Sunk costs is a concept which I think about quite a bit.  We all make decisions about the future.  We need to make the best decisions that we can based on where we are today.  A sunk cost is something which has been expended and cannot be recovered such as time, effort or money.  You cannot recover these costs no matter what you do.  When making today’s decision we have to ignore sunk costs. Money and effort spent yesterday should have nothing to do with decisions today, because each decision is a new one.  That is a hard concept to get your head around.  This is because we may feel we must keep going no matter what “because I have invested so much in this already”.

Sunk costs and career choices

I often think of this concept in relation to my career and my future direction.  I have degrees and I even have a PhD which cost me a lot of money, time and effort.  My own education is a sunk cost and in many cases what I learned is no longer relevant in today’s fast changing world.  Decisions I make about my future direction need to be based on today’s realities and future opportunities and not on what I have invested in my education.  It’s a bit like a soccer team that has spent a lot of money on a player and then feels forced to play them regardless of their performance!  I need to ignore sunk costs and free myself to make better decisions today.

Best wishes,

Tom

PS. Check out my course “Experiments in Personal Change” which shows you how to set goals and plan your future direction.