The Sunk Cost Bias
A friend sent me a very interesting article describing something called the Sunk Cost Bias. It’s a phenomenon that may help explain why it’s so hard for some people to leave the Church of Scientology.
The article describes sunk cost bias as “throwing good money after bad.” One persists with a bad decision due to an irrational attachment to the money or time already invested. One tends to persist on a given course just because one already has so much time of effort involved in it.
Let’s say you buy a used car. After you’ve had it for a while, you discover it’s a complete lemon. You spend weeks of your own time trying to fix it. You invest thousands replacing this and that, trying to get it to work properly. The smart thing would be to have the thing hauled away. But you’ve already invested so much time and money in it, you are reluctant to let it go, so you keep trying to fix it. You’re throwing good money after bad. The money you’ve spent is gone. It will never be recovered. You could save the money you are continuing to spend, but sunk cost bias prevents you from doing the rational thing.
The article notes that it happens with organizations and governments too. One example given is a government that insists on continuing to wage a war so the lives and treasure already spent “are not wasted.”
I’ve seen Scientologists struggling with their own sunk cost bias. They can see that the Church of Scientology has become corrupt and criminal. They know that tech and policy has been altered beyond recognition. They know that staff are being abused. They know that public are extorted and harassed. But still they carry on. Why? Because they’ve already invested years of their life and hundreds of thousands of dollars.
What to do? The article gives some advice:
“This is the fundamental reasoning behind how we deal with sunk costs. We have a genuine interest in making our efforts worth our while. We don’t want to feel that we spent anything in vain — time, money, anything. However, even if we know deep inside that our approach is wrong, we still have trouble abandoning it.
“Sure, we all expect to have a good return on what we invest. It would be insane not to. Just make sure you’re not on a situation solely because you made the investment in the first place. You don’t make a bad move any better by dwelling more on it, unless you can effectively make something that changes the expected outcome.
“Stop spending resources on a bad move — throwing good money after bad — immediately and start spending these resources on a new one: Cut your losses and move on!”