Skip to main content

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.  

Comments

Popular posts from this blog

The Kaepernick Craze: Exposing the Nation's Fools One Conversation at a Time

The Kaeparnick craze and other viral movements haven't merely pressured people into becoming simpler caricatures of their prior selves, but they have manifestly exposed people for how foolish and uninformed they've been all along. 



In his final year in the NFL, Kaepernick ranked 17th in passer rating and 34th the year before that. 

He played through an entire season in only two of his six years in the league, and his best full-season performance ranks far outside of the NFL's top-250 single-season passing performances in the league's history. 

For reference, the oft-criticized Tony Romo posted a career passer rating of 97.1, as compared to Kaepernick's 88.9. 

Romo's passer rating dipped below 90 for only one season of the eleven seasons he played, whereas Kaepernick failed to eclipse the 90 mark on three of his six seasons, a full 50 percent of his time in the NFL. 

In fact, Kaepernick accomplished this feat only once if we are to discard those other two seasons in …

Institutional Racism: The Sasquatch of Political Folklore

A great confusion has arisen out of the clamor of political debate, one which presupposes that any dismissal of the merits of “institutional racism” somehow equates to one’s rejection of personal struggle. 

Whereas the struggle of any individual remains always and everywhere unique and wholly personal, his common bond of complexion with others who have struggled serves inadequately as the basis for any argument which regards this commonality as the cause, or as the reason, for that veritable struggle. 

To condemn the unidentifiable and nebulous abstraction, then, by castigating an unnamed institution which persists beyond our specific capacity to recognize its power, serves only to absolve individuals of their personal responsibility, to shift blame and culpability to a specter which exists only by the creative designs of our imaginations, which exists as the scapegoat for all outcomes popularly maligned as undesirable. 

This unactionable practice, then, swiftly and categorically excuses…

Homelessness More Lucrative than $150,000/Year Job in SF Bay Area

Most people in the United States long for a $150,000-per-year salary. This makes sense, as the nation's median personal income is roughly 80 percent below that mark. 

It's a lot of money. 

In fact, this income level qualifies for the top 4 percent of Americans and the top 0.1 percent of the world's population; it is 109 times the global average.

If this is true, how could an unemployed homeless person possibly make more money? Well, the federal, state and local governments: that's how!

Let's take a look at the numbers.

A single Bay-Area Californian earning $150,000 per year pays an effective income tax rate of 32.23 percent: this figure is inclusive of a 7.20-percent effective state income tax (and 9.30-percent marginal rate), an 18.27-percent effective federal income tax (and 24.00-percent marginal rate), and a 6.76-percent effective rate for Federal Insurance Contributions Act (FICA) taxes. 



In addition to income taxes, the homeowner incurs an annual mortgage cost amou…