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Show notes

A sunk cost is one that can’t be recovered - the money, time, effort or whatever else is gone and there’s no way to get it back. Therefore the sunk cost fallacy is where a person lets a sunk cost determine their present and future actions.

There are some examples with relevant references here.

Alex references opportunity costs. These are the opportunities you give up when you make a choice. For example, if you spend a day shopping, you can’t also be hiking in the woods at the same time. If you spend £10.00 on a take-away you don’t have it later to save towards a holiday. And vice versa.

Our tips:

• spot sunk cost fallacies by listening for when you tell yourself you “might as well” or “if I can just sort out this one thing” or “if I keep trying it will get better” - if you catch yourself at these ask yourself what’s the best case scenario from carrying on, perseverance is not always a virtue;

• ask yourself what you’d say to a friend in your situation;

• ask yourself, if a friend had lost out like I have, would I carry on what they’ve started;

• think about what else you could be doing with your money/time/energy/whatever, so you don’t regret what you’re giving up, but instead see yourself moving on to something better;

• take an active decision that something is finished because you say it is.