Sunk Cost Fallacy, The

The fallacy that, when a choice is being made between two or more alternatives, the costs that have already been incurred in bringing the alternatives to their present stage should be taken into account. In fact, only the costs and benefits expected in the future should be counted.

This can be hard: if millions have already been spent on developing alternative A, but alternative B is in fact better, simpler and (in terms of future costs) cheaper, then this is a matter of regret and embarrassment. It should prompt a kaikaku moment, but the people who have built their careers in developing alternative A can be expected to argue against with passionate intensity: “We cannot just throw 20 years’ work down the drain. . .”.

In fact, decisions can only affect the future, so only future costs and benefits should be considered.

 

Related entries:

Paradigm, Nuclear Energy, TEQs (Tradable Energy Quotas), Time Fallacies.

Synonyms:
Sunk Cost Fallacy
David Fleming
Dr David Fleming (2 January 1940 – 29 November 2010) was a cultural historian and economist, based in London, England. He was among the first to reveal the possibility of peak oil's approach and invented the influential TEQs scheme, designed to address this and climate change. He was also a pioneer of post-growth economics, and a significant figure in the development of the UK Green Party, the Transition Towns movement and the New Economics Foundation, as well as a Chairman of the Soil Association. His wide-ranging independent analysis culminated in two critically acclaimed books, 'Lean Logic' and 'Surviving the Future', published posthumously in 2016. These in turn inspired the 2020 launches of both BAFTA-winning director Peter Armstrong's feature film about Fleming's perspective and legacy - 'The Sequel: What Will Follow Our Troubled Civilisation?' - and Sterling College's unique 'Surviving the Future: Conversations for Our Time' online courses. For more information on all of the above, including Lean Logic, click the little globe below!

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