Julia Galef: The Sunk Costs Fallacy | Big Think

Julia Galef: The Sunk Costs Fallacy
Watch the newest video from Big Think: bigth.ink/NewV...
Join Big Think+ for exclusive videos: bigthink.com/p...
----------------------------------------------------------------------------------
The sunk cost fallacy means making a choice not based on what outcome you think is going to be the best going forward but instead based on a desire not to see your past investment go to waste.
----------------------------------------------------------------------------------
JULIA GALEF:
Julia Galef is a New York-based writer and public speaker specializing in science, rationality, and design. She serves on the board of directors of the New York City Skeptics, co-hosts their official podcast, Rationally Speaking, and co-writes the blog Rationally Speaking along with philosopher of science Massimo Pigliucci. She has moderated panel discussions at The Amazing Meeting and the Northeast Conference on Science and Skepticism, and gives frequent public lectures to organizations including the Center for Inquiry and the Secular Student Alliance. Julia received her B.A. in statistics from Columbia in 2005.
----------------------------------------------------------------------------------
TRANSCRIPT:
So I want to introduce you to a concept known as the sunk cost fallacy. Imagine that you’re going to the store and you’re halfway there when you realize, “Oh wait, the store is actually closed today.” But you figure, “Well, I’ve already come ten blocks. I might as well just go all the way to the store, you know, so that my ten blocks of walking won’t have been wasted. Well, this is a transparently silly way to reason and I doubt that any of us would actually go all the way to a store that we knew was closed just because we’d already gone ten blocks.
But this pattern of thinking is actually surprisingly common in scenarios that are a little bit less obvious than the store example. So, say you’re in a career and it’s becoming more and more clear to you that this isn’t actually a fulfilling career for you. You’d probably be happier somewhere else. But you figure I’ll just stick with it because I don’t want my past ten years of effort and time and money to have been wasted. So the time and money and effort and whatever else you’ve already spent is what we call the sunk cost. It’s gone no matter what you do going forward. And now you’re just trying to decide given that I’ve already spent that money or time or whatever, what choice is going to produce the best outcome for my future.
And the sunk cost fallacy then means making a choice not based on what outcome you think is going to be the best going forward but instead based on a desire not to see your past investment go to waste.
Once you start paying attention to the sunk cost fallacy you’ll probably notice at least a few things that you would like to be doing differently. And maybe those will be small scale things like, in my case, I now am much more willing to just abandon a book if a hundred pages in I conclude that I’m not enjoying it and I’m, you know, not getting any value out of it rather than trudging through the remaining 200-300 pages of the book just because I don’t want, you know, my past investment of a hundred pages, the time that I spent reading those hundred pages to go to waste.
And you might notice some large things, too. For example, I was in a Ph.D. program and started realizing, “Gee, this really isn’t the field for me.” And you know, it’s a shame that I have spent the last several years preparing for and working in this Ph.D. program but I genuinely predict going forward that I’d be happier if I switched to another field. And sometimes it really does take time to fully acknowledge to yourself that you don’t have any good reason to stick with the job or Ph.D. or project that you’ve been working on so long because sunk costs are painful. But at least having the sunk cost fallacy on your radar means that you have the opportunity at least to push past that and make the choice that instead will lead to the better outcomes for your future.
Produced/Directed by Jonathan Fowler and Dillon Fitton
Read more bigthink.com/v...

[@bigthink]

Want to get Smarter, Faster? Subscribe for DAILY videos: bigth.ink/GetSmarter

[@reagestme]

Hello, I do not know how appropriatly adress you but I have a good question: "How to stop cling to a goal which give you more gain but not sustainable in long run." Like good office pay but you can't sit anymore becuase you litterally dying without movement. Is it greedeness, stupidness or there is more to it?

[@downhillphilm.6682]

@@reagestme when my decades of bedside (standing 12 hr shifts) hospital work transitioned to "administrative" responsibilities, I was sitting all day. So, every hour or so I would get up and do the stairs or go outside and walk the parameter of the building, anything to just MOVE.

[@jesipohl6717]

most nations only continue to exist based on the sunk cost fallacy.

[@gerardo20211]

Sunk Cost Fallacy: "Don't cling to a mistake just because you spent a lot of time making it".

[@MrFindX]

+

[@kennythelenny6819]

Stephen Dedalus Goes ahead and throws baby into the river

[@charlesd.jungheim6953]

Well put! But it's getting at a *much* deeper truth: preventing the means of error-correction is what makes *any* decision-making bad! Correspondingly, openness to improvement is what makes any decision-making good! :D

[@KrunchyTheClown78]

@@kennythelenny6819 XD

[@edwardgaines6561]

Unfortunately I made that mistake, due to low self-esteem.

[@measureofdoubt]

... the key is just to focus on *future* costs and benefits, not the past. So the sunk cost fallacy is when you estimate (2) is higher value than (1), but you do (1) anyway, because you hate the idea of your past investment "being wasted."

[@EdisonBryan]

Hi Shawn, take remote classes or get a degree from a school with an online program. I would suggest getting at least a bachelors. You can do it!

[@hamida185]

smart and pretty ;)

[@punishedsnake6141]

@nwahs bocaj sounds like you just need to relax. Take a vacation.

[@AdelaAlonsoAlonso]

Yup - I remember the backlash I got when I decided to quit learning mandarin after 5 years. People kept repeating me "but all those years...waisted".

[@AdelaAlonsoAlonso]

@nwahs bocaj Hi Jacob! Im assuming :) If its just one class I think its a good idea to finish it but maybe not necessarily right away - Im sure there are ways you can apply your natural skills and talents in a way that can be marketable! :)

[@measureofdoubt]

Julia here. The correct question to ask is, "Which of these do I expect is higher value: (1) Spending X more years to finish the PhD + the career I'm likely to have with the PhD? or (2) The alternate career I'm likely to have without a PhD if I quit now?" For me, I estimated (2) was higher value than (1), so it made more sense to quit. That calculus depends on factors like X (how much time it will take you to finish the PhD), how much you think the PhD will improve the career you can get, etc.

