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The Psychological Side of Sunk Costs


Writing off any so-called sunk cost as immaterial to any present decision is equivalent to writing off a relationship, perhaps a marriage, as soon as it proves to be disadvantageous instead of recalling its history or perhaps imagining its future. In terms of sunk costs, the modern economist may easily dismiss those costs, especially in the modern economy, when expenses are facilitated by work which has become less laborious than in prior generations. 

If, for example, a laborer were to purchase a football ticket with an amount of cash earned from fifty days of hard labor, the economist may expect that laborer to go to relatively greater lengths, perhaps despite the winter storm of the season, than a counterpart who spent a fraction of his daily earnings, or perhaps a friend who benefited from a "free" ticket.  

This is, after all, representative of all of those days of painstaking work, a feature of life which may be long forgotten due to the relative ease with which incomes seem to be systematically generated without as much blood, sweat or tears. 

Much of the same could be said about the progressive abstraction of money such that its roots and the causes of wealth are increasingly misunderstood and markedly misrepresented. 

This may strike an observer as irrational, especially when the apparent risks seem irreconcilable with the perceived potential for rewards, but this may merely be the consequence of a difference between the observer's and actor's respective sensitivities to the prior experiences which enabled the option now afforded to said actor. 

This sensitivity, when forward-looking, often drives scrupulous savings and spending habits, and while these behaviors may strike the observer as irrational when compared with perceived risks, opportunity costs or even the actor's own present mental calculus, the value of prior work may be understated to accommodate a potentially-overstated or largely-unsubstantiated valuation of life. 

This is not to suggest that individuals are prudent to remain committed to those ends afforded them by past expense, but rather to recognize that some of those individuals are influenced by the recollection of the ferocity or duration of that work which enabled the option. 

In some capacity, merely satisfying the terms tacitly accepted upon the time of purchase is a way to pay homage to oneself and the work conducted for this end. 

Therefore, attendance at the game may not merely stand as a source of mere football-related entertainment but may rather become a hybrid between that and the former. 

The actor may then seem better off by foregoing the game to remain safely at home, or by avoiding the painstaking drive, but the perceived regret, stemming from a supposed diminution of the value of said previous work, may beset the perceived value of the former. 

Again, this may seem irrational while it's merely a specific case of expressed valuation on past time and labor relative to alternative actions or endeavors whose values fail to be expressed with as neat a price tag as the other.  

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