Perseverance is a blue chip trait, because life will inevitably become difficult. The only thing to do, during those moments of difficulty, is power through and grind it out until the end.
Unless of course, that’s a completely stupid move. Which it just might be. Take, for example, continuing to invest resources into a failing decision solely because you’ve already invested resources. In business, this is called the sunk cost fallacy. It’s an attempt to undo the past and recoup the losses, but it’s a futile effort, because the time has passed. The costs are gone, and, as the name implies, says JoNell Strough, professor of psychology at West Virginia University, “it’s sunk.”
The sunk cost fallacy is not just about money or business. It can also apply any time where time and energy are spent on something that isn’t necessarily offering any rewards. It’s small stuff, like not walking out of a bad movie or not dropping a hobby. And it also applies to personal, more unwieldy stuff, like staying in an unfulfilling job or unsatisfying marriage.
The reasons for sticking it out are similar. Who wants to be a quitter? There’s a personal conviction in sticking to something. Then there’s not wanting to feel like any time or money has been wasted. And then there’s ego.
“Nobody wants to admit they made a bad choice, and maybe I’m not as good as I thought,” says Daniel Molden, associate professor of psychology at Northwestern University. Instead, per Molden, the seemingly plausible but irrational response is to double-down. The self-confidence provides a kind of cover – yeah, ego again – that you’re just dealing with a rough patch and you can fix the problem. “If I stick with it, it will turn around, and it was the right choice,” Molden says.
It’s easy to become mired in the sunk cost fallacy. Even mice, per new research, has shown that have a hard time backing out of a decision. The long-held understanding is that when a person feels responsible for the situation — picking the movie or the business investment — stubbornness kicks in.
But Christopher Olivola, assistant professor of marketing at Carnegie Mellon University’s Tepper School of Business, has shown in his recent research that when there’s another person in the equation, the fallacy also activates. It could be a relative giving you an ugly sweater for Christmas, compelling you to never throw it away. Or even a stranger making a cake for a party, compelling you to eat a piece. Bottom line: When there’s the perception that someone has invested time and/or money, people feel a commitment, he says.
The sunk cost fallacy is certainly in play with jobs and relationships. When situations are defeating and offer no hope for a turnaround, it’s easy to remain in them if only to want to get those years back, to ensure you’re making good on your investment. But there’s an added layer in these instances, which is outside the fallacy and makes them less clear-cut. A job gives you a salary that helps support your family. Your marriage gives you a family, and, as Olivola says, “Kids are not sunk costs.”
In order to avoid the sunk cost fallacy, in general, you need to forget what the past has brought and instead focus on the likelihood of a future payoff and where your time and effort are best spent. That’s simpler, of course, when it’s 30 minutes into a movie. Not everything is on a reel.
“Lives become intertwined. There’s not just an emotional investment, but a structural commitment,” Molden says. Marriages are hard to untangle, as they call for the need to sell a house, divide up bank accounts, and choose friends. “Even if you’re not satisfied, that’s a factor in your commitment,” he says.
Molden adds that what helps is shifting from a security-oriented mindset to a growth one. The former fosters being too committed and seeing the danger in the unknown. In his research, Molden’s found that the latter happens when people focus on hopes and aspirations rather than duties and obligations. “You have to start to ask what you will gain by staying and what could you gain by leaving,” he says.
Strough says it also helps to think like an older person. Her research has shown that those more than 60 years old don’t succumb as much to the sunk cost fallacy. They’re less likely to fixate on things that can’t be changed. They’re also less prone to engage in wishful future thinking, she says. One mental trick is to imagine your mortality. In one of her studies, having young college students imagine not having much longer to live caused a decrease in the fallacy to take hold.
Again, there’s a limitation. A manipulated mindset might make it easier to walk away from a lame holiday party or give up a longtime softball team. But evaluations about what defines happiness are subjective and decision-making isn’t a quantitative checklist.
“It’s not easy and it shouldn’t be,” Molden says. “You don’t want people just abandoning families when things get hard, because when you have kids, things get hard. It goes for jobs too. It wouldn’t be good if it was painless to bail on these big life commitments.”