[@SauravRaj-ib2yo]

What factors do you use to calculate "value"? Is value about the ability to earn money? Respect? What? What about the great experiences you will have while doing your phd or the joy of finishing it. The things you will learn during that process? Do these things have value, or none at all? It was not worth it?

[@HussAA23BBall]

Sounds like a loser justifying themselves.

[@mrknarf4438]

@@SauravRaj-ib2yo that depends on what you value. For some it's money, for others freedom and time, for others experiences, for others career. There's no right answer, you set your priorities.

[@rufusapplebee1428]

If you are not going to destroy the universe don't do PhD, if you are going to, then finishing PhD would help you to destroy the universe faster and with style. 😈

[@garyloewenthal]

@Brian Kelley I think you bring up a good point. Julia's point - "Do I get greater value continuing on this course or choosing a different course?" - is still valid. Basically, know when to cut your losses. But if I'm understanding you correctly, the additional cost of going to the store is lessened by the fact that we're halfway there. To generalize: past actions affect the remaining cost of completing the goal. Hopefully I'm in the ballpark.

[@JoshuaDb_The_Witness]

I would bet a dollar that this fallacy is the reason for 90% of the toxic relationships that go over long

[@jordywilliams]

I would bet two dollars you are correct

[@mykehunt2430]

@Lance Bermudez I think you got it

[@dragonmartijn]

90% of all relationships are toxic.

[@thejinzo4690]

i actually watched the video to get my mom to divorce my dad. theyve been unhappily marrierd for so long now

[@therobotics1rthegreat157]

Serious reply. I'm tired so if this was a joke I must have missed it. Anyway to the response. I'm afraid that you'd loose that dollar. Most toxic relationships stay alive because of a multitude of reasons but most notably because people think they can change their partner with time. There is a lot more to it but like I said I'm quite tired so I'm going to go back to sleep.

[@makoarios5250]

What gets me is with the grocery store example you have a high level of certainty that the store is closed. A high level of certainty about the original end not being available to you. It seems deductive in this sense, and not necessarily grey scale. As the potential ends are in the future, and in a lot of cases have uncertain outcomes while still having ideas of your initial investment being in vain.

[@christianschwalbach7561]

Makoa Rios precisely. this doesent apply to examples where your "costs" would actually be detrimental to abandon. in other words you would be sinking your advantage. ..ie, an investment in a career. sometimes purely rational decisions actually obscure potential benefit in the future. ..

[@domingojimenez528]

true

[@theultimatereductionist7592]

+Makoa Rios Actuaries create much more subtle and sophisticated probilistic models of choices than the one she gave her for merely educational purposes.

[@canererbay8842]

Exactly. If you go back home, you know you stopped losing and by going back home, you didn't jeopardize you chances of buying whatever you wanted to buy. If you switch your career and realize the 1st one actually was better, you know then you wasted your initial investment and the decision you made (switching) did make a difference on the value of your initial investment i.e. it wasn't sunk but now it is. That's what people try to avoid and it's not always a fallacy.

[@starfishsystems]

Yes, and these may in effect be conditional probabilities as well. Decision theory addresses such scenarios. Each decision point in the tree has a set of available choices, each with an expected value based on probability and base value. In the grocery store example, only when the probability of the store being open is STRICTLY ZERO can we safely neglect the base value of the items we wanted to buy. But in the general case, we have to compare the expected value of the choice to carry on against the expected value of abandoning the journey (and perhaps setting out to some other store instead.) If the store might just possibly be open, and it carries some urgently needed product, and alternative stores are unlikely to carry it, the choice to carry on might well be justified. Thus a "low probability, high value" scenario is exactly where we might predict that people will get stuck sometimes. It's not an issue if we know that the probability is strictly zero, but rarely is life so certain.

[@NWTech75]

Julia, thanks for this insight. As soon as you described staying in a job so that the "last 10 years don't go to waste", you hit a nerve with me. I literally just went through this at the end of 2020. I was trying to decide what to major in at college. I'm 46, I'm late, and I have over 20 years in my field of aviation. I really didn't want to give that up, but at the same time I couldn't escape the feeling that it was ultimately a dead end. When it was all said and done, I opted to return to school to become a writer. In this way, I could maintain my current skill set and make myself more marketable to upper levels of the organization, but at the same time, it would provide an out if I needed to seek new avenues. I couldn't be happier with my decision and have learned so much these first months of school. Thanks to you I can now put a name to that pain. The Sunk Costs Fallacy. Thank you so much.

[@andreacruz8736]

This is a really interesting topic, we have to learn to let go and convince ourselves that if something isnt working out for our benefit and fulfillment we can quit and start something that will truly push us to our happiness. Its not about being a quitter, its about letting go of anything that makes us unhappy and take new chances on life. Such great vid.

[@ChristopherRyanPhD]

This is a big one in justifying the continuation of war: "My friends didn't die for nothing!" I'm sorry, but they probably did.

[@coolbreeze2.0-mortemadfasc13]

Absolutely true.

[@daviddassow8508]

Wow! I read a lot, listen a lot and this was brand new to me. Amazingly explained in less than three minutes. Side note from a 70 year old, now inlightened and using your terminolgy. At age 25 I had sunk time into getting a business degree and then two years working for a large corporation. In my soul I knew it was wrong place for me. My wife and I (no children) took a 325 mile hike on the Appalachian Trail for me to think that summer. I returned, back to college, got my degree in education and had an amazing ride as a special education teacher. Today, I use both skills to teach people about while working a career to also keep one eye on a side project that willl create residual income. Overcoming the sunk costs has made my life one of fulfillment. -David Dassow/Michigan USA

[@OFilellinas]

Thank you! This was thought-provoking.

