When clinging to the past becomes a factor in making decisions about your future, you run the risk of being derailed by sunk cost mindset.
Have you ever stayed in a relationship beyond its use-by-date?
Do you keep clothes you have not worn for years?
Are toxic people from your past still in your life today?
There is no shame in saying, “yes” to any of this. We are all prone to stick with people and things that no longer serve us.
Sticking with something that no longer serves you is known as a sunk cost fallacy. In economic theory, sunk costs should be ignored because nonrecoverable costs cannot be reinvested.
Of course what works in theory is often easier said than done in real life!
When clinging to the past harms your future.
We think we make rational decisions based on the future value of something — in truth, our decisions are often tainted by our emotions.
The more time, money and effort invested, the harder it becomes to abandon your investment.
When clinging to the past becomes a factor in making decisions about your future, you run the risk of being derailed by sunk cost fallacy. — David McRaney
Consider the opportunity cost as you cling to your investment — whether this is a relationship, a job or personal items.
Are you are more concerned with what you have “paid” for something rather than what you will get out of it in the future?
If so, you run the risk of harming your future due to a sunk cost mindset.
The psychology of sunk cost thinking.
Here are some of the reasons why people get derailed by sunk cost thinking.
- You wish to convince yourself (or others) that you’re not wasteful.
- You cling out of regret of what might have been.
- You are delusional about the potential to recoup on your investment.
- Your ego gets in the way i.e. you are too proud / ashamed (take your pick) to admit you have made a poor investment.
- You have an emotional attachment that prevents you from moving on.
Understanding the psychology of sunk cost thinking can help you to make rational decisions rather than be trapped by your emotional investments.
How I moved on from a sunk cost mindset.
Recently I read the runaway bestseller, The Life-Changing Magic of Tidying Up by Japanese organizing consultant Marie Kondo.
Ever wonder why you can’t let something go?
According to Marie Kondo:
We hold onto things for one of two emotional reasons — a fear of the future or to preserve the past.
A fear of the future or to preserve the past ~ wow, that’s sunk cost thinking in a nutshell!
Impressed by the logic, I have applied the “KonMari” method to improve several areas of my life.
First, I did a massive purge of my closets.
It was brutal. I had clung on to all sorts of items cause, you never know, I may lose 5kg or it might come back into style.
Since the purge, I have gained more than 10 minutes in the mornings. Everything I reach for in my closet now fits me and looks stylish!
Next I targeted my bookcase.
I have had far too much collateral invested in the persona of being well-read. In reality, most of my books have sat unopened for years attracting dust.
Yes, I am well read — but I do most of my research and reading online. I do not need to hang on to outdated textbooks in this digitalized era!
Then I tackled social media.
Until I have “hid” people whose updates I found annoying. Lately I did a clean sweep. Anyone whose updates do not bring me joy ~ Bam. Gone. Deleted.
The most notable positive impact ensued from deleting Donald J. Trump. I wish to stay abreast of US politics but the extent @realDonalTrump dominated my Twitter feed was surreal.
My social media feeds have gone from spewing negativity to inspiring me everyday ~ Amazing!
Sometimes even the smallest change make a huge difference!
Finally I addressed unfulfilling relationships.
In the past I hesitated to nix “dead as doornail” friendships. With new resolve, I have become more discerning (aka hard-edged) — I prioritize my time and energy for those who return in kind.
In short, I no longer bang on doors that remain closed for whatever reason out of a sense of duty and obligation.
Cutting losses does not make you a failure, it makes you a realist.
If you do not receive the expected return on your investment (from a job, a relationship, designer clothes, gym membership, books or whatever) why continue on the same path?
Pursuing something that makes you unhappy is only going to make you worse off. You’re digging a deeper hole.
Be honest with yourself and motivations.
Then consider alternatives.
A word of advice; when you cut a sentimental cord do it decisively. Any regret you may feel will be over faster than you expect.
You don’t need to justify past decisions to move forward in your life.
Don’t hang on to things out of a fear of the unknown. Making space in your life (and your closets!) is a necessary step, to let new things — wonderful things — enter.
I am not suggesting to throw away serious relationships, careers or that dress you have never worn. But taking time to examine your logic for past choices might steer you to make a better decision next time.
Thank you for reading!
References: The Interpersonal Sunk-Cost Effect, C. Olivola, Psychological Science Journal, May 2018. The Sunk Cost Fallacy, D. McRaney, 2011. The Life-Changing Magic of Tidying Up, M. Kondo, 2011.