One of the things to consider (like with a movie ticket): no one wants to pay twice. Playing with a friend is free and can be done tomorrow. If you want to see a movie, then you will have to buy another ticket, so that's actually losing money, so logically you shouldn't throw away a ticket for something that you didn't pay for yet. Might be the same with education. If you want to do something else, you probably would have to pay for it. No one wants to pay for two universities in a row. You might work with your first profession, get tired of it, save enough money, and then get another degree that you want (or go travel the world, whatever you want to do instead). The only bad example of this phenomenon is in relationships when you think you had invested too much, so you would rather try to change your partner (who didn't change for the last 5-10 years), than quit toxic relationships.
Instead of throwing away spoils fish they should be donated to local farmers as fertilizer. I think that relationship might grow into a reciprocating one. There's nothing better than rotting fish for a vegetable garden. The conspicuous consumption beyond ones needs is much of we the working classes financial problems beyond the wage slavery promoted by corporations and their bought legislators. Mom says: Waste Not, Want Not.
That bit about finishing your food ... Years ago, while waiting for the rest of our family to join us at the New Jersey Seaquarium, my sister and I got hungry and decided to get ourselves meals. I got a McDonalds meal, she got a full plate of rice, meat and stuff. Hardly had we sat down to eat than our family arrived. I still had my meal's wrappings, so I carefully wrapped it up to eat later. But I was absolutely stunned to see my sister casually dump her entire meal in the trash! I'm a Filipino, and we absolutely hate letting our meals go to waste. This incident has haunted me for decades.
I think this could be considered as an example of the sunk cost fallacy at first glance I don’t think it is. First of all there’s no real investment, there’s no difference in chance to win if the gambler had just started or has lost a big portion of money. The gambler is simply chasing his losses.
Not to keep "changing the assumptions", but, at 1:02, at no time did Jimmy change his mind about wanting to see the movie. The assumption, or, rather, YOUR assumption was: he bought a ticket to see a movie that he WANTS to see. That did NOT change AFTER the invitation. The only way it would be a sunk cost is if you ADD the assumption that "Jimmy would prefer hanging with friends than seeing movie". As you have it now, the value of movie = value of hanging with friends so there IS no fallacy.
Lots of time I had thought of shifting my career to new field but I had always thought that I have spend almost 9 years (4 years of education and 5 years working on the job) in this field and if I change, all that effort and time will be wasted. But I finally decided to let it go and work on shifting the career. I guess I was also held by sunk cost fallacy.
A lot of people keep repairing their cars because they remember how big the last repair bill was and don't want to waste the money spent on it. This causes them to spend too much repairing the car once more instead of scrapping it. And when I say a lot of people I mean me. I've done it more than once.
Isn't this usually because people can't afford to get something better but can afford the repair bill to squeeze a bit more life out of that they have?
Probably closely related to hoarding. People value their old junk so much they can't get rid of it. I'm a little like that, lots of stuff stashed away that I think might come in handy someday. Sometimes the packrat wins when old stuff is reused and don't need to buy it new. Waste not, want not.
You can, but it would be unwise for a business to always continue investing in projects solely because of how much money they've invested in it so far. Periodically, you have to assess whether it's likely worth it to continue or to cut ties.
I agree with the first illustration but I prefer to look at it from the perspective of risk and return. Losing the bad fish is part of the cost/risk of that particular business but the return gained from clients that always come back seeking quality should compensate for that. Besides, he could charge more for his better product, assuming the superiority of his product is evident. But I don't agree with the second illustration. Money is just an exchange medium. We actually trade value for value. The value of his work is exchanged for money that can be used to buy value. If he doesn't watch the movie, the path is incomplete and he loses the value of his work. It is not like he will never play football again. That's not a risk.
He could just offer canned fish products for a proportion of the goods to extend the durability of which who will most likely go bad more quickly. But that's a whole other bussiness. Kind of.
I think you need to separate personal and political situations. A politician may delay realizing losses (wasted sunk costs) because until they are crystalised the politician cannot be judged on them... they can always argue, that they are not sunk costs but further investment that will come good eventually. By the time the loss is realized (when concord was finally decommissioned) those who had wasted the money (and pocketed huge salaries/pensions etc) were long gone. Look at UK's HS2 - it should have been shut down long ago, it never made sense. But there are loads of people pocketing loads of taxpayers money and politicians whose reputations would be toast if they admitted that they had been wrong all along (and others whose reputations would be trashed for not having just it down long ago).
A much better example might be Brexit. To date it has not brought the benefits it promised, and if anything has become a millstone round Britain's neck, but instead of swallowing their pride and asking to be let back into the EEC the Brits are still trying to brazen it out because "We've already come this far."