[@c.s.7097]

my sincerest condolences

[@brotendo]

@@c.s.7097 Lol

[@theawkwardcurrypot9556]

She have a youtube channel.. She's awesome

[@savaspog]

Να μια γνώριμη μορφή!

[@evilwayz1464]

Very bad example. Expected more from her.

[@fredkruse9444]

They should teach more of this stuff in high school.

[@lewisjameskearney6452]

This is the sort of stuff the definitely don't want taught to keep us stupid

[@catakuri6678]

i agree 100% they only teach us trash

[@mahmudulhasan6056]

I vote for it.

[@richjames7595]

Maybe they don't even know it🤣

[@ismael1751]

lol? They teach you this in a microeconomics class

[@HokKan]

That's a faulty analogy. If you find out the store is closed, the store is guaranteed to be closed. There is nothing to salvage even if you make it to the store. If you feel like whatever you're investing in may not be the best, there is still a chance that it will work out. It's not necessarily the case that nothing can be salvaged, unlike the closed store example.

[@CherryWongPhoto]

MonokuroBooHokKan I was thinking the same thing

[@KarlHerzog]

I thought of it like, I know the store should be closed, but since I'm halfway there, better see it for myself...it could be open too 🤷‍♂️

[@voroldrwarfff8858]

but most of the time, there's no rational reason to think that because you keep doing something it's gonna get better all of a sudden

[@HokKan]

@@voroldrwarfff8858 no one said things will suddenly get better.

[@voroldrwarfff8858]

@@HokKan yes but if you have no reason to think things will get better, then you're just waiting on a miracle

[@dwaynewadethree]

I watched Taxi Driver and 10 minutes before the end of it I thought I was about to waste two hours of my life. Then the ending shifted my perspective and I realized it's genius. It is not always that obvious until the end...

[@fotina45]

extermely good counter argument. Sometimez people dont really know how close they are, when they quit.

[@trevbarlow9719]

Underrated comment. I bailed on The Godfather and years later regretted it. It's all about estimating likelihood. It was silly for me to not watch the rest of The Godfather because the rave reviews of it increased the likelihood that the whole thing would be worth watching. Plus even if I watched the whole film and hated it, I could at least have an opinion on it with which to argue with my friends who enjoyed it. That's movies. With relationships one has to ask questions like "what are the odds of this person changing for the better/worse?" The stakes are much higher due, if nothing else, to the large amount of time invested. With careers it's kind of like relationships.

[@brunomorado]

She's right, however people should be careful not to go from dismissing sunk costs as irrelevant to decision making, which is wise, to misevaluating their opportunities and opportunity costs in the future which is unwise. To take the PhD example, the time / effort / money you have ALREADY spent on it is IRRELEVANT, however the time / effort / money that REMAINS to be spent in order to obtain something DO MATTER, and are coincidentally often proportionate to the amount of sunk costs. The question should be, how should my REMAINING time / effort / money be spent in order to maximize returns (whether those returns are financial or personal i.e. happiness / satisfaction or whatever). In other words, even if you think there is a 80% chance you will not need this degree in the future, if you are a few months from completion and completing your degree does not cost you any major opportunities, then it would probably be wise to spend the remaining months finishing your PhD program and THEN move on. This common link between sunk costs and future costs can easily mislead our decision making even if we're aware of the fallacy. "I've already spent this much" is NOT relevant, but "I still have this much to spend" IS relevant.

[@Lexoneify]

word...

[@canererbay8842]

Yes! Evaluating the "sunk cost" 9 months into a 1-year "PhD program" vs a 6-year "PhD program" is very different. The "sunk cost" is the same (simplifying it to just the time spent) but the amount and quality of the remaining cost matters a lot and makes a big difference.

[@ianboard3555]

My wife introduced this to me when we were dating. We went to a movie that was pretty awful. About 10 minutes from the end, she said 'do you want to go?'. I normally like to finish what I start and said no, let's stay until the end. She said 'are you enjoying this?' When I said no, she said 'well, let's go then' - she was absolutely right.

[@dakibmw]

Little that she knew that by intrducing that to you, she was to become soon to be ex-wife...

[@ganeshadhikari946]

She was testing your assertiveness and you failed it

[@ianboard3555]

@@ganeshadhikari946 So you should assert something that is wrong, just for the sake of asserting yourself? I have no problem admitting when someone has a good point.

[@MrHarumakiSensei]

Was it The Village? I thought that was crap the whole way though until the last ten minutes.

[@ianboard3555]

@@MrHarumakiSensei I think it was 'the Skulls' - really stupid thriller about some secret society in a college. I honestly don't remember it too well (just that it sucked).

[@allanmherrera]

Could this also be summed up as "Don't throw good money after bad?"

[@WinkLinkletter]

Having always been an avid, compulsive, but not very choosie reader, an anonymous (to me) quote "Never finish a book just because you started it." I read as a young man really helped me continue touching all kinds of subjects and not get bogged down with OCD completion anxieties.

[@shamassive]

Welp, I know who I want to marry. After all, I've already invested 3 minutes into our relationship.

[@Torsade101]

Noooo, I want to marry her!

[@lugus9261]

shamassive she's her own person. Why is everyone such a fucking creep online

[@bullseye6969]

@@lugus9261 shut up man, she didn't hired you be her lawyer. all he is saying is if you are in to relationship with someone for months or years. just because you have already invested your time in them you don't have to feel bad to lose that time and get married to them just for that reason. its ok to brake up afters years when you understood you are not compatible with each other.

[@lugus9261]

@@bullseye6969 what the fuck is wrong with you You fucking incel? The guy is saying be wants marry some randomer after watching a 3 minute video That's just creepy Fuck off

[@forza1sra]

@@lugus9261 r/wooosh!

