Ever seen someone cling to a previous choice despite oodles of evidence that it was the wrong way to go? You may have done it yourself. I’ve held onto losing investments and kept working on hopeless projects, even when I knew better.
It’s not just stubbornness (although one or two people have occasionally intimated that I have more than my share of that). It’s also our dislike of something called sunk costs. These are the resources (time, money, effort) that we’ve already put into a project, and we often care far too much about not wasting them. Stopping something before we get any benefit from it feels like a loss (and we’re really sensitive to losses, as I’ve mentioned before) – even though putting more resources into that project could mean an even bigger loss.
This tendency can get in the way of our world-changing plans. Let’s say your organization has been funding an expensive program for several years, but it’s not producing the desired results. You know a better way to get those results – but the organization is determined to “get its money’s worth” out of the current program and won’t give up the funds.
It applies at an individual level, too. You’d like someone to join an activist organization with you, but he’s too busy writing letters to the government, even though the previous hundred letters haven’t accomplished anything. You suggest a joint vegetable garden with a friend, but she wants to finish designing her perfect composter first – even though better ones have become commercially available.
Even when we know we’re being irrational, it’s hard to ignore sunk costs. However, a recent article suggests one way to make it a little easier.
Daniel Molden and Chin Hui asked a third of their online study participants to spend five minutes writing about their personal duties and obligations, another third to write about their hopes and aspirations, and the remaining third to write about their typical daily activities. Then, in what was supposedly a separate study, all the participants were asked to imagine that they had to decide whether to invest a large sum of money into a project that had already cost a lot and produced very little.
Molden and Hui found that writing about their hopes and aspirations made people less likely to keep investing in the unproductive project. It appears that concentrating on potential gains and benefits – what psychologists call “adopting a promotion focus” – makes it easier to ignore sunk costs, especially compared with thinking about potential losses (adopting a “prevention focus”).
So, if you’re up against other people’s sunk costs, try turning their minds toward the benefits of a new choice, rather than the losses associated with an old one. Remind them how much they could accomplish on a new path. Focus on what they stand to gain.
Try it on yourself too, if you need to. Sunk costs are in the past; you’re making a decision about your future. How much better might it be without that sinking feeling?