No, the Sunk Cost Fallacy is all about hanging on to something even when it's not worth the trouble. For instance, this is why abused spouses take so long to leave their abusers (if ever they do), because "I've put so much effort into this marriage, I can't let it all go to waste!"
I belive any sunk cost that proves halfway its not worth it should be immediatly droped because it would be a waste of time and possible time doing something better. In the case of the ticket scenario i would go to the movie and turn down my friends. There will be more opurtunities to hang out with friends in the future but thats not the case for the movie because they are not permanent meaning there is a time limit on watching a specific movie (sry for my bad english)
There were already commercial aircraft that could go across the ocean, the Concorde was made to make the travel faster. However as said in the video this was not “economical”, meaning the revenue received from passengers wanting a quicker flight didn’t exceed or even meet the cost of the project.
Hello How can i study abroad in a foreign university? How can i have a student's loan to pay the expensive university fees ? How can have the material and study it with myself without getting a certificate?
Jimmy should go see the movie because if he doesn't he's more than likely to spend money to see the same movie at a different time. He can always go play soccer some other time.
i'm satisfied with my educational decisions. i chose the right fields to focus on given my strengths and interests. if i could change anything it would be making myself rich. so i wouldnt need to work for others for a living, and i could spend time working on all my projects.
oh my god - i want to quit my job so bad, but i don't make enough money. I'm afraid of losing the people I love, but the job stresses me out so much it's not worth the paycheck
With the education inflation where in 90s time switching major is something doable, but now of you accidentally chose major wrong, then may as well go til the end.... And this fallacy even manifest stronger. Hmmm another thing im trying to connect is consummerism and this fallacy what could these two combined into? Hoarding?
Um.. problem with the movie theater thing, what if he ended up getting more entertainment out of going then playing football... Then it wasn't a sunk cost, the sunk cost would have been time spent playing football instead of enjoying the movie...
not wanting to bet 50 bucks just to win another 50 bucks is not a sunk cost fallacy. Losing 50 bucks hurts more than gaining 50 bucks gives benefits. Think of it this way; if you're 50 bucks short on your monthly food budget, you'll go hungry for a week. An extra 50 bucks is just an extra 50 bucks, while a 50 buck deficit can be disastrous.
"People who succeed have momentum. The more they succeed, the more they want to succeed, and the more they find a way to succeed. Similarly, when someone is failing, the tendency is to get on a downward spiral that can even become a self_fulfilling prophecy." _Tony Robbins
I'm not sure Concorde was all a suck cost? At the time, on paper, and compared the the original plans yes. But the longer terms gains are giant, Thousands of engineers trained who wouldn't otherwise, that would go on to make things of high value. Many of the lessons learned from this project are in use in modern air craft (e.g fly by wire for passenger flight, just one of very many). The biggest win, by a million supersonic miles this was the birth of Airbus.
I agree with you that the Concorde wasn't a good example of a sunk cost that should've been given up. A far better example would be all those people who voted for Donald Trump in 2016, recognized what a mistake they'd made during his tenure as POTUS, but still voted for him in 2020 because "There's nobody else" -- which by now seems to translate as, "At least he hates the same people we do."
Philosophers and especially stupid economists need to stop using loaded words such as "rational" or "irrational" to describe THEIR particular sets of utility functions that they wish to optimize. Stupid economists just ASSUME that what THEIR utility functions are are the same as everyone else's.
Lol what??? you normally have great videos, but y'all dropped the ball with this one. This hardly even discusses investments... your examples were more about prospect theory and social desirability than sunk costs.
Support us to make more econs video at www.patreon.com/sprouts!
One of the things to consider (like with a movie ticket): no one wants to pay twice. Playing with a friend is free and can be done tomorrow. If you want to see a movie, then you will have to buy another ticket, so that's actually losing money, so logically you shouldn't throw away a ticket for something that you didn't pay for yet. Might be the same with education. If you want to do something else, you probably would have to pay for it. No one wants to pay for two universities in a row. You might work with your first profession, get tired of it, save enough money, and then get another degree that you want (or go travel the world, whatever you want to do instead). The only bad example of this phenomenon is in relationships when you think you had invested too much, so you would rather try to change your partner (who didn't change for the last 5-10 years), than quit toxic relationships.
Man that's beautifully summed up
video games also have very negative relationships with this fallacy
Instead of throwing away spoils fish they should be donated to local farmers as fertilizer. I think that relationship might grow into a reciprocating one. There's nothing better than rotting fish for a vegetable garden. The conspicuous consumption beyond ones needs is much of we the working classes financial problems beyond the wage slavery promoted by corporations and their bought legislators. Mom says: Waste Not, Want Not.
or he should start a fertilizer company lol more money
Or sell them to a fertiliser company.