[@gerardozg9700]

There needs to be a disclaimer along with this that acknowledges people will fall into this thought pattern to quit anything when the going gets rough. Not saying that this is not useful, but there needs to be some specifics on when to apply this. Commitments you've made to people, to yourself, or to your future are sometimes more important than selfish pursuit of "happiness".

[@ankitkumarpandey5205]

Broke up a day after watching this video lol

[@danilthorstensson8902]

lol nice

[@theuday99]

Why is she suddeny in everyones recommended?

[@glennwatson3313]

The thing is, in real life, you never know for sure if the store is closed.

[@stekl.h]

Exactly!

[@zeroceiling]

Pretty much textbook example of rationalization...Julia would likely disagree...

[@glennwatson3313]

@@zeroceiling I'm sure she would. But the reality is assessing sunk cost is never as easy as she makes it out to be.

[@JK-mx3go]

@@zeroceiling Well, she might agree. I mean how do you know EXACTLY what kind of job you would get after getting Ph.D.? You could be a professor, or just a researcher outside academia, which is very hard to predict, especially 2 or 3 years before you finish your dissertation. Even if you managed to be a professor, for example, you might not get a tenure, which makes life difficult. Also, even if you could achieve exactly what you wanted, you might not like it as you think you would! It's a good way of making decisions, but it is not easy to apply to important things in one's life.

[@cuntofgod]

In the example of the store, the store is either open or closed - there is either a benefit or no benefit. In more complex examples the options will provide varying degrees of benefit and in these situations sunk costs may become a real barrier to seeking out another option with only a marginally greater benefit or where the benefit is unknown.

[@childofafrica-masteroftheworld]

2) This is about realising within yourself that the only thing keeping you on that road is the fear of having wasted time, that fear of square one. Are you brave enough to cut your loses and start again striving for something better? Sometimes quitting is the harder thing to do, but it is worth it when you know that all that waits for you at the end is complacency and frustration without an ounce of joy. It's about knowing yourself, knowing what you really want, and refusing to compromise.

[@BlackJar72]

I did just that with the Ph.D. I almost finished. Unfortunately, some costs are debts (and money is hard to come by) and the past is a basis others use for judgement -- unfortunately, some times those past costs hold you back, sometimes there is no viable way forward.

[@Ytremz]

Evaluating past facts tends to more effective decision making than assessing future uncertainties.

[@psychepeteschannel5500]

Sunk cost fallacy is the deepest hole to fall into, its bottomless. Most people are falling into it right now. The "cut the loses" aproach is also not ideal however, because there are no situations in life that would not be Win-win. Like seriously, If you let go and just use basic logic for long enough, you will find a way - ALWAYS find a way - to make the cost invested work together with the new direction.

[@frosty3693]

Too many times it is harder to walk away because of all the people who will just say you are a "quitter", "fiinish what you started", which are valid if there will be a benefit on the completion. But analizing the situation and seeing you are wasting your time, and money, is sometines difficult.

[@magicalfrijoles6766]

She isn't suggesting you quit something the second you don't like it. If you are one class away from your BA in marketing, but decide you don't want a career in marketing, it is still probably a good idea to finish the degree.

[@childofafrica-masteroftheworld]

The simplicity in her examples is whole point. Stopping before getting to the closed shop doesn't affect anyone else, stopping a book that you know you will have no further interest in has nothing to do with external variables. There is value in going to the shop if you can still get that thing your friend wanted, but if there is genuinely NO value at the end you gotta consider why you're continuing. We can get into opportunity costs and external variables but that's a-whole-nother level.

[@freedomprayer007]

Key aspect in decision making - always compare on incremental basis.

[@justdad3681]

I feel like with some things such as the PHD it is worth just finishing to get the degree. I had a friend who spent 3 and half years in an undergraduate course who quit at the last semester, and while he wasn’t enjoying it I always figured it would have been worth sticking it out and getting his degree. Because even if he never continued in that died he still had an extremely valuable piece of paper for the rest of his life as opposed to nothing but a loss of an additional 6 months.

[@Volound]

or the obvious one, the one that sometimes gives its name to an entire synonym of said fallacy, the "concorde" and the derived "concorde fallacy".

[@thomasbutler5150]

ADD saves me from something! I'm great at saying "fuck it".

[@Phi1eap]

I often go to store, not for the sake of buying, but for other reasons, like pleasure of walk itself, active rest, break from the work, muscle strech, health. Shopping is only side benefit, and action of walking to the store have ignition in completly different necessity than acquiring goods. Oversimplification isn't good way of reasoning.

[@drrodopszin]

I have a university degree thanks to sunk cost fallacy. It took 8 years instead of 5, but I was like, well I have invested already a lot of time, I can't quit without having a paper...

[@JK-mx3go]

You mean PhD? I'm curious what your life has been like after getting the degree.

[@Paul_Wetor]

At least you have something to show for it. Being halfway to a degree doesn't add much value to a resume.

[@ret13yrs]

I'm watching this at a time that I've been struggling with the thought of whether I should continue with my current career prospect or pursue what I think I will enjoy and/or benefit more from.

[@preston0]

One example that I've encountered multiple times is when I buy or someone buys for me a sports game ticket. If I don't want to go, and staying home is a more valuable use of my time than going to the game, then it can be the better option. One might say 'but the ticket is purchased, don't waste the value of the ticket.' One thing to also consider in this example though is diminishing returns. I feel like staying home during the sports game, but I get to stay home a lot, and it may get boring or not as valuable to do things at home one way or another the more I do it. I will crave going to a ball game or other outing at some point. Going to the game now is a bit less valuable use of my time in the moment, but already having the ticket is an opportunity to do something different now instead of paying for it again at another time.

