You cannot recover yesterday’s investment by wasting tomorrow’s energy. This is an important life lesson that I learned after spending way too much time chasing a losing proposition, thinking that I could not stop because of everything that I had already put in. This is the sunk cost fallacy. A sunk cost is something you have already spent and cannot recover. It might be money, time, effort, or emotional investment. The fallacy occurs when you allow that unrecoverable investment to influence what you decide to do next, rather than evaluating whether continuing makes sense.
This is a tendency that most of us share. We put time, money, and energy into something, and we expect a return. We do not get what we hoped for, so we continue to pour our resources into it, hoping that we will eventually get the return. This underlying belief that you have already put so much into it that you cannot quit now is what results in greater losses, lost time, and tremendous regret.
We celebrate persistence. We admire people who refuse to quit. We teach our children that perseverance is the key to success. Yet the sunk cost fallacy suggests that sometimes the very characteristic we admire most, persistence, can become our greatest liability. So the important consideration is why you choose to continue.
Do you honestly believe that the future reward justifies the additional investment? If so, then persist. However, if you are saying, “I have to keep going because I have put so much in,” then you are in the danger zone. You have already lost the time, the money, or the effort. It is already spent and gone.
The key question is this: knowing everything you know today, would you choose to start this again? If the answer is no, then cut bait now and stop falling into the sunk cost fallacy.