Plot twist: turn fish, entire garden, aforementioned company employees, and laden love interests INTO fertilizer. Monopolize. ???? Profit
Great video! The only channel I watch actually that demonstrates these concepts in an easy way, in which I learn something and also have fun!
Awesome, thank you!
That bit about finishing your food ... Years ago, while waiting for the rest of our family to join us at the New Jersey Seaquarium, my sister and I got hungry and decided to get ourselves meals. I got a McDonalds meal, she got a full plate of rice, meat and stuff.
Hardly had we sat down to eat than our family arrived. I still had my meal's wrappings, so I carefully wrapped it up to eat later. But I was absolutely stunned to see my sister casually dump her entire meal in the trash!
I'm a Filipino, and we absolutely hate letting our meals go to waste. This incident has haunted me for decades.
Decades of trauma over spilled rice? You alright bro?
@@omegazero5032
Maybe not!
I know how you feel. Wasting food is almost a sin to me.
Guessing you paid for yourself and your sisters meal.
The best example of sunk cost fallacy I know is the gambler who keeps betting because they've already bet so much
I think this could be considered as an example of the sunk cost fallacy at first glance I don’t think it is.
First of all there’s no real investment, there’s no difference in chance to win if the gambler had just started or has lost a big portion of money.
The gambler is simply chasing his losses.
Not to keep "changing the assumptions", but, at 1:02, at no time did Jimmy change his mind about wanting to see the movie.
The assumption, or, rather, YOUR assumption was: he bought a ticket to see a movie that he WANTS to see. That did NOT change AFTER the invitation. The only way it would be a sunk cost is if you ADD the assumption that "Jimmy would prefer hanging with friends than seeing movie". As you have it now, the value of movie = value of hanging with friends so there IS no fallacy.
Lots of time I had thought of shifting my career to new field but I had always thought that I have spend almost 9 years (4 years of education and 5 years working on the job) in this field and if I change, all that effort and time will be wasted. But I finally decided to let it go and work on shifting the career. I guess I was also held by sunk cost fallacy.
A lot of people keep repairing their cars because they remember how big the last repair bill was and don't want to waste the money spent on it. This causes them to spend too much repairing the car once more instead of scrapping it. And when I say a lot of people I mean me. I've done it more than once.
Isn't this usually because people can't afford to get something better but can afford the repair bill to squeeze a bit more life out of that they have?
@@Philip550c It's a matter of defining the words 'too much' used in my answer.
Hey, your Sales Incentive payment is all sorted out and good to go!
Probably closely related to hoarding. People value their old junk so much they can't get rid of it. I'm a little like that, lots of stuff stashed away that I think might come in handy someday. Sometimes the packrat wins when old stuff is reused and don't need to buy it new. Waste not, want not.
Yeah!
Doesn't seems as such a negative fallacy. From time to time it seems you rather win something too.
You can, but it would be unwise for a business to always continue investing in projects solely because of how much money they've invested in it so far. Periodically, you have to assess whether it's likely worth it to continue or to cut ties.
I agree with the first illustration but I prefer to look at it from the perspective of risk and return. Losing the bad fish is part of the cost/risk of that particular business but the return gained from clients that always come back seeking quality should compensate for that. Besides, he could charge more for his better product, assuming the superiority of his product is evident. But I don't agree with the second illustration. Money is just an exchange medium. We actually trade value for value. The value of his work is exchanged for money that can be used to buy value. If he doesn't watch the movie, the path is incomplete and he loses the value of his work. It is not like he will never play football again. That's not a risk.
Interesting perspective. Thanks
Nice video
Thanks
He could just offer canned fish products for a proportion of the goods to extend the durability of which who will most likely go bad more quickly. But that's a whole other bussiness. Kind of.
I think you need to separate personal and political situations.
A politician may delay realizing losses (wasted sunk costs) because until they are crystalised the politician cannot be judged on them... they can always argue, that they are not sunk costs but further investment that will come good eventually. By the time the loss is realized (when concord was finally decommissioned) those who had wasted the money (and pocketed huge salaries/pensions etc) were long gone.
Look at UK's HS2 - it should have been shut down long ago, it never made sense. But there are loads of people pocketing loads of taxpayers money and politicians whose reputations would be toast if they admitted that they had been wrong all along (and others whose reputations would be trashed for not having just it down long ago).
Excellent point
A much better example might be Brexit. To date it has not brought the benefits it promised, and if anything has become a millstone round Britain's neck, but instead of swallowing their pride and asking to be let back into the EEC the Brits are still trying to brazen it out because "We've already come this far."
I still doesn't understand. Is sunk cost fallacy make us think "there is no other choice except using our economical chance or losing it"?
