Is the sunk cost fallacy really a fallacy? Part 2
Rationality and honoring non-economic values
You may recall from last week that sunk cost thinking was invoked as a reason for faculty to vote in favor of a proposal to modify our general education curriculum, and I raised some questions about whether this proposed reason was really as mistaken as the sunk cost fallacy makes it out to be.
So when is sunk cost thinking a fallacy, and when is it not?
According to an article by The Decision Lab, sunk costs “should not be a factor in current decision-making. It is irrational to use irrecoverable costs to justify a present decision. If we acted rationally, only future costs and benefits would be taken into account. Regardless of what we have already invested, we will not get it back whether or not we follow through on the decision.”
The Decision Lab article goes on to state that “The sunk cost fallacy occurs because we are not purely rational decision-makers, and we are often influenced by our emotions.” This makes it sound like emotions are a bad thing and (a particular conception of) rationality ought to be obeyed in all things.
Let me just hop on my soap box here
First. Being influenced by emotions is not—let’s add more emphasis here: NOT—a bad thing. Emotions are intimately tied to values. We wouldn’t have anything to be rational about if it weren’t for values, and emotions are the indicators and protectors of value. We get angry at disrespect because we value our own worth. Joyful when good things happen to people we care about. Proud when we or they have accomplished something good. Afraid when something that matters to us is in danger. And so on. I’ll say it again: emotions are the indicators and protectors of value. We couldn’t be human without valuing things. Couldn’t be ourselves. Couldn’t even be alive. We’d have no motivation to do anything if we didn’t care about things.
Second. Values give us reasons. If I value playing the piano, then I have reason to carve out time in my day to do it, to buy a piano or new music, take lessons, etc. These actions are rational only in light of that value. It would make zero sense to buy an instrument if I didn’t care about playing it. So our very rationality depends on values, which depend on emotions.
Third. Why is reason defined in such a way as to render the past irrelevant? The idea is likely that since we can’t change the past, it’s not rational to take it into account. But if we had (value-based) reasons to act as we have in the past, those reasons may still be in play even though we can’t change our actions or their outcomes.
Fourth. The Decision Lab article also states that “The sunk cost fallacy means that we are making irrational decisions that lead to suboptimal outcomes.” We need to distinguish between irrational and non-rational. It’s true that many decisions we make, when guided by emotions, are coming from the parts of our brains rooted in “fast” automatic, emotional processing rather than “slow” conscious, logical processing. That makes them non-rational in the sense that they didn’t come from classically rational thinking. But that doesn’t mean they’re irrational in the sense of being bad or incorrect. Very often emotionally-based decisions are in fact optimal precisely because they’re timely and guided by our values. This is why “going with your gut” often works.
All right, I’ll hop off now.
When to quit?
The question of a fallacy only comes into play when I’m no longer happy with my course of action. That’s when I start to wonder whether it’s worth it to keep going. It makes sense to wear your retainer after the braces come off if the orthodontic work did its job. If I’m using and enjoying my piano and happy with it, then it makes sense to continue. It’s only if I’m no longer getting much out of it and finding myself playing less and less, or having to make myself play when I don’t really want to, that it’s reasonable to question whether I still have reason to keep going. Sometimes we really do have reason to break with the past and cut our losses.
If the point of view of the sunk cost fallacy were all there was to it, once I notice my flagging musical motivation this should be an easy choice. But often, a choice like this isn’t at all easy. I might be quite sad to have drifted away from my piano playing and regret not being able to keep my motivation up. To me, this makes perfect sense because the values that guided the original decision haven’t gone away just because the actions haven’t worked out. If we had good reasons to invest our resources in a project, those reasons typically don’t disappear just because the course of action we took isn’t working out in terms of other values.
Still, if the project is no longer serving its intended purpose, that’s a reason to stop, just as the sunk cost fallacy suggests. But it isn’t about costs, and it’s not because our past choices have no bearing on future ones. It’s about purposes, which are grounded in values. Values—or our priorities among them—do shift over time. If my motivation to play the piano is ebbing, it’s probably because other things have taken priority. And there’s nothing irrational about regretting that, even if it does in fact make sense to give up the piano. A lesser connection with a value is still a connection.
Back to the committee
So is it a fallacy to invoke the committee’s hard work as a reason to vote for the proposal? My answer is no and yes. No: I think it’s very reasonable—even an obligation—to honor the work the committee put in. It was based in reasons that are still in play, including wanting a curriculum that serves our students well. Yes: at the same time, however, I think that voting for the proposal wasn’t the only way to honor that work, and in that sense the work put in didn’t justify a yes vote. A better way (in my opinion) is to take the proposal as a draft and revise it using the input from this spring’s discussion to iron out some significant wrinkles and try again next year.
Why would smart people—college faculty with Ph.D.s—would commit this fallacy? Well, for one, we’re not experts on everything. And to the extent that the fallacy is the result of cognitive biases that everyone has, college faculty are no different. But I suspect that there’s something much deeper going on: invoking sunk costs is actually shorthand for honoring values that aren’t always made explicit when we pose problems in economic terms, and we’re not great at posing them in terms of other values. People are really good at responding to value, but not always that great at recognizing when they’re doing so.
P.S. Speaking of honoring values, happy Juneteenth.
Yipes, have I seen this so often! Add to this the problem that committees often feel so obligated to “propose something” that they place proposition over rational judgement. And the longer they work on the proposal, the more they fall prey to sunk costs themselves. Then, the poor department is obligated (because of sunk cost) to approve something that never should have been proposed in the first place! To avoid this trap, committees could propose a series of options, including the option to do nothing, then the department is acknowledging their hard work by adopting one of their solutions, and thanking them for their hard work!
"emotions are the indicators and protectors of value." I never thought about it that way, but it's a great way to think about emotions! Perhaps this is why Spinoza identified two main emotions - joy and sadness (or pleasure and pain) -and considered the rest to be variants of these two. For example, envy, pity, or fear would be types of sadness, while schadenfreude would be a type of joy. Maybe emotions exist to let us know quickly if something is good or bad, at least for us personally. The Nietzschean question, however, is where these values come from, and that is a whole different story...
Also, perhaps in some cases, emotions are more 'right' than rational thinking, as we humans can rationalize ourselves into believing whatever makes us feel good, even when the initial 'bad feeling' might have been the correct one.
A great essay, as usual!