Have you ever stayed in a job just because you had invested too much effort and time? Or kept reading a book that you didn’t enjoy just because you had spent hours on it? These are classic examples of the sunk cost fallacy that secretly shape our life decisions.
The Sunk Cost Fallacy
The sunk cost fallacy is a common psychological tendency to keep on investing time, money, and energy into something just because you have already invested so much in it. In other words, even though past costs are unrecoverable, we let them influence our future choices and are still willing to increase our investment. Some examples of the sunk cost fallacy include playing an instrument you no longer enjoy, staying in a career because you had invested too much money, or holding on to your long-term relationship even if it’s not good for you.
Why We Keep Holding On
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Fear of losing what we’ve invested
As our investment in something increases, so does the potential loss if we walk away. This makes us stay committed by hoping for future gains and fearing the loss of what we’ve already put in, especially when that investment feels significant. -
The need to justify our choices
The deeper our commitment, the harder it becomes to admit we were wrong. As we continue investing, we try to justify our initial and ongoing decisions, even when they no longer make sense. -
The influence of social expectations
Social expectations play a major role in driving the sunk cost fallacy. When our reputation is at stake, we may feel social pressure to keep going. The fear of being seen as a failure by society can be so overwhelming that it strengthens our attachment to poor decisions. -
Dealing with internal conflict
When our beliefs and actions conflict, it creates psychological discomfort. To reduce that tension, we might stick with our earlier investment instead of facing the uncomfortable truth. -
When emotions get in the way
Emotions are a primary factor in decision-making. Over time, we accumulate many emotional memories and form deeper connections. The longer we stay as a part of a task or project, the more we become emotionally connected. This emotional attachment can make it even harder to step away, even when letting go is the better option. -
The hope that things will work
Admitting that we have made a mistake and regretting our decisions can be an intense experience. We want to believe that things will eventually work out and our investment wasn’t for nothing all along. This hope can cause us to ignore red flags and keep investing in something that may not improve.
How Age Influences Our Decisions
A study has shown that, unlike adults, children are less affected by their emotions when making decisions. As we grow older, we have more experience and a chance to develop deeper connections. We also tend to have more fear of social judgment, which makes it more difficult to let go of things emotionally (McCormick & Telzer, 2024).
On the other hand, another study found that older adults are actually better at avoiding the sunk cost fallacy than younger adults. They were more likely to make logical decisions and let go of poor investments (Strough, Karns, & Schlosnagle, 2008). This might be because, as people get older, they prioritize enjoying life rather than forcing things to work. They also have less fear of failure. Older adults might care less about social judgment and more about what’s actually best for them.
Avoiding the Sunk Cost Fallacy
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Focus on the future
When we have to make a decision, we often get stuck with the thought of how much time, effort, or money we’ve already put in. However, holding on just because we’ve already invested often causes more harm than letting go. Instead, try asking yourself what opportunities you might miss if you keep investing in the situation. See whether it still matches your long-term goals and what’s actually best for you moving forward. -
See the situation clearly
Sometimes it becomes harder to analyze a situation you are in objectively. Taking a step back allows you to pause and reframe. This allows you to assess your current situation from a different angle and see with better clarity. Imagining yourself giving advice to a friend might be helpful. -
Reflect and grow from experience
Reflect on past experiences so you can develop and make better choices moving forward. Ask yourself: What went wrong in the past, and what can I do differently next time?
In Conclusion
Everyone keeps emphasizing persistence, like it’s the only way to achieve your goals. You constantly hear, “Never give up! Keep going!” But the truth is, no one but you knows what’s truly right for your life.
Realizing that the path you’re on no longer serves you, or maybe never did in the first place, is not a failure. The cost of walking down a road that leads you nowhere is often far greater than the difficulty of changing the path.
References
McCormick, M., & Telzer, E. H. (2024). Emotions before actions: When children see costs as causal. Cognition, 242, Article 105774. https://doi.org/10.1016/j.cognition.2024.105774
Strough, J., Karns, T. E., & Schlosnagle, L. (2008). Are older adults less subject to the sunk-cost fallacy than younger adults? Psychological Science, 19(6), 650–652. https://doi.org/10.1111/j.1467-9280.2008.02138.x