Sunk-Loss Theory

Barry Schwartz, is a professor of psychology at Swarthmore College, writing in the Los Angeles Times about
The 'Sunk-Cost Fallacy':

We make a significant investment — of money, time or emotion — in some project, relationship or business deal, and it doesn't seem to be working out. Do we continue to "throw good money after bad" or do we "cut and run" and "stop wasting time"?

Psychologists, decision scientists and economists have an answer. They tell us that it's a mistake to continue with a project or an activity because of what you have already invested in it. The time or money you've already spent is gone. You can't reclaim it. Using a past investment to justify a future investment is what they call the "sunk-cost fallacy."

Instead of thinking about the past, what we should be doing is thinking about the future.

Life is full of uncertainty. But what we can say is that if the reason for "staying the course" is past commitment — sunk costs — we need to find a better one.

Oh, yes, we've heard them trotted out in defense of continued U.S. involvement in Iraq as death, injury and insurgency mount. President Bush has offered several reasons for staying the course. And one of them is the more than 2,600 Americans who have already died in Iraq. Bush said said at Ft. Bragg, N.C., on July 4:

I'm going to make you this promise . . . I'm not going to allow the sacrifice of 2,527 troops who have died in Iraq to be in vain by pulling out before the job is done.

We heard this argument often enough in the 1960s. As casualties mounted in Vietnam, it became more difficult to withdraw because withdrawal would have "cheapened" the lives of those already sacrificed. We "owed" it to the dead and wounded to "stay the course." What staying the course produced was thousands more dead and wounded. "Knee deep in the big muddy" is how folk singer Pete Seeger described it.

The question should never have been, "What have we invested so far?" but "What are our objectives for the future and can we attain them at a reasonable cost?"

. . . The sunk-cost fallacy took many lives in Vietnam. Whether Iraq is or is not another quagmire I leave to others, and to history, to determine. But there is one respect in which we must not allow Iraq to become another Vietnam: Continued involvement must not be justified by appealing to the imperative not to allow the dead to have "died in vain."

How should we honor the sacrifices of those who have died or suffered serious injury in a U.S. military conflict? The best way to show how much we respect and value their lives is by not risking other lives unless future prospects for success fully justify putting more people in harm's way. Therefore, our standards for putting more people at risk should, if anything, become more rigorous, not less, as casualties mount.

Yet people seem willing to waste even more (time, money or lives) to justify what they have already spent and avoid that sick feeling of failure . . . .And troops haven't really "died in vain" as long as you continue to press on in the fight, no matter how disastrous the results.

. . . . it is unacceptable to justify continued involvement in Iraq or any other conflict on the grounds that we "owe" it to those who have already fallen. That is a justification that has strong emotional appeal, but it is fallacious, and no one should be allowed to get away with it.

Whatever the differences between Iraq in 2006 and Vietnam in 1968, if we allow policymakers to use our "sunk costs" — our dead military — to justify further conflict, we will have turned Iraq into another Vietnam. And if we do, we will be shamed by Iraq just as we were shamed by Vietnam.