Sunk Costs, Like the Verb, Are Irregular

Late on New Year’s Eve, I brashly decided to drive to Charlotte, NC to attend a party. After the 1.5 hour commute, I arrived moments before midnight only to be greeted by a friend and the somber warning that cats –to which I am allergic—lurked within. Indeed, the friend himself was sitting on the porch with a slight wheeze, and had plans to leave shortly after the ball dropped. ‘But I’ve come all this way,’ I thought. ‘Surely I can’t just leave. That would make the entire trip a waste!’

I knew better than to accept this logic, but on New Year’s the mellifluous deluge of delusion exceeds even champagne’s rich flow.

The reasoning I espoused was shoddy because I committed the sunk cost fallacy. Once I arrived in Charlotte, I had already incurred the cost of the round trip (the cost of the trip back was unavoidable). These costs could not be recovered, so they should not have factored in decisions about the future. My decision to stay should therefore have been based purely on the value to me of going to the feline-filled party—as if I had been magically transported to it in the blink of an eye--and contrasting that value with the alternatives.

This fallacy is often committed when dating. The longer a couple has been together, the more they see the resources they’ve invested in the relationship as justification that it should continue. A better heuristic would be to evaluate the relationship as if those investments had never been made.

The sunk cost fallacy also emerges occasionally in policy about the Iraq War. The idea that trillions of dollars and thousands of lives will have been wasted lends the arguments against leaving a persuasive pathos, but those dollars and lives are gone, never to return. Good arguments for staying there may be, but past costs cannot be a premise. The real question is whether additional offerings of blood, toil, tears and sweat will bring commensurate benefit.

In the case of the New Year’s party, I stayed, and the cats’ dander and fluff proved largely avoidable.