[@preston0]

A similar scenario to also think about (though I'm not sure if it's technically a sunk costs fallacy) is when you go to a restaurant and the spaghetti is on sale from $15 down to $5. The burger is not on sale. It costs $10, but you really want a burger. Same exact situation. Make decisions by comparing the value to its price. The spaghetti deal is an opportunity, but maybe you value the burger at $11 and the Spaghetti at $5. The better deal is still the burger for your value. And again diminishing returns factor applies here as well.

[@Dabu-Dabu]

This is soooooo typical of bad relationships. People stay just because they've put so much energy and time into it, not because it has a potential to unveil a great future. I didn't know there's a freaking name for it.. wow.

[@ICBMCatcher]

*This sounds a lot like rationalizing quitting, telling yourself it's OK to give up.* The "sunk cost" fallacy AKA "don't throw good money after bad" applies to business frequently, but rarely to a task undertaken. Finishing what one starts, if only for the sake of principal, is almost always worth seeing through a difficult, unfun … even grueling task to the bitter end. Adopting this mindset will build mental toughness, amplify one's sense of determination, and sharpen resolve. What's really awesome is when we finish a particularly harrowing undertaking only to find out it was all for nothing. Now _that's_ how to build character!

[@michelleg980]

The psychology behind why I never leave a bottle of wine until it’s gone. Interesting.

[@WillN2Go1]

Terrific first example. All wars almost immediately get trapped in the sunk cost fallacy. "If we stop now, what does that say about the sacrifice of our glorious dead!" John Kerry flipped this around when he said to Congress “How do you ask a man to be the last man to die in Vietnam? How do you ask a man to be the last man to die for a mistake?”

[@DisfigurmentOfUs]

Not all books are read for please, some books are hard to read for the first N pages or last N pages or N middle pages but still provide a lot of value overall. It is really important what are you reading book for - to cut time or to learn/understand/improve.

[@hydr012]

Great and agreed. However, in your job example - you cite 10 yrs of sunk costs. How about if you realize you don't like the job after 63 days? Should you stick it out to 90? To 6 months? Or just abandon all together? What is the least damaging to your resume and reputation? What is the threshold for 'sinking' the sunk costs vs planning to call it quits anyway but balancing with the best possible outcome?

[@adip8]

I have avoided the sunk cost fallacy. I spent two years in a shitty college major (accounting) and then started over again majoring in pure maths. Everyone gave me advice based on the sunk cost fallacy but thankfully I knew better.

[@OldManOnTrak]

This infected so many IT projects I used to be involved in. When something unexpected happened and costs started to rise, "sunk costs" were considered a more important factor in deciding whether or not to continue than ultimate RoI or TCoO. So projects that should have been cancelled early marched onwards until they finally delivered something, or a new manager decide to cancel it

[@Vorundor]

Thank you for this video! I've been looking for an explanation of this beyond just economics to illustrate it to a friend in a dead end relationship and you are the ONLY one that puts it on a broader perspective. Thanks again! :)

[@Kallor_]

I always thought a sunk cost was when you had to make a desicion, but no matter what decision you make, it will cost something, and that something is the sunk cost. Like I am going to boston on either train or by car. The insurance on the car is a sunk cost because regardless of if I take the car or train, I will still have to pay my insurance.

[@angstvision7108]

I've found this works in relationships. Like if one is pursuing a relationship with another to no avail, realize it's time to cut the strings and let go. Just like people "we've been together so long" but are going nowhere. It's better to let go.

[@ThePeterDislikeShow]

Question: is there a way you can, BEFORE you invest in something that has sunk costs potential, to hedge or insure against sunk costs to make it less painful when you do have to bail? Say *before* you go into a career or PhD program, what can you do to make it easier or less painful to bail when things go south later on? This is something I rarely hear addressed when people talk about the fallacy.

[@ThePeterDislikeShow]

Do you have a solution to this question I asked 4 years earlier? Still have no answer.

[@childofafrica-masteroftheworld]

I have experience on this. I quit a programming degree midway to do project management, and I'll never regret it. I found programming to be mind-numbingly tedious and a career doing just that seemed like hell on earth to me. Should I have continued just because I'd already started? It would've been another 2 years of my life wasted with no satisfaction at the end. This isn't about quitting when things get hard. It's about weighing up the value of finishing against losing the time already spent.

[@classicteachings]

Absolutely brilliant. Thanks for bringing this thought and behavioural pattern to my awareness so unpretentiously. Impressive.

[@bakerdesmoines]

I came across this video yesterday-in time to make an important decision. Thank you, Julia Galef.

[@Paul_Wetor]

The book "Quit: The Power of Knowing When to Walk Away" has this story (summarized by someone else): _Guides leading groups of people to summit Mount Everest know there is a turn-around time of 1pm; no matter how close you are to the summit, you must turn around by 1pm to descend safely to base camp. In 1996 three men, 300 feet from the summit, “obeyed” that “rule” and lived to climb another day. One of the most experienced and well-respected guides in the world, Rob Hall made it to the summit by 2pm but waited for a straggling client to arrive. They both perished on the descent. The two men who died were seen as somewhat valiant for not giving up; the three who lived by being cautious became largely invisible to the public. Not heroes, but quitters._

[@Quinten_]

Clicked on the lady, stayed for the brains :)

[@dirtyeffers2914]

she´s gorgeous

[@Timkast]

I don’t know if I’m allowed to say things like this anymore (2021), but here goes: Julia Galef, you have a magnificent intellect, are a razor sharp communicator and a gorgeous person. I feel like an improved human after I watch any of your videos. Thank you.

