Have you ever continued doing a course you don’t actually find useful, or stayed in an unsatisfying relationship because you’ve already invested so much time and effort in making it work? Or perhaps you’ve kept something you don’t like because it was expensive?

None of those decisions would make us happy or fulfilled, but most of us make decisions like this, at least for a while. It’s called the sunk cost fallacy.

The sunk cost fallacy is the tendency for people to continue with something because they have already made an investment, even if it is actively making them unhappy or worse off.

It seems illogical, but we have a strong aversion to any kind of loss, and will often go to great lengths to avoid it. According to Kahneman and Tversky, who have written extensively about loss aversion, losses hurt about twice as much as gains make you feel good.

There is also the question of losing face, and not wanting to be perceived as a failure. Or we may feel guilt about wasting money, or being seen to waste money.

And it isn’t just about individuals. Governments can be very prone to this fallacy, persisting in large and expensive projects, even when it is obvious that they are throwing good money after bad.

How can we avoid being trapped by the sunk cost fallacy?

Simply being aware of it is a good start. This means that you can at least question your assumptions, and ask yourself if it’s really in your best interests to continue.

Try and notice your emotional attachments. Perhaps you’re worried what people will think of you, or you feel obliged, or you have some strong childhood messages about finishing what you started? If you can uncover these, you have a better chance of letting them go.

Projecting yourself into the future is a useful strategy. Try and imagine how it will feel in six month’s time if you continue? Does that feel bad? How about if you stop? It might feel bad now, but how will it feel further down the line? Is there a sense of relief?

Talking the situation through with a disinterested friend can help. However, you do need to be careful about their unconscious drivers as well.

For this reason, it can also be useful to look at some cold hard facts. For example, if you are working on a project, and you are tracking the hours you’re spending, you’re in a better position to see that what you have done so far in no way equates to the fee you’ve been offered, and therefore that you would be better off pulling out than continuing to work for minimum wage.

It may be challenging, but as the saying goes, if you’re in a hole, stop digging.

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