Skip to main content

The Psychological Side of Sunk Costs


Writing off any so-called sunk cost as immaterial to any present decision is equivalent to writing off a relationship, perhaps a marriage, as soon as it proves to be disadvantageous instead of recalling its history or perhaps imagining its future. In terms of sunk costs, the modern economist may easily dismiss those costs, especially in the modern economy, when expenses are facilitated by work which has become less laborious than in prior generations. 

If, for example, a laborer were to purchase a football ticket with an amount of cash earned from fifty days of hard labor, the economist may expect that laborer to go to relatively greater lengths, perhaps despite the winter storm of the season, than a counterpart who spent a fraction of his daily earnings, or perhaps a friend who benefited from a "free" ticket.  

This is, after all, representative of all of those days of painstaking work, a feature of life which may be long forgotten due to the relative ease with which incomes seem to be systematically generated without as much blood, sweat or tears. 

Much of the same could be said about the progressive abstraction of money such that its roots and the causes of wealth are increasingly misunderstood and markedly misrepresented. 

This may strike an observer as irrational, especially when the apparent risks seem irreconcilable with the perceived potential for rewards, but this may merely be the consequence of a difference between the observer's and actor's respective sensitivities to the prior experiences which enabled the option now afforded to said actor. 

This sensitivity, when forward-looking, often drives scrupulous savings and spending habits, and while these behaviors may strike the observer as irrational when compared with perceived risks, opportunity costs or even the actor's own present mental calculus, the value of prior work may be understated to accommodate a potentially-overstated or largely-unsubstantiated valuation of life. 

This is not to suggest that individuals are prudent to remain committed to those ends afforded them by past expense, but rather to recognize that some of those individuals are influenced by the recollection of the ferocity or duration of that work which enabled the option. 

In some capacity, merely satisfying the terms tacitly accepted upon the time of purchase is a way to pay homage to oneself and the work conducted for this end. 

Therefore, attendance at the game may not merely stand as a source of mere football-related entertainment but may rather become a hybrid between that and the former. 

The actor may then seem better off by foregoing the game to remain safely at home, or by avoiding the painstaking drive, but the perceived regret, stemming from a supposed diminution of the value of said previous work, may beset the perceived value of the former. 

Again, this may seem irrational while it's merely a specific case of expressed valuation on past time and labor relative to alternative actions or endeavors whose values fail to be expressed with as neat a price tag as the other.  

Comments

Popular posts from this blog

Trump Victorious in 2024 Presidential Election

As of this hour, former President and now President-elect Donald Trump has secured his second term as the forty-seventh President of the United States. Trump’s victory comes after winning key battleground states Wisconsin, Michigan, Nevada, Arizona, Pennsylvania, and Georgia.  As for the popular vote, Trump was victorious there as well, winning by a one-and-a-half-percent margin. Despite these results, it’s evident that there remains a significant social and political problem in the United States, where politically-motivated violence, social unrest, crime and general instability have become rampant over the years since the death of George Floyd.  However, I’d say the fact that it was even this close is ominous for the years ahead. This was as clear as it gets for an election, that the incumbents (both Biden and Harris) are wholly unfit for any office, that they present a real and present danger where they’re allowed within twelve thousand miles of a school zone, let alone any...

Failure by Design

In the case for liberty, there is certainly some tolerance for error or failure, as it is generally suffered by the individual and not brought upon anyone by design . Wherever anyone seeks to empower government, however, one must be reasonably certain of the designs, the logic and the costs, and he must be equally honest about the unknowns as with the foreseeable consequences; after all, there is no margin for error where those designs are administered by the barrel of a gun.  One must necessarily remember that government is a monopoly on force and coercion, that force and coercion serve together as the modifying distinction between government and enterprise. It is a kind of force and coercion not by spirit or intention of written law but in accordance with the letter and understanding of the enforcers in their own time, in their own limited judgment and impaired conscience. As opposed to a state of liberty, where mistakes, failures and crimes are unavoidable in the face of human f...

Artificial Intelligence

There will inevitably come a time, in the not-too-distant future, when the majority of people are likely to embrace artificial technology like ChatGPT as the gospel. They will be either unwilling or incapable as far as scrutinizing its responses Just as ChatGPT doesn’t know who specifically provides its inputs, just as it doesn’t know the extent of the credibility of those inputs, and just as it will never possess the skills of nuanced thinking, people will be hampered by the same limitations while being encouraged or predisposed to relying on its judgments. It’s unavoidable.   Authority figures have predisposed artificial technology like ChatGPT and will continue to predispose it through those inputs. They will continue to leverage it as a means to persuade and predispose people, as it is itself completely incapable of discretion and original thought.  People will rely on it to inform them of not only the laws of physics but the laws and measures written and enforced. Its fal...