The Sunk Cost Delusion and Relationships: Effects and Solutions
In the field of economics, the sunk cost fallacy – also called the sunk cost effect – is well known. This happens whenever we double down on bad financial decisions based on past investments that cannot be recovered.
But the phenomenon does not only apply to the business sphere. You might be surprised to learn that it often rears its ugly head in our relationships as well.
Examples of sunk cost error
Christopher Olivola, associate professor of marketing at Carnegie Mellon University, offers several examples of sunk cost fallacies specifically related to finance.
You might watch the entire movie you hated from the beginning, for example, if only to justify the ticket price. Similarly, you may continue to go to the gym even after suffering a painful injury if your expensive membership is non-refundable.
“But what happens in all of these situations is that you don’t really get that money, or that time, or that effort — or whatever you’ve invested — back,” Olivola says. “That’s part of why it’s irrational.”
As a more mundane example, he points to the sunk cost fallacy as contributing to the length of US involvement in the Vietnam War. As the death toll rises, he says, so does the fear of devaluing those lost lives by withdrawing from the war without victory.
The same fallacious reasoning was also there tied to ongoing investments in fossil fuelsdespite gloomy climate forecasts and increasingly affordable energy alternatives.
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Fallacy of sunk costs in relationships
When it comes to romantic relationships, the stakes involved are not as high as some of the examples above. Most often, lives are not at stake. But the sunk costs in question—money, time, and emotional effort—still ring true.
In a 2018 study published in Current Psychology, researchers at the University of Minho in Portugal have proposed a reason why we stay in unhappy relationships. Spoiler alert: The sunk cost effect is to blame.
In one experiment, the research team presented more than 900 participants with a relationship scenario that was far from perfect. When participants were given the chance to leave this hypothetical relationship, their responses indicated that we are more likely to stay in such situations when we have previously invested significant money and effort.
A follow-up experiment in which a smaller number of participants were asked to choose how much time they would be willing to invest in a relationship revealed that we were also willing to spend more time in a relationship if more time had already been invested. Participants were willing to stick with an unsatisfying relationship almost 300 days after the expiration date, in fact, as long as that relationship had lasted a decade or more.
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Other relationships
Of course, don’t think you’re clean just because you’re single; research shows that the sunk cost fallacy digs its claws into our non-romantic relationships as well.
A few years ago, Olivola created experiments to analyze how the sunk cost fallacy applies not only to our own past investments, but also to the investments of others. His findings were published in Psychological science in 2018
“If my wife spends a lot of money to buy me a sweater and I’m really itching,” he explains, “I’m more likely to force myself to wear it to justify or honor her investment in the same way as if I myself were spent a lot of money.
But surprisingly, he found that the same mindset often applies to our friends and colleagues—even strangers.
In one experiment, Olivola asked participants to imagine that they were extremely full when a cake was revealed on a plate. Some were told the cake was not expensive, while others were led to believe it came from a fancy bakery an hour away. As an added layer, some participants were told that they had purchased the cake themselves; in other scenarios, a friend or stranger brought it.
For each of these circumstances, ask yourself whether you are more or less likely to eat a piece of cake despite being full. According to Olivola’s findings, we’re likely to snack regardless of who bought the dessert.
Psychology of sunk cost fallacies
Another example can be applied to the workplace: Even if you no longer feel like your job is serving you, you may be more likely to stay, given how much time your boss has spent training you — or given generous raises, which they gave you.
The psychology of the sunk cost fallacy is a powerful phenomenon that has been studied time and time again. But researchers haven’t pinpointed why people keep falling for it. “There are many different mechanisms that could explain it,” says Olivola. “And maybe there are multiple mechanisms.”
Based on his own research, he tends to blame our desire to minimize waste. “We don’t like to see ourselves as wasteful, and we don’t like to see other people as wasteful,” he says, though he acknowledges that this aversion is largely rooted in Western culture.
Another possible reason? We tend to open a mental “bank account” when we invest money, time or effort into something, he says. Subsequently, the only way we can “close” this account is by receiving the value of our figurative money.
“Otherwise, it feels like an unfinished business, and we don’t like that,” Olivola says.
Overcoming Sunk Cost Bias
Under certain circumstances, the sunk cost delusion can actually help you achieve big goals, like getting healthier or completing a degree. But if you find yourself fixating on past decisions you can’t change at the expense of what you can in the present or future, the sunk cost fallacy no longer serves you.
How then do we overcome the sunk cost bias? When it comes to respecting other people’s investments, Olivola says it’s important to remember that our friends and family members don’t really want to suffer for them – even if it’s something as trivial as an itchy sweater.
“I don’t think you can argue that it’s more rational to pay off another person’s sunk costs,” he says. “If you suffer, then it’s bad for two people: you and the people who care for you, right?”
But in general, just taking a breath and focusing on what will make you happiest moving forward is a great tool.
In a 2013 study published in Psychological science, researchers found that just 15 minutes of mindfulness meditation helped 77 percent of the participants avoid sunk costs. This success may be due to meditation’s ability to improve mood and reduce our focus on the past. researchers suggest.
Of course, don’t feel too bad if you’re still struggling. Even for Olivola, who has spent more than two decades studying such things, the effect of sunk costs is still incredibly overwhelming.
“Sometimes I realize I’m doing it, I realize it’s irrational, that it’s a bad idea — and I still do it,” he says. “So you know if you i can get over it, you’re better than me.
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