The Sunk Cost Fallacy and Why It’s Ruining Your Life

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There is nothing wrong with changing your mind about something. The problem is that people are less forgiving when it comes to adults. The world has an image of the responsible adult who has their life figured out. When in reality, no one relates to that narrative. Even the most successful people think that they are not good enough.

If it was a kid who says they don’t want that newly bought dollhouse anymore because they like cars and robots better, people don’t stress about it. The more people age, the heavier the responsibility becomes. When the same kid goes to college and decides to shift out in the middle of his program, there are some questions but mostly, it’s not that big of a deal.

Now, when you, a full-grown adult decide you don’t like teaching anymore, you will hear so many objections. People will tell you that you just have to give it some time, maybe you’re just losing your inner fire. Or that you are wasting money and time thinking of exploring a new career. You’ve already come so far so why stop here? Now, this is how twisted people’s view is of the investment of money and time.

What is the sunk cost fallacy?

The sunk cost fallacy is also known as the Concorde fallacy. This is a concept used in economics that applies just as well in your life. Put simply, a sunk cost is money (or any other investment) that you cannot recover anymore.

For example, you have been paying for your insurance premium for one year now. You have nine more years to go. And then, you find another insurance that fits your needs better and with a more affordable premium and payment terms.

Most likely, you will have a hard time deciding to let go of the first one and get the other insurance. Why? Because you have already paid one year’s worth of premium. That’s already a sunk cost. You cannot get a refund from your first insurance provider. Even if the benefits of getting the other insurance are better, you will still feel bad about letting that one year’s worth of premium go.

How does this affect your decision-making?

Well, it’s obvious how. You cling on to things that don’t serve you well anymore just because you’ve already invested in it. The most common example of this fallacy is movie tickets. You buy movie tickets only to get sick on the day of the show. Why do you still want to go?

The sunk cost fallacy is everywhere in your life. Be it buying something you do not need just because you are already at the mall. Or clinging on to toxic relationships. You don’t want the five years to go to waste so why not just endure another five years? This doesn’t sound smart, right? And yet, many people think this way.

two people during a job interview

How should you approach a career change, then?

Think of what could go right

Instead of focusing on the things you cannot recover anymore like the years you’ve spent in your career, why not think about all the good things that are yet to come? What if you will be happier if you pursue your dream of becoming an artist? What if your real purpose in life is coaching and training remote employees?  This career change could be the best decision of your life. Doesn’t that excite you?

Think of sunk cost like it’s the tuition fee in life

If you just change your perspective in life, you will never regret a thing. When you buy ice cream and it turns out it’s to be the worst flavor in the world, that’s not wasted money. At least now, you know to never get that flavor again. Right?

If you think that teaching is not for you anymore, the years you spent in the field of education will not go to waste. Down the road, you will find situations where what you learned will come in handy. If not, at least you know now that teaching is not for you.

Sometimes the price to pay is quite big. But other times, the price you pay for staying is bigger. Don’t mind what other people say. It’s your life and if you are not happy anymore, you are the only person who can do something.

Life is really just a series of trial and error. Don’t cling to things for the wrong reasons. You are ruining your life by being content with asking what-ifs and never actually tying.

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