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Would you buy this path today?
Why it feels too late
Years of school, exams, a job in the field, and a built-up network and skill set sit behind the feeling that it's too late. Saying it's too late to change really means too much has already been invested to leave. Timelines are arbitrary, and a person can wake up and choose to live differently.
One reader wrote in from exactly that spot: a 32-year-old big law attorney, married, whose parents are lawyers. They picked the path as a freshman and followed it through the right major, the LSATs, law school, and clerking. The money is solid and the parents are pleased, yet the reader feels like they're living someone else's life and worries that so much invested means falling behind on a new path.
The sunk cost test
That pull has a name: sunk cost thinking, the tendency to continue with an endeavor simply because of the money, time, or energy already put into it. The test strips the investment away. Would this version of life be chosen today if it weren't already owned, and if the preceding years hadn't been spent building it?
The question works on a good day. Asked on a bad day, it turns into jumping ship because something got hard. If the answer is no, that is when someone is ready to take action.
Why does past investment keep people committed?
Psychologists Hal Arkes and Catherine Blumer tested this in a 1985 paper called The Psychology of Sunk Cost. In one study, theater patrons were randomly given full-price or discounted season tickets. Those who paid full price attended more of the early plays, even though the tickets were equally useful to everyone. The researchers read the gap as a pull to avoid wasting money already spent.
Why does a bad day distort big decisions?
In a 1983 study, Norbert Schwarz and Gerald Clore phoned people and asked how satisfied they were with their lives. Respondents reported lower satisfaction on gloomy days than on sunny ones. The gap mostly disappeared when the caller first asked about the weather, which pointed to mood being mistaken for a verdict on life. The finding became a standard example of the affect-as-information account of judgment.
Why do economists treat past costs as irrelevant?
In standard decision theory, a choice should depend only on what differs between the options from now on. Money already spent is gone whether a person continues or stops, so it appears on both sides of the comparison and cancels out. Only future costs and future benefits can separate one option from the other. This is why economics textbooks describe a sunk cost as one that should not enter a forward-looking decision.
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