No, the Sunk Cost Fallacy is all about hanging on to something even when it's not worth the trouble. For instance, this is why abused spouses take so long to leave their abusers (if ever they do), because "I've put so much effort into this marriage, I can't let it all go to waste!"
Hi, please tell me which software is used to creat these kinda videos. I love them😍😍 And I'd like to learn🙏🙏🙏
I belive any sunk cost that proves halfway its not worth it should be immediatly droped because it would be a waste of time and possible time doing something better. In the case of the ticket scenario i would go to the movie and turn down my friends. There will be more opurtunities to hang out with friends in the future but thats not the case for the movie because they are not permanent meaning there is a time limit on watching a specific movie (sry for my bad english)
But passengers DID get the economic benefit of the Concorde: BY FLYING ACROSS THE OCEAN ON IT!
There were already commercial aircraft that could go across the ocean, the Concorde was made to make the travel faster. However as said in the video this was not “economical”, meaning the revenue received from passengers wanting a quicker flight didn’t exceed or even meet the cost of the project.
Very informative 👏 👌
Hello
How can i study abroad in a foreign university?
How can i have a student's loan to pay the expensive university fees ?
How can have the material and study it with myself without getting a certificate?
Jimmy should go see the movie because if he doesn't he's more than likely to spend money to see the same movie at a different time. He can always go play soccer some other time.
✨👀 this not for me
i'm satisfied with my educational decisions. i chose the right fields to focus on given my strengths and interests.
if i could change anything it would be making myself rich.
so i wouldnt need to work for others for a living, and i could spend time working on all my projects.
oh my god - i want to quit my job so bad, but i don't make enough money. I'm afraid of losing the people I love, but the job stresses me out so much it's not worth the paycheck
@@LeonardNemoy
yeah living in a capitalist regime when you arent rich means you dont really have that much freedom.
With the education inflation where in 90s time switching major is something doable, but now of you accidentally chose major wrong, then may as well go til the end.... And this fallacy even manifest stronger.
Hmmm another thing im trying to connect is consummerism and this fallacy what could these two combined into? Hoarding?
Hoarding sounds about right 😆
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Now I get so many things. I have developed a love-hate relation with the Sprout's videos though hahaha.
How come?
You know, being aware of how things can be messed up is nice but anoying... Still, thanks for your hard job.
Um.. problem with the movie theater thing, what if he ended up getting more entertainment out of going then playing football... Then it wasn't a sunk cost, the sunk cost would have been time spent playing football instead of enjoying the movie...
thanks!
Welcome!
One still weighs the opportunity cost of any situation,
True
not wanting to bet 50 bucks just to win another 50 bucks is not a sunk cost fallacy. Losing 50 bucks hurts more than gaining 50 bucks gives benefits. Think of it this way; if you're 50 bucks short on your monthly food budget, you'll go hungry for a week. An extra 50 bucks is just an extra 50 bucks, while a 50 buck deficit can be disastrous.
Yeah, this is something I'm guilty of a lot and I consider myself a logical man.
Shit.... Now you're casting doubts about my degree... Problem is I don't have an answer to what I really want....
Awesome video good explanation
Glad you liked it
Nice
Thanks
"People who succeed have momentum. The more they succeed, the more they want to succeed, and the more they find a way to succeed. Similarly, when someone is failing, the tendency is to get on a downward spiral that can even become a self_fulfilling prophecy." _Tony Robbins
hre because i own 4 heirlooms and tons of event skins from apex
It's exactly what's happening to the collective west regarding Ukraine
I'm not sure Concorde was all a suck cost? At the time, on paper, and compared the the original plans yes. But the longer terms gains are giant, Thousands of engineers trained who wouldn't otherwise, that would go on to make things of high value. Many of the lessons learned from this project are in use in modern air craft (e.g fly by wire for passenger flight, just one of very many). The biggest win, by a million supersonic miles this was the birth of Airbus.
Great point!
I agree with you that the Concorde wasn't a good example of a sunk cost that should've been given up.
A far better example would be all those people who voted for Donald Trump in 2016, recognized what a mistake they'd made during his tenure as POTUS, but still voted for him in 2020 because "There's nobody else" -- which by now seems to translate as, "At least he hates the same people we do."
Ahh, that Concorde moment
Philosophers and especially stupid economists need to stop using loaded words such as "rational" or "irrational" to describe THEIR particular sets of utility functions that they wish to optimize. Stupid economists just ASSUME that what THEIR utility functions are are the same as everyone else's.
Lol what??? you normally have great videos, but y'all dropped the ball with this one. This hardly even discusses investments... your examples were more about prospect theory and social desirability than sunk costs.
Thanks for the feedback. Noted
I really didn't understand the point sprouts is trying to make
Beyond Good and Evil 2
Marriage.
Ukraine is a sunk cost fallacy
🤔...
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W