The Sunk Cost Fallacy
Have you ever done something simply because you’re caught up in the inescapable momentum of the time you’ve already spent on it? Refused to let go of a material object you no longer cared for only because it was expensive? Or even stayed in a failing relationship that you invested many years of your life in? Congratulations, you’ve fallen into the trap of the sunk cost fallacy. Don’t worry, this phenomenon is such a natural human impulse that I don’t think there’s a single person on the planet that hasn’t fallen into this trap in some way. It’s an enemy of logic and an enemy of minimalism.
From a business perspective, a sunk cost is any cost that cannot be recovered once spent. It is typically thought of in terms of finance, but it can equally be applied to time and effort spent. As 21st Century humans, especially those of us living in the West, we tend to expect some sort of equivalency in life for our money, time and effort. However, we either neglect to see the true value of the thing we’re paying for or the value that we originally perceived shifts and fluctuates over time. Then the natural impulse to recover what we spent kicks in. I’m going to give some personal examples of these three main embodiments of this tricky fallacy and then talk about how we can all avoid it in the future.
Money and material things
I used to play guitar a lot. I was in a band in high school and by the time I went to college I had gotten quite good and amassed a collection of guitars, amps, effects pedals and all the other required knick knacks that come with such an expensive hobby. It was about the same time that I had my sort of minimalist awakening after a trip on the Appalachian Trail, and I began to pare down my possessions. I found this especially hard to do with my guitar stuff, which I was using less and less at that point. I had spent so much on that stuff, certainly in the multiple thousands of dollars, and I wanted to get as much of it back as possible by selling my gear. Little by little it went, until I was left with the last thing I wanted to get rid of, my Blackheart 15-watt tube amp, which I cherished a lot and spent a lot on. It sat on craigslist for weeks until I finally gave in and slashed the price to a point I wasn't comfortable with, but I did get rid of it. And you know what? Once it was gone and I had that space back, I was happier for it. I should have skipped the stress and the prolonged goodbye by lowering the price earlier.
Suffering for my childhood
Back in the late 90s when I was around 10 without a care in the world, I would rush off the school bus and grab a snack for my afternoon ritual. I wanted to catch every episode of this new cartoon from Japan that was unlike anything I’d ever seen. If the joy I got from watching people beat the shit out of each other on Dragonball Z could be measured, it’d probably be in the neighborhood of over 9,000. So when the live-action Dragonball: Evolution came out in 2009, my best friend and I had to see it. We saw the reviews. We knew it was going to be absolutely horrible. But we had to. We had to spend the money on a ticket and waste two hours of hour lives because we had already invested so much of our childhood in Dragonball. It was a complete and utter abortion of a film and I will never get that time back. We knew this. Yet we still went, lest we betray our childhoods. We probably would have been better off drinking beer at home and playing Halo 3.
The very bad thing I did
I haven’t really told anyone other than my good friends this story, probably because I’m very ashamed of it. It ranks up there as one of the worst things I’ve done in my life. When I was in Sweden I met a girl there. We had kind of a strange relationship, but we had a connection and resolved to meet each other in Iceland when I went to do conservation work for ICV. I left my acoustic guitar with her in Sweden. It would be less for me to carry home, and I’d see her again, right? Well, I didn’t know that I was going to meet Kate in Iceland. She was on my ICV team and now we've been together for nearly 4 years. Kate and I were just getting to know each other, so I had a choice to make. I could either uphold my agreement to meet, possibly damaging my progress with Kate, or burn a bridge. I knew that this other girl was going to be coming to Iceland with her friends, so that made me feel less bad about what I was going to do, which was blow her off completely. I made up some shitty excuse like I didn't have enough money to travel during our vacation week. She was pissed and I kissed my guitar goodbye in that moment. So I guess I didn't actually fall for the fallacy in this moment because I made no effort whatsoever to get the thing back. Had I been stupid enough to try, however...
Happiness gained and future sunk costs
The problem with the sunk cost fallacy is our perceived loss. No one likes losing something, especially if it’s seen as a complete waste. What we don’t look for is the amount of happiness that we can gain by just letting go. If you've got a bunch of junk you've been trying get rid of, don't hold onto it waiting for a buyer that's probably never going to come and most certainly isn't going to give you what you paid for it. Just give it to friends or donate it to someone who needs it, you will feel the weight lift off your shoulders and you will be happier. Yes, maybe you lost some money, but you lost it the second you bought it and you weren't guaranteed to get any of it back in the first place. The same thing goes for time and effort. Focus more on the joy you got from a pursuit or relationship before it grew stagnant, then move on to bigger, better, possibly more challenging things that will no doubt bring you more fulfillment.
Nothing is permanent; you and everything around you is in a constant state of flux. Therefore, it is nearly impossible to completely avoid sunk costs insofar as how they relate to time and effort spent. You could study business management for three years at university only to find that you really want to be a teacher. These kinds of things just happen. You might have some sort of mind-rending epiphany between today and tomorrow, a complete change of course in your life. The best way to avoid future sunk costs? Be mindful of yourself and do what makes you happy.