[@kobayashimaru8114]

Soo DON'T finish what I start? Roger that. (Dad's in graves everywhere rolling over)

[@ps.2]

If you've put 5 months into a project and you think it will take 1 more month, the question isn't "will the end result be worth 6 months of my time" but "will the end result be worth 1 month of my time". Those two questions may have different answers! But in fact only the second question matters, because those 5 months you already spent are gone and nothing will get them back. If the end result is worth 1 month of your time, then it is worth finishing, even if in the end it was a mistake to put 6 months into it. But if the end result is _not_ worth 1 month of your time, then it's _not_ worth finishing, no matter how many months or years you put in already. And *that's* the unintuitive part.

[@brotendo]

I feel sorry for what little brain cells you have left.

[@zeroceiling]

Peter Samuelson ...well stated!

[@richc9631]

@@brotendo I think he's joking

[@byron2521]

As someone who is older, with more life experience, that "sunk cost" fallacy cuts both ways. It's often a gray area and your decision to "cut your losses" may cost you more than what you perceive as losses due to sunk cost fallacy. Ironically creating another sunk cost fallacy. Using her same example. You work a job for 20 years, it sucks so you want to leave. You decide to follow your dream and go back to school. Things to consider. The obvious is the cost of school worth it? But, what most people don't consider is the loss of job experience. I think that's actually more important than the school debt. Of course when you're young experience doesn't mean as much. I guess as far as career goes you really have to balance 4 things. Sunk cost (how much you got invested), your age, how much it will cost to change (potentially creating a 2nd sunk cost), and finally will you lose too much experience in the time needed to make a change? (a sunk cost often not considered) I'm 53, have 2 college degrees, I'm very aware of the sunk cost fallacy. Something I have to consider several times in life. Just saying it is not always an easy decision to just cut your losses. If I were 20 again.....sure!

[@folumb]

I'm so ashamed at how nasty the comments are on this of all videos. Can't we appreciate her wisdom without commenting on her looks? I don't know if girls post comments like this on videos of attractive men talking about intelligent things but I've personally never seen it. Why do guys have to comment on her looks? People watching big think videos presumably like to think critically about the world so why don't us guys think critically about the reasons (rational and irrational) we perceive messages from women differently and do our best to remain objective? The comment section would likely be much more enlightening if she was a man since attractiveness wouldn't distort the message and that is pretty sad/irrational

[@coreycox2345]

She does seem pretty and smart. How is it insulting to compliment a woman on her looks?

[@cbarlow3]

Yes, she does seem pretty and smart. The problem is how many people feel the need to comment on her looks as though that is the main value in the video (do you have a reaction to her THOUGHTS you'd like to share?). Additionally, many of these comments about her looks don't sound like compliments to me at all. They sound like dysfunctional attitudes towards women. Yes, I'm talking to you, Eddie Wu.

[@50iraqidinar]

*Context* is a wonderful analytical tool when you start incorporating it into your daily life. Empathy, too! I'm not a woman, but let me take a wild stab in the dark and guess that, given how the value of women in society is often limited to a narrow range of domains (motherhood, marriage, housekeeping, sexual objects), women in professional fields MIGHT... just maaaaaaaybe appreciate being complimented for their intellect *without* being reminded that men are constantly looking at them as a pretty face first, a scientist second. If I'm wrong to assume that's the case, do let me know. But it's a fairly reasonable hypothesis, don'tcha think?

[@vandertuber]

It's ok to tell her she's pretty. Just don't do it in a creepy way. It's definitely ok to compliment her work as well.

[@dragoncurveenthusiast]

MorsInvicta As a woman, I can tell you that you hit the nail on the head. I know women who always appreciate a compliment on their look (as long as it's done in a non-creepy way), but I have always appreciated compliments on my brain/mind/thoughts much more than those on my looks and I know that many other women feel the same way.

[@frajyassinelakhal9180]

that's an oversimplification of the career problem which was the example. We have to assume that the career path that you have spent 10 years in leads to nowhere and that the deviation from it will bring up improvements to your professional life. We have also to consider other facts like spending 10 years doing something probably means that you mastered it and so on...

[@pmwilliams123]

The economic jargon for this type of optimization is "Decision Making at the Margin" with the general advice to only do more of x if the Marginal Benefit of another unit of x is greater than the marginal cost of another unit of x. Sunk costs do not count in marginal cost, so they are ignored. In estimating future values, some people consider the asymmetric nature of upside and downside risk, and this can lead to the completion of a project if the upside (though not assured) presents significant potential for gain. Lastly, some issues in completing degrees involve benefits of the 'signal' involved in completing projects. In such cases, the signal on a resume, as interpreted by a potential employer with limited information, may have a value even if the applicant is pursuing another career.

[@crazyprayingmantis5596]

How many clergy do you think go on preaching after they've lost their faith that are victims of this fallacy?

[@cawfeedawg]

All of them

[@jeffallen8181]

Cawfee Dawg I wouldn’t say all of them but a lot of them.

[@b0mazor]

I experienced this chasing my pilots license. It was a hard break. I really wanted to get my commercial license but could not afford and the longer I held on the more grim the bills came in. I eventually gave up to cease the debt accumulation and I'm finally almost debt free. I'm sad I'm not a pilot but finally healthier coming to grips with reality. Either way if I hung on id never make it with my finances.

[@boldvankaalen3896]

The opposite is giving up when you are very close to reaping the rewards of your big investment. The remaining investment is actually quite small, the reward is big, but it feels like the remaining investment will be as big as the investment you have already done. Is there a term for that?

[@chuckbecker4983]

Jimmy Buffett, 1981, "It's my Job." That song radically changed my life for the better. As individuals, we have to have the introspection to understand what "happy" means to us. For me, "It's my Job" gave me an external validation that earning the respect of those who are respected, sticking to commitments, and making each investment of my life work toward the future was where I would find happiness. There were many times that I wasn't "happy" in my job, but looking back on the arc of my life, those sources of happiness I mentioned have more than made up for the brief period of unhappiness. Most people are not very wise about themselves. The message should be to first, get to really know yourself. Then, let that guide your decisions regarding course changes and sunk costs. Sometimes our apprehension about forfeiting sunk costs is simply our better, inner-self whisper wisdom in our ear.

