WHAT IS THE SUNK COST FALLACY – AND HOW COULD IT BE EFFING UP YOUR LIFE?

change Jan 27, 2021

Have you ever started reading a book or watching a movie, only to find that you had no interest in continuing it – and yet you felt obligated to do just that? To read every single page or watch it until the credits rolled? Have you ever had a similar feeling about a job, a relationship, or an educational path – that feeling that “this might not be right for me, but darn it, it’s too late now to change my mind!” If so, you aren’t alone. This is a phenomenon called the sunk cost fallacy, and it’s exactly what we’ll be talking about today – what it is, and how it could be holding you back from your true potential.

What is the sunk cost fallacy?

The sunk cost fallacy tells us that because we have already invested in something (whether that be time, money, or energy), we will be more likely to feel obligated to that thing, even if it's no longer serving us. This keeps people in relationships that no longer work, careers that don't fit anymore, and it even makes us watch a movie through to the end, even if 20 minutes in we can tell it's terrible. Somehow we feel that what we have already invested is worth whatever the cost is that we are paying currently, and so we grit our teeth and keep going.

But there's a reason they call it a fallacy, right? Sure, it's true that we have invested that time, money, or energy. But we aren't getting back the time, energy, or money that we've invested, no matter what happens. So why do we keep moving forward, when it should be clear that we're on a dead end road?

Why do we fall into this trap?

There could be a number of reasons why we fall into this trap and stay stuck in it. It could be shame or embarrassment. Maybe admitting that we aren't willing to see this thing through makes us feel a deep sense of shame or we just can't imagine the embarrassment of people knowing that we've failed. It could also be caused by optimism -- especially foolish optimism. Maybe we've convince ourselves that the job, the partner, or even the book has to get better, that it just has to turn itself around and become what we need it to be. Finally, we could also be feeling denial. Along with whatever other negative feelings we are feeling, there is a healthy, heaping dose of denial. Sure, part of me knows this isn't where I'm meant to be...but how can I even access that truth when it's buried under a mountain of denial?

Whatever it is that is holding us back, whatever that emotion or belief is that stops you, it's there for a reason. Somehow, some way this emotion or belief is serving us -- but maybe it isn't serving us in the way we'd like. Maybe it is keeping us safe or small, protecting us from the risk of the unknown. We can both acknowledge the service it has provided us and choose to move on from it.

So, what's the solution?

The most helpful way I know to move on from the trap of the sunk cost fallacy is to reframe the value of the investment. Is what you invested yesterday, last month, or a decade ago worth more than what you have to invest today? Is the time, the energy, the money that you will spend today not worth infinitely more than that which has already been spent? While you can't change the past, you can choose what investments you will make today. And if you're lucky, you may even do it in a way that benefits both you today *and* you in the future.