Better Than Happy Jody Moore | The Sunk Cost Fallacy

Have you ever found yourself sticking with a decision or course of action simply because you’ve already invested time, money, or effort into it… even when it’s clear that moving on would be more beneficial?

This common phenomenon is known as the sunk cost fallacy, and it affects all of us to some degree. While it will always be at play in our lives, we can learn to minimize its effect by becoming more aware of what it is and how it drives us. And in this episode, I explore how it can hold us back in various areas of life, from relationships and business to personal projects and purchases.

Tune in this week to learn what the sunk cost fallacy means and the value of learning how to recognize it in your decision-making process. I share real-life examples of the sunk cost fallacy in action and offer my top tips for making rational, forward-thinking choices that align with your true goals and values, rather than being swayed by past investments.

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What You’ll Learn on this Episode:

What the sunk cost fallacy is and how it can manifest in various aspects of life.
How commitment bias and loss aversion contribute to the sunk cost fallacy.
Why focusing on the future, rather than the past, is key to overcoming this cognitive bias.
The value of reframing wasted time or money as valuable learning experiences.
3 tips for making more rational, forward-thinking decisions in the face of sunk costs.

Mentioned on the Show:

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Is the sunk cost fallacy at play in your life? Is it preventing you from getting the absolute most out of your financial decisions, the way you spend your time, and where you put your effort and attention? Well, the answer to this question, according to the experts, is yes, it is at play in all of our lives. And the way to minimize its effect on each of us is to become more aware of what it is and how it drives us. From awareness, you will have the ability to make wiser decisions. And that’s why today I wanna dive in to The Sunk Cost Fallacy, episode 491. Let’s go.

Welcome to Better Than Happy, the podcast where we transform our lives by transforming ourselves. My name is Jody Moore. In the decade-plus I’ve been working with clients as a Master Certified Coach, I’ve helped tens of thousands of people to become empowered. And from empowered, the things that seemed hard become trivial, and the things that seemed impossible become available, and suddenly, a whole new world of desire and possibility open up to you. And what do you do with that?

Well, that’s the question… what will you do? Let’s find out.

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All right, everybody, welcome to the podcast. How’s it going? How’s your holiday going? How’s December treating you? Are you enjoying it? It’s a really bizarre year for my family and I because we moved to the San Diego area at the beginning of the summer. And so for my two youngest kids anyway, this is their first time experiencing Christmas in a place that is sunny and relatively warm.

I noticed the people around me are getting out their beanies and coats and talking about how cold it is. And I do still like to wear a coat and I get kind of cold, but I’m like, this is not cold people. It’s interesting because my younger kids kind of miss the feeling that cold weather brings that they associate with Christmas and I keep reminding them that’s just because that’s how you know Christmas as gray and gloomy and dark but after a couple years we’re gonna have Christmas memories in the sun and also we’ll go visit the snow don’t worry. I love to visit snow, I just don’t love living in snow.

So at any way, we can always find something to complain about, right? Anyway, I hope you’re having a great holiday. We are having a beautiful time overall. We’re loving it, loving the holiday season, loving living here in San Diego. And I’m thinking of all of you, especially those of you in the cold.

I wanna dive into this concept today, this phenomenon of the sunk cost fallacy. Obviously I did not make this up. We’re gonna go to an official definition in a minute, but it’s one that I have thought about a lot over the past few years and tried to really notice in my life.

And according to the experts, like I kind of said before, apparently none of us can totally get rid of it. It’s just a part of how human beings operate for some reason. But I do think that being aware of it can help us to minimize it.

So I’m going to start out with a story for you. So I remember a few years ago when we lived in Washington state and we decided to go skiing one day. So my husband got online and got lift tickets for the kids and I and we got all of our gear loaded it up in the car drove up to the ski mountain got our clothes on went up and started skiing and it was a cold day.

I don’t remember if it was snowing or raining, which I know for the true skiers, the real skiers love skiing when it’s snowing because you have fresh snow. But for a skier like myself, that is just a recreational, maybe we’d even call me an obligatory skier because I really only ski because my family loves it so much and I do like to be with them and I want to be helpful and supportive and take them skiing.

But at any rate I don’t love skiing when it’s snowing because it’s wet and it’s colder and the visibility’s worse. And those are just the things I don’t like about skiing anyway. So anyway, we’re skiing and we break for lunch and we’re sitting in the lodge and I’m thinking how good it feels to be not skiing and to be out of the cold, to just be resting, eating some food, and I think to myself, well, I guess I could just stay in the lodge and...

491. The Sunk Cost Fallacy