[@sinyud]

Sticking with an unfulfilling career one has invested 10 years into is, often, a decision between maintaining a level of income vs starting over at a lower income in a new field. And sticking with a bad book is more about seeing if things get better. The sunk cost example that hits home for me is about over eating at an all you can eat buffet. I eat till I’m sick because i gotta get my money’s worth.

[@swedensy]

Who is this beautiful women?

[@50iraqidinar]

Is that your idea of a joke?

[@vandertuber]

NOT funny !

[@quitequiet5281]

Sunk costs and politically driven decisions are frequently connected. This is frequently the inertia behind bureaucracy and maintenance of fallacies. The status quo is most often involved in sunk costs seen as a investment and then becomes a face saving manipulation in order avoid the mistakes being recognized as mistakes.

[@hawk0485]

Religion.

[@basselsalah4604]

+Tiwaking “Tiwaking” Tiwaking haha what a funny twat

[@basselsalah4604]

what a funny guy :/

[@basselsalah4604]

that likes his own comments

[@miniwarrior7]

I've believed I it my first 17 years might as well not stop

[@blueq4324]

Sometimes you don't know what comes from your future, things may not be as transparent as a store you already know is closed. I'm glad she mentioned it later in the video! The counter could still encourage ignorance

[@sherlockholmes6990]

I'm a huge fan of poker, and it can be such a heuristic for our lives. How our minds handle things is very acute in poker and becomes very apparent. In poker, the notion is "throwing good money after bad" which is to say that one stays in a hand because they've already put money into the pot, even though they know that the chances that they're beat are pretty high.

[@maxcat479]

My understanding of "Sunk Cost" is that the used cost in effort or money is already spent and should not be part of any future decisions making. Fells like the opposite of what you are saying. The ten blocks walked (sunk cost) should not be part of the reasoning on continuing the journey to the store. In this case the logical answer is to turn back.

[@prjahelka]

The sunk cost example I remember from school had more to do with you've already spent all X dollars to win a contract. How much more can you spend? The answer is X which is why sunk cost is very counter intuitive.

[@downhillphilm.6682]

I understood this a long time ago, I dropped out of choices as soon as they only offered diminishing returns. I have never ever regretted those kinds of decisions.

[@madderz69]

Also since this video offers a solid simple example to prove its point, i'm going to offer a similar example to prove my point. If you were going to the store (11 blocks away) to get fruits, vegetables, and meat. 10 blocks through you remember the store is closed, but you also know there is a butcher shop close to the store. Would you abandon your trip in an all-or-none response? Or would you get the meat and then figure out a grocery store that might be open to supply the fruits and vegetables?

[@illwill2453]

Already had my own private lingo for this one - had never heard of the sunk costs fallacy. "Don't commit to a mistake." Also, the military has a saying - "If you are going to fail, fail quick." (So that we can get back to the problem with another solution quickly.)

[@JasonLee-fc2ot]

There are more advanced concepts than sunk cost, such as reputation and keeping of promise that one makes to self or others. Finish what you start - there maybe exceptions but there’s a reason that wisdom has been passed down to us.

[@Uncle-Ruckus-]

This was me with an ex of mine. There were red flags even at the beginning and I let them slide for a literal decade before I finally came to my senses It's weird to go from loving someone with every fiber of your being to wishing you never knew they existed.

[@npatrcevic]

So, here is a question. I'm a graduate of mechanical engineering, currently working as a HVAC designer. I have 1 exam left with law school, which I started before engineering, and have absolutely no plan on working as anything regarding law. The last exam will cost me a lot of time and money. Do I work at it or drop out now?

[@derrickhand4214]

In your two examples, I would counter that had you continued to the store you may have found that the owner was there and that he was eager for your business and invited you in to make your purchase or you may discover once you arrive that there is other business in the area of the store that you can do, saving another trip in the future. In that case your "persistence paid off." Changes in course are complex, especially with regards to occupation. Quitting a job because you don't feel fulfilled can cost you your income which most people need. Many people work at jobs or for people that they hate because quitting would ultimately be more painful. The fallacy of the Sunk Cost fallacy is that you rarely have a clear dichotomy in your choices.

[@Whyiseverythingtaken1]

The boundary between whether the efforts or maney invested is sunk or not is thin. Mostly people continue because they feel they're better off if they keep at it.

[@gettinthingsdonemusic9876]

Interesting topic, but I think that this thinking may slightly overlap with another viewpoint/ way of thinking and it should be brought up. I agree 100% with your description, but I would bet that there are people who may use this thinking in order to justify their lack of discipline when it comes to sticking it out and working through the difficult times and quitting. There is a fine line between determining what is the best choice for you and your actions, and sometimes that means finishing what you started even though it sucks and is difficult. Just something else to consider.

[@Willsturd]

In the example she gave, she said if you knew the store was closed, the sunk cost fallacy is that you continue to the store even though you knew it was closed thus adding on to your cost. It does not mean give up or getting bored. It simply means, when you know you have lost, the best approach at times is to stop losing. That is my interpretation.

[@gbkooper]

Have to be very careful about the reason for abandoning a path, not so easy to decide. Many of the things of worth require perseverance even if you don't enjoy it any more or sometimes not see the value; it's very complicated.

[@RossCampoli]

Spectacular explainer!

[@ytubeanon]

I can see this applying to gamblers especially those who've been on a losing streak. However, it's also true that her 'closed store' analogy could be a bit misleading, as it's 100% certain it will be closed. In real life, very rarely can outcomes be perfectly known. Many times people will try something new that they initially find unenjoyable, but for which they discover a real taste for eventually. Unknown musical genres or cultures are a perfect example and often developing an adult taste for things won't happen quickly. So, when using suck costs fallacy, which is a valid idea, it's important to also balance the values of patience and being open minded.

