One Simple Reason Why You’re a Bad Decision Maker
When we know that things will inevitably turn out badly, we have to let go.
The Concorde was one of the only two supersonic civilian aircraft ever made available to the public, the other one being the Tupolev Tu-144, with both aircraft reaching speeds twice that of the speed of sound (2,150 km/h). Supersonic planes are pretty much the hare to regular aircraft’s turtle. The latter only averaging 740–930 kph in cruising airspeed.
On October 24, 2003, British Airways flew its last Concorde flight from JFK to London Heathrow. This was the last Concorde aircraft ever flown, ending a solid 27-year run for this aviation marvel.
So why did we pull the plug on the Concorde? What could possibly have been the reason behind the decision to scrap this revolutionary piece of technology?
The answer is simple — cost. It was just too expensive to build these flying machines, let alone maintain flights on a regular basis. It was a no-brainer, or at least, should have been. We witnessed the last Concorde fly back in 2003; however, by that time, the British and French governments and manufacturers that collaborated to build the project had already been losing money for over a decade. Wouldn’t common sense dictate that the project be abandoned much sooner?
Studies show that someone is more likely to believe in or be optimistic about something that he/she has invested some resources into; and in many cases, regardless of facts. This is called sunk-cost bias. (Geg Mckeown tackles it quite extensively in his famous book, Essentialism: The Disciplined Pursuit of Less)
We’ve all been there before. Whether it’s believing too much in a sports team that you’ve already bet money on, or pulling out too late on a stock that’s fated to rise no more, sunk cost bias continues to be present in many-a-decision being made by the individual and organization alike.
It’s hurting our ability to think clearly and make sound decisions. Instead of deciding based on facts and reason, we now lean towards beliefs and emotion — the latter obviously being the less dependable.
A sunk cost refers to an expenditure that has already been made or paid for. More importantly, you can’t get it back regardless of whether the thing ends up being valuable. For obvious reasons, that could lead to a range of feelings, from simple disappointment to flat-out devastation.
If I were someone who has made a sunk cost, I’d do everything in my power to make the most out of it to try and squeeze every ounce of value from this, whenever possible. Enter, the sunk cost bias.
Imagine yourself saving up $40,000 for the degree of your dreams, only to find out halfway through freshmen year that it’s not for you. Would you drop out, transfer school? Or just complete the degree because otherwise, it would be a total waste of money?
How about enduring a toxic relationship with a partner who is abusive towards you and your kids? You’d think that filing for a divorce is a no-brainer, right? But why do many people opt to just weather it out and hope for things to improve?
The fact of the matter is, humans are romantic. We make decisions based on our emotions and put a heavy amount of weight on things we’ve put our hearts and souls into. “In our minds, we think to ourselves, though sometimes unconsciously, that this thing, this relationship, this project, this career needs to work out. Because if it doesn’t work out, that would mean the end of me.”
So often, however, that’s not the case. Believe it or not, it’s not the end of you, nor the end of the world when things go south. They suck yes, but more often than not, it’s nothing fatal. Problems do pass and we can count on being able to pick ourselves back up and start on a fresh new path.
Yes, each case is obviously different. And for the two examples I shared above, depending on circumstance, pulling out isn’t always the best option.
Regardless, the core thought is still important to note — when we know that things will inevitably turn out badly, we have to let go.
Cut your losses. Come to grips with reality and accept the fact before you — “it’s not going to happen”. It will sting at first but as Jesus said in the New Testament, “The truth will set you free”.
In many ways, having sunk-cost bias is like a long loop of lies to yourself, barring you from thinking and making decisions with unclouded clarity. Stop the lies! Pull out early, and save yourself time and resources that you would have otherwise poured into fixing a sinking ship that’s long been submerged underwater. As soon as you break from this bad habit, you instantly become a much better decision-maker.
Originally published at https://www.betterman.blog on October 11, 2020.
