sunk cost bias

Cutting loose… or how I got rid of my distracting habits.

Entrepreneur life

13 September/Posted by Natalia

I’ve probably never told this to anyone, but I’ve recently realized I was a game addict. No, I’m not hooked to my Playstation or Xbox for 24/7, I personally don’t even own one. And no, I’m not spending my evenings playing Monopoly or bridge with my neighbours, in case you have more old-fashioned associations with the word ‘game’. It’s actually much more simple than that: it was a game that I’ve semi-accidentally downloaded on my iPhone about a year ago. I’d rather not mention the name, you’ve probably never even heard about it, and no it’s not Candy Crush.

Anyway, there I was, having no idea how I ended up spending a few hours a day on this mobile game, 5, 10, sometimes 45, 60, 120 minutes at a time. And do you think I never realized what a waste of time it was? Of course I did, each time I clicked on that icon to open it! But somehow, every time I wanted to quit, it seemed such a waste of all those hours I’ve already spent to get to a certain level, and to have acquired a certain status (I was playing with actual people). It was designed in a way that you had to check in at least once every 12 hours, otherwise the enemies would burn you down and you’d lose a lot of what you’ve been building up for days, if that makes sense. So yes, even on those days when I really didn’t have the time for it, I HAD TO log in and check stuff, cause yet again: wouldn’t it be a waste if everything I’ve spent hours on would be destroyed! Including those days when I said that 24 a day was not enough to finish all of my work.

But then, a few days ago, I had this moment… You know when you’ve subconsciously known something all along, but you actually need this one tiny push to realize it? One conversation, one word that opens your eyes and helps you see things for what they really are. For me this one word was ‘sunk cost bias’ (ok that’s three words). I’ve been sort of familiar with this concept, but I’m not sure whether I’ve ever actually heard the precise term. This time, I heard it on an episode of Tim Ferriss’ podcast (episode #328 of the Tim Ferriss Show with Greg McKeown ‘How to say “No” gracefully and uncommit’ – awesome episode by the way, I’d definitely recommend it to pretty much everyone). The term ‘sunk cost bias’ or ‘sunk cost fallacy’ originates from the world of economics and is defined by the Cambridge Dictionary as following:

the idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do.

Or put simply: the more you invest in something, the harder it is to quit. Sounds straightforward, right? And at first, not that bad, or serious either. Yeah, it makes sense that you don’t want to stop doing something after you’ve invested lots of time, money and/or yourself into it. So what’s the problem?

The problem is this is exactly the same as gambling. It is irrational, addictive and doesn’t really lead to anything good. You go to a casino and lose $100. It sucks, you want to win it back, so you go on. A half an hour later you’ve lost $1000 – this sucks even more, and it’s getting harder and harder for you to leave. Before you know it, you’re broke, depressed, on the verge of loosing everything that is dear to you. This is perhaps a bit of an exaggerated example, and any clearly thinking person would say: ‘Well yes, this is stupid, this could never happen to me, as I know when to stop.’ But do you even realize how often this happens in life, to me, to you, to the best of us?

How often do you go to a restaurant and order a steak, just to realize this is far too much for you to eat in one go… but eat it anyway… because you’ll be paying for it after all! Or how many times you really didn’t feel like meeting your friend Steve, cause you don’t really have anything in common anymore, and it’s so boring to just sit here and listen to him talk about his new car… but well, you’ve known him for 10 years now, it would be a shame (and a far too awkward to be honest) if you’d just stopped talking to him. Or, back to where it all started, how difficult is it to delete this one stupid game from your iPhone after having wasted hours, days, or even weeks of your precious time on it, trying to get to level 67? I’m sure there are tons of examples you could think of right now, if you’d look at your own life and things you do daily, from this perspective.

So, once again, what’s the problem? Of course, every situation is unique, but I believe that in general, continuing to do something, just because you’ve already invested a lot into it, without it actually being a benefit for you, is a terrible waste. The money, the time, even emotional resources you invest into something like this could instead be invested into something that would actually do you some good, help you grow, and develop.

Just like in my case with the mobile game… I kept feeling that I don’t have enough time to do everything I want for my business, or go to the gym, or find an hour to do yoga or meditate… and at the same time kept wasting hours of my life on a game that doesn’t really add anything to my existence, except for, perhaps, being a place where I could go to escape reality for a second. And this was by far not the only way the ‘sunk cost fallacy’ got to me.

In the past 2 years I’ve gained a lot of weight (over 10 kg). This had various reasons, I mainly attribute it to stress, that’s a different story… but there was one thing I caught myself doing even now, trying to lose all those extra pounds… is that I keep eating even after I’m full. Cause well, it’s waste to throw food away, right? And I’ve also spent money and time preparing this meal… So I’d better stuff it down my throat until I could almost puke, just so it doesn’t go to waste. It sounds ridiculous now that I’m writing this… but yes, the ‘sunk cost bias’ has a lot of different faces.

So what now? Well, if you notice this kind of behavior in yourself, and (just like me) want to quit it, I believe that quitting is a two-step process.

The first, and most important step is (as it often is): self-awareness. The reason I’m writing this blog is to share my experience and hopefully make you, and everyone else who reads it, more aware of things they do guided by the sunk cost fallacy. What’s next is actually looking deeper into it and analyzing how this behaviour influences you, your lifestyle, and well-being. Based on this analysis, I think it would be pretty easy to decide what to do about it, which habits to quit and which ones to keep for now (but still keep in mind).

The second step is quit simple: simply quit. As you’ve probably guessed in my case, I did exactly that to my distracting game behavior and a few other habits. It might get pretty tricky, depending on the habit you’re dealing with. I haven’t called it an ‘addiction’ in the beginning for nothing. Although you rationally understand that something is not good for you, it won’t always be easy to quit it the second you get it. In my case with the iPhone game, I did just delete my account and the app from the phone. I should say, I do still sometimes unlock my iPhone and my finger automatically slides to that place where the app’s icon was located. But each and every time I do it, it makes me feel liberated once again (and a little stupid of course, that I keep doing this automatically). And for the record, it’s only been about 24 hours, in a few days I won’t probably even remember it. But there are other habits that might be much more difficult to go cold turkey on. You might simply forget to unsubscribe to a monthly service you don’t really need anymore (but keep paying for), and your old boring friend doesn’t have a ‘delete’  button. Each situation is unique, and everyone has their own process of quitting. For me personally, the awareness of the problem was already 80% of the solution. I don’t have much trouble quitting things once I really understand the necessity to do so, but well, everyone deals with these things differently.

I hope that reading this has at least given you some new insights for improving your lifestyle, productivity and perhaps even your emotional state. I am also very curious what kinds of things you do, and find difficult to quit and I would love to hear all about them, so please share them underneath this blog, or as a comment on Instagram. Also, if you don’t believe in the ‘sunk cost bias’, if you’ve never been affected by it and think everything you’ve just read is a bunch of BS, I’d also love to hear your point of view on this topic!

P.S. I found the Tim Ferriss’ podcast episode on Essentialism (and sunk cost bias) on YouTube, check it out when you have a spare moment:

Posted by Natalia

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