Let's discuss the Sunk Cost Fallacy

Our life decisions are based on an array of conditions. We make micro-choices every minute which can lead to different outcomes later on. However, our decisions are heavily influenced by a concept called the sunk cost fallacy - and you have undoubtedly been a victim to this fallacy in your life at one time or another. 

This post will explain what exactly the sunk cost fallacy is, why it occurs, and its potential effects on mental health.

In essence, The Sunk Cost Fallacy is the continuation of an action, behaviour or endeavour due to a prior investment- whether that be time, money or effort. Have you ever gotten halfway through a film that you hate, and continued watching anyway because you ‘might as well finish it’? Or perhaps you’ve continued to study something you have no passion for, purely due to the time you’ve invested in the subject. These are examples of the Sunk Cost Fallacy. Whilst it seems harmless at face value, it’s the reason why so many people end up unhappy with their life.

This is heavily applicable to relationships; when asking a person who’s unhappy in their relationship why they’re still with their partner, they are likely to respond with ‘we’ve been together x years’. The only reason that person remains unhappy is due to the energy and time that they’ve invested, i.e their sunk costs. It can affect our decisions on a small or large scale, but having awareness of the effect will enable us to be more in touch with our thoughts.

The effect of the Fallacy is a psychological mouse trap of sorts, with the cheese being the potential for contentment and the trap being the subjective sunk costs. As humans, wastefulness is recognised as a negative thing. Thus, we see the effect of a loss to be greater than the potential for gain. It’s a way for us to justify why we allow ourselves to stay in an unhappy relationship, or continue studying the course we hate- because of the time we invested into it. 

The rational mind should tell us that the resources are already gone, the time can’t come back so why not use it doing something which brings you excitement? It’s vital to view the resources we invest into a person, project or skill as irrelevant to what comes next, or we run the risk of being caught up in the mouse trap of stagnation and discontent.

There is a link between eating disorders, depression, addiction and many other mental illnesses with regards to the Sunk Cost Fallacy. Research by PubMed Central (2016) hypothesised that “symptoms associated with Binge Eating Disorder, which is often co-morbid with depression symptoms, may also be associated with a higher propensity to commit the sunk-cost fallacy.” 

It’s likely that symptoms of Bulimia and Binge Eating Disorder, including the inability to stop eating despite feelings of fullness are partially driven by the Fallacy. Once a partial investment is made, the psychological urge to stop the waste of resources kicks in. The Sunk Cost Fallacy does not cause mental illnesses, however a link has been established, and therefore awareness of it’s effects may aid recovery from mental illnesses.

The first step to eradicating the effects of this cognitive bias is awareness- so you’re halfway there! By simply noticing the fact that we as humans are prone to base our decisions on past commitments as opposed to future aspirations, we can start to notice examples of where The Sunk Cost Fallacy is popping up in our lives. Self-reflection is the most accessible and effective method to identify this; journaling your goals and aligning them with your current commitments will provide you with a clear outline of progression.

There are many ways to manage The Sunk Cost Fallacy;

• Acknowledge emotional investment.
  Emotions can cloud our judgement and move us away from our goals. It’s important to seek advice from people not involved with the situation to help you make informed decisions, whether that be in relationships, work, school, etc.
  
  
• Consider personal reviews.
  No one likes wasting their time. By practising self-awareness through mindfulness and journaling, you can ensure that the time you invest daily into different tasks will eventually serve you. Ask yourself- ‘Do the opportunity gains outweigh the investment costs?’
  
  
• Being honest with yourself.
  As hard as it is to admit, sometimes it’s fear which holds us back from letting things go. It is very possible that some of your current commitments are acting as both a safety blanket and a barrier to success. Be compassionately hard on yourself and learn to let things go when you start to notice that you’re holding on to them because your time is already invested.
  

The Sunk Cost Fallacy is a commitment bias, fuelled by irrationality. In order to avoid its effects, we must focus on the present and future impacts of the decision- past investments shouldn’t become a factor. Change is difficult, but it’s vital for growth. If you find yourself in a situation where the benefits are no longer serving you, then it’s best to let go- despite the resources previously invested. Letting go of something which adds nothing to your life, for a potential gain is the most beneficial decision in the long term. Whether it be in a relationship, a job or just a movie; habituating yourself to prevent the Sunk Cost Fallacy from influencing your decisions will improve the quality of your decisions, and subsequently, the quality of your life.