Fact: Sunk costs are any resources that have been expended and are sunk because they cannot be regained, no matter what.
Fact: Economists believe that sunk costs should not play a role in our decision making.
My Public Finance/Micro Professor suggests we don’t consider sunk costs in any of our decision making. The example he gave was, I believe, intel or was it Steve jobs? Anyways, one of those companies, the CEO was getting rid of a project like two weeks before it was to launch. Now this was a new product that they had invested a lot of time money and resources in. But the CEO believed it to no longer be useful and beneficial to the market or the company, and instead of justifying going forward because all that has been spent, he shut it down.
Economisits, and some sociologists, argue that people are (mostly) rational individuals. Economists believe that we want to maximize our happiness. Therefore, if we consider sunk costs in our decisions, it can hold us back from obtaining our maximum utility.
We need to start thinking about sunk costs in our lives.
It wasn’t until this past week when I was reading five models of behavior for another class that I realized how applicable the self-justificaton model is to relationships and why we need to start forgetting about sunk costs.
Sunk costs in relationships would include: time and money. Examples: justifying staying together because of how long you have been together, or the fact that you have kids (but are not happy), that you spent money on an engagement, and lastly, because you do not want to admit you made an error in choosing this mate.
“The commitment of self-justification version of the rationalizing model is also at odds with economic conceptions of rational decision making…..Not demonstrating continued commitment to a previously chosen course of action to some extent acknowledges that one has made a decision error. Better to persists and hope that things will turn out all right or that one will be rewarded for the positive attribute of perseverance.”
…. Sound like anyone in a relationship you know? I think we’ve all been there. Maybe if you just imagine it being great, like it might have been in the beginning, maybe if you just picture fairy tales, maybe if you believe in him so that he’ll change….these are self-justification rationalizations about why we are in a relationship with someone.
I think we can all agree that the only reason you should be with someone is because you love them! (and sometimes, that’s not even enough)
I’m guilty of it. We’re all guilty of it. Maybe we justify getting back together with an ex because it’s comfortable, because you can skip the first moments of awkardness and cling to the belief that this person knows you. Or maybe in a weak moment we just want to feel loved (and we believe that an ex has the best potential of making us feel loved).
Except the relationship didn’t work the first time. And the fact that you were already together once does not mean that the relationship has a better chance the second time around (first round relationship = sunk cost).
I’m not saying forget about all ex’s in your life and never talk to them ever again or that the second time around is never better. I’m just saying that you should really examine your sunk costs. Are you still in love with this person?
Or are you embarrassed about admitting to friends and family that you made an error?
The heart knows what it wants. But I don’t think it’s rational to stay with someone you don’t love because you don’t want to be lonely.
All I know for myself is that I don’t want to settle. I shouldn’t have to. No one should. I don’t want to be in a relationship with someone where I am rationalizing to myself why I am with this person. Love is love. It grows differently for different people and can take many shapes and forms, but it’s always love. And no one knows more than your own head and heart if you love someone. But if your head is the only one in the relationship, than maybe your relationship is a sunk cost in the general picture of your life happiness.
This model also says we rationalize more when we are getting a perceived loss out of something. For example, in the beginning you thought maybe this will be great and had expectations. But now your expectations have been disappointed. Because you are not getting out of the relationship what you originally thought you would, you begin justifying your commitment.
Of course, love is not rational. But if we, as women, applied these theories to our relationship choices and stopped putting up with shit (because that is NOT rational) than maybe we will finally find a man that deserves us.
We all deserve a chance to be happy and to be loved.
The model also suggests “that people escalate commitment when they do not set a budget and when incremental costs and benefits are difficult to track,”
Now if we take budget= clear standards and expectations/ deal-breakers
Incremental costs= lying, cheating, not treating you how you want to be treated.
The model is telling you to start tracking these things so you will know how much shit you are really putting up with.
As individuals we all need to be very clear what we expect and want out of a partner. Once we have been honest with ourselves it is easier to communicate this with a partner. Now over time you may find yourself in a relationship where you are increasingly unhappy. Where he is not the man you thought or want. Where his little white lies are increasing and he may have been unfaithful. This is where we really need to implement the no sunk cost. As time goes by all these things he has done are building up, but it’s hard to see because it’s gradual—these incremental costs to ourselves are difficult to track.
Of course, “commitment to decisions may make sense and demonstrate persistence in the face of adversity.” None of us are perfect. And we cannot expect our partner to always be perfect, either. And yes, sometimes you just have to wait the tough times out to see the rainbow.
Ask yourself: Am I sticking it out because I want to prove to people that I didn’t make an error and show them all that we have the rainbow still? Or, am I sticking it out because I know I love this person and they are the one I want to be with?
Life is hard. Relationships are hard. I’m not trying to make relationship decisions for everyone out there…I just want people to examine their utility. Is there potential for maximized utility?
Okay, enough with all the econ talk. But really, I see so many young girls out there letting men treat them like shit.
What. The. Fuck. Stopping putting up with it! Do not justify being in a relationship with someone just to prove something (yes this includes proving things to yourself). We all deserve to be treated well. Come up with your bottom line and stick to it, because you deserve better.
No more sunk costs.
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