[@iAmeer]

Yes what she did was 'false equivocation' she used this fallacy in order to say sunk cost is a fallacy (it is not)

[@9ust4v02]

Totally agree with the concept although the name is misleading. Sunk cost means it's already spent so you should not consider it in further decisions. What you describe as the fallacy is the exact opposite

[@caof2005]

It is interesting the career example you mention, however I would say that it is not always easy like that, for instance if the career I chose is Medicine and I'm just about to finish or start my thesis, but the thing is that I really love is poetry or media (TV), maybe it will be worthy to stay until the finish or wait a little more, why? May be for the pay, may be for the satisfaction of saving lives, or maybe for the realization of having great endurance. Who knows???, The point is that until you experiment something on the really near future you will not realize that many of the steps you took in a specific endeavor will not make sense until you finish, take for example the sprinters Olympians, 4,8, 12 or 16 years, i.e. A complete life dedicated to train just to have the possibility to run a race that will endure 10, 20 or 45 sec or less. Very few can say they become Olympians, and from those few just a little small group will win be in a final or win a gold medal,.... but at the end, and in case they didn't win, you can ask them if they regret to invest such amount of time and effort just to know that at the finish the didn't win the gold, ... I bet you most of them will say "not at all"... but it was not of just for their passion to a specific sport, but because they realize that in order to be there, they had to demonstrate they were the best of their university, the best of their state, the best of their country and probably they had to set a national record and win other events such as central american or panamerican games. besides the fact that was an honor and a privilege to be ones that represent their country, besides the opportunity to hang out with the best healthiest athletes in the world for two weeks... so I may say it depends on your endurance and strength of will.

[@MrKrtek00]

It is a similar thinking like what people do during dollar bidding.

[@stephenjackson7797]

The sunk cost fallacy comes from accounting. The fallacy is throwing good money after bad. But it's usually in the context of pursuing a goal. If you've spent money on something and you find a cheaper way to get that thing, you use the cheaper way and abandon the original way. Example: I'm an electric utility, I need more generating power. I start building a nuclear power plant because that is the cheapest way to get the power I need. But a fourth of the way through, along comes a new technology that cheapens the ability to build solar power plants. If the cost of starting from scratch and building a solar power plant is cheaper than finishing the nuclear one, then I switch to the solar option because I now have proof that I'd be throwing good money after bad if I continue building the nuclear one. The goal stays the same but the method of reaching it changes.

[@philinconcord]

When I was in college, I wanted an easy course to balance my difficult engineering classes so I saw a class in Philosophy and immediately registered for it. I thought it would be great... a group of students and a professor sitting around debating lofty ideals. Well, I didn't read the fine print. The 'easy' Philosophy course was Intro to Logic and I had no idea what I was in for. The first week was brutal and I could have dropped the course but by the second week, I had become intensely fascinated. By the end of the course I was totally sold and have gone back to things I learned in that course many many times over the past 40 years. So while I agree wholeheartedly with the logic (pun intended) expressed in this video, the counter argument is that sometimes you have to wait before the full value of a particular path becomes evident.

[@tchai91]

I completely agree, but the walking to the store analogy doesn’t really work, because nobody pays you to walk to the store. Many people know 10-20 years into their careers that what they’re doing is not their passion, but at that point, if they’re on a decent salary and have financial commitments such as a family and a mortgage, it sometimes makes more sense to stick with what they’re already doing and take meaning and pleasure in life away from work.

[@FeederForLife]

But she doesn't "propose that the success or reward of career or relationship is as easily defined as the operating hours of a store". She merely states that people often encounter situations such as (just for examples) being aware that their job/relationship is unlikely to go anywhere good to the point where they would end it and try to find something else except for the fact that they've spent time in it already. That is the sunk cost fallacy. It involves likelihoods, not certainties.

[@pantheater1]

Good topic but poor examples. The idea makes more sense applied to investment decisions that have fewer secondary consequences to consider. Should I hold stock X or sell it. Should we continue to invest in factory Y even though market demand has changed?

[@FrostyWitchGoddess]

Not liking her examples does not invalidate what she's saying. Sunk cost theories apply very well in economic situations - imagine you are planning a wedding for a date in the future, you've paid a non-refundable deposit on your venue. Soon, you find out no one on your list can attend on that date. Going forward with the wedding on that date bc you already paid the deposit would be silly. Picking a different date is better, but ppl are reluctant bc they already paid the deposit. Get it?

[@mccloysong]

It is never too late to switch. Make the move. Thanks for this

[@sapphyrus]

My issue with the preposition this fallacy is that many examples include unfathomable outcomes and treat them as perfectly measurable. Like that book example, you can never know if the book turns out good and be worth it in the second half after the build-up in the first half. Maybe it will, maybe it will not. You can't know the outcome halfway. Walking to the closed store is a different example since the outcome is already known. Life is full of immeasurable, unfathomable things like that. You might end up as someone who never sees things done if you treat everything like this.

[@5Gazto]

Now the question is, how to determine whether what you have worked on for so long is a mistake or not?

[@jillting1852]

Do u feel its a mistake!? If yes, then y

[@richvail7551]

How would a person know if they are using sunk cost fallacy as something that is holding them back vs quitting certain things and using the concept of sunk fallacy as a way to justify an unhealthy relationship with pushing through the difficult times? Not all health decisions should be based upon avoiding certain emotions or uncomfortableness’. Sometimes pushing onward is what builds one’s character so that later on when they need strength to overcome bigger obstacles they have already done the leg work by not avoiding suffering and clinging to the idea that life must be happiness all the time.