Sunk Cost Fallacy (Word For The Week)
Sunk cost fallacy is a phenomenon where somebody justifies an increased investment of money or other resources based on the cumulative prior investment (the sunk costs), despite new evidence suggesting that the cost of continuing now outweighs the expected benefit.
In life, we are constantly making investments. In business, career, friendship, relationship, property, and other things.
These investments not only cost us money, but also time, emotions, health, and other resources. Often enough, we get to a point where we need to engage in a bit of stocktaking.
Sometimes, you consciously do this. Other times, you are engaged in another related or unrelated activity when you learn something that applies to your “investment”. And other times, the truth just hits you out of the blue.
Some people will discover that a friendship of over ten years or a childhood friendship is weighing them down. That the “friend” is selfish, greedy, jealous, and uncaring. They will choose to remain friends with the person because they don’t want to lose x-years of friendship.
A person discovers that the land he bought is flood-prone or basically a wetland. They know it would likely cost them their life-saving and some more to fix it, yet there is no guarantee of fixing it.
Rather than walking away and selling it, they’ll continue to invest money into it, in the name of “I must be a landlord”. While claiming “every place the sole of my feet shall tread upon.”
Someone else realizes that a five-year romantic relationship is bound to fail. It could have been toxic, they might be growing apart, they might be totally different people, or they just ain’t right for one another.
They will go ahead to trudge on to get married. Then start going to prayer meetings and counselors to fix an irredeemable situation.
The sunk cost fallacy is why some people don’t just fall victim to advance fee fraud, 419, and yahoo-yahoo once.
Just to prove that they are wise, in their unwillingness to acknowledge that they have been duped, they will stay in contact with their cheater and keep sending them money.
When you point out the obvious to them, they will call you a hater and threaten not to share their gains with you.
Until you acknowledge when you are making a sunk cost fallacy, you will most likely continue pouring your resources down the drain.
Introspect. Look around you. Evaluate your relationships. Audit that business you been struggling to start or keep afloat. Are you not making a sunk cost fallacy?
Would the benefit of the situation ever outweigh what you are putting in? Are you doing it only to save face or prove everyone else wrong? Are you becoming a victim of your own passion, perseverance, and patience?
Stop being strong for “being strong” sake. Don’t keep pushing on because you are scared others will judge or mock you. Forget the cost and save yourself.
It is sometimes okay to quit. Stop being a victim of the sunk cost fallacy.
Count your cost, cut your loss, move on.