SUNK-COST

May 28th, 2018

Sunk-costs can have terrible ramifications. 

The sunk-cost of time, effort, and money, can keep people in terrible marriages, holding on to failing businesses, even researching pointless scientific inquiries.

Generally the sunk-cost is spoken of in negative terms. 

But it is a simple aspect of human psychology that is neither good nor bad. 

(That we unconsciously default to focusing on the negative is simply an unfortunate aspect of human psychology. But it can be trained to be otherwise.)

Sunk-costs can be used for good.

Buying a year’s membership to a gym is generally going to cost a fair amount of money. That sunk-cost can be a motivating factor when it comes to the difficult beginning portion of starting a new habit or set of habits geared towards fitness and health.

So many want the perfect free meditation app. But paying for a meditation app gives it a much highlighted presence in one’s mind when compared to the free apps that we can weigh our phones down with. The sunk-cost makes us more likely to actually use it. To Commit.

Money is a form of belief. It is an abstract agreement that we have with one another.

(always interesting to think about someone with good credit. What does the word ‘credit’ even mean? It comes from the French and Latin, meaning ‘belief’. Having good credit simply means that people can believe you will come through on your financial promises. That is what a credit card is: a promise card. A promise that you will pay. Eventually. And if you don't come through on that promise, that promise card starts declining. It's a signal that you are not to be believed in, not to be trusted. THAT is why it is so embarrassing when a card declines, and why people are soooo quick to furnish a reason why it is not working. We understand this unconsciously, but consciously using money with a thoughtful understanding of it's abstract nature can yield us benefits beyond the material.)

Money can be an agreement we have with ourselves.

Pay for the membership. Pay for the app.

Committing the money commits one more part of your brain. 

The more parts of the brain that are devoted to the change, the more likely it will stick.

If you can’t commit the money, then do you really believe in yourself?