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If Only People Understood What A Sunk Cost Is

Something that The Guardian’s subeditors – come along now, none of us expect the people who write for the paper to grasp anything economic like this – don’t manage. A sunk cost is the opposite of what it is being used as here:

When I’m on my deathbed, surrounded by people I love, I know the regrets that will flash through my mind. I’ll regret trying to grow my hair out as a teenager. I’ll regret spending so much time on dishwasher comparison websites. But most of all – and I guarantee that this will happen – I will regret sticking with Westworld.

Because I am still watching Westworld. Even though it is airless and overblown. Even though it is 75% smugger than it needs to be. Even though I don’t care a jot about any of its characters or mysteries. Even though the entire series annoys the ever-living hell out of me. I am still there, watching the bloody thing out of a sense of grimly resigned duty. Because, hey, I’ve watched this much so far. Westworld has become a sunk cost. There is no getting out of it now.

He’s using “sunk cost” to mean I’ve invested this much so far therefore I’ll have to continue.

Which is entirely the opposite of what a sunk cost is. The correct meaning being that what I’ve spent so far, what I can never recover no matter what I do, is irrelevant to any decision I might make about continuing or not. This is true whatever we’re talking about. That I’ve pissed away hours of my life on crap TV is irrelevant to whether I should watch more crap TV. That I’ve blown billions of taxpayer money is an irrelevance to whether I should splurge more.

The decision is about whether the marginal spending, the more I’m going to do of either time or money, is worth what I will get from that further investment. What I’ve already wasted just doesn’t come into it – it’s a sunk cost.

OK, perhaps we shouldn’t be too hard on The Guardian about this. After all, no politician grasps it either, do they?

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Hallowed Be
Hallowed Be
2 years ago

Ok the terminology is wrong. But i think he’s explaining stickiness. Which may be strictly irrational in terms of getting time back but is still a real phenomenon. I’d say one’s tolerance for a shit episode (stickiness) is some factor of all the good ones you’ve seen. It’s like an international batsman that’s had an extended run of fails but the selectors stick with him because of his high average whereas someone with those results soon after selection would be dropped. Stuart’s quite right that westworld has gone all screwy. Completely unsure of what any of the characters intentions are… Read more »

Spike
2 years ago

His use of the term is not mistaken. Governments (especially advocates of government passenger rail in a region where the population is so dispersed that it doesn’t make sense) tirelessly argue for more spending in view of sunk costs.

Hallowed Be
Hallowed Be
2 years ago
Reply to  Spike

You’ve got a point. The journo’s trying to explain why he’s sticking with it despite everything and he’s slipped into a fallacious argument for doing so. Being in the same predicament with Westworld i’ve overlain my rationale for sticking with it over the top.

Spike
2 years ago
Reply to  Spike

Sunk costs are not an asset. But they are a value; here, they indicate how much you’d have to sink into some other show to be able to pan it so assuredly.

This just in: The legislature has left for the year without approving a $4 million “federally funded” study (= sales pitch) of passenger rail, that is, an explanation why $4 million in newly “sunk costs” demand that we now bring construction cranes to the riverside easements and kick out the bicyclists.

Rob
Rob
2 years ago

Both the Guardian and Government are using the term “sunk costs” when they are really in thrall to the behavioural bias normally referred to as “escalation of commitment”, i.e., trying to justify pissing away even more resources to a clearly loss-making investment project.

Bernie Gudgeon
Bernie Gudgeon
2 years ago

Is this the reason I am still married.

John Galt
2 years ago
Reply to  Bernie Gudgeon

No. The reason you are probably still married is the exit costs are so high.

TD
TD
2 years ago

I’ll be a bit pedantic, but I think the phrasing actually is that what you’ve already spent on a losing proposition SHOULD be rather than IS irrelevant as to whether you keep spending. Clearly the thinking and decision making as to whether something is a Sunk Cost is a relevant part of the decision to throw in the towel.

So, I take it West World is not worth the bother. I haven’t seen it, but haven’t we unfairly associated Clint Eastwood’s photo at the top, who is often worth the time?

BniC
BniC
2 years ago

Similar with lost in space reboot on Netflix, kept watching partly to see how much worse it could get (unfortunately not disappointed by the writers on that score), partly to see which bits I recognised as they filmed some of it a mile from my house in an area where I regularly walk the dog and I had to detour around a few of the sets at the time

Spike
2 years ago
Reply to  BniC

If you had glued a unicorn horn or antennae onto the dog, you could have cut straight across the set.

BniC
BniC
2 years ago

Similar with lost in space reboot on Netflix, kept watching partly to see how much worse it could get (unfortunately not disappointed by the writers on that score), partly to see which bits I recognised as they filmed some of it a mile from my house in an area where I regularly walk the dog and I had to detour around a few of the sets at the time

Hallowed Be
Hallowed Be
2 years ago

Ok the terminology is wrong. But i think he’s explaining stickiness. Which may be strictly irrational in terms of getting time back but is still a real phenomenon. I’d say one’s tolerance for a shit episode (stickiness) is some factor of all the good ones you’ve seen. It’s like an international batsman that’s had an extended run of fails but the selectors stick with him because of his high average whereas someone with those results soon after selection would be dropped. Stuart’s quite right that westworld has gone all screwy. Completely unsure of what any of the characters intentions are… Read more »

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