Do you have a banana limit?
I have a banana limit.
I don’t know if it’s because there’s something in bananas that my body doesn’t need much of, or if it’s all in my head, or what… but I can’t usually eat big bananas. And sometimes I struggle with small ones.
Honestly. I’ll get half-way through a banana, and suddenly feel like I’m gonna throw up.
But often I’ll carry on eating it anyway for a couple of reasons: first, I don’t like wasting food. Second, I feel like I’ve eaten this much banana so I should really finish it. Might as well.
Which is daft.
And a reasonable, if rather silly, example of the sunk cost fallacy.
Human beings are – in many ways – really very stupid (just look at Donald Trump and his popularity if you’ve any doubts about this).
We are not rational. We are not sensible. We are not SMART, often. We fall for the sunk cost fallacy – often enough for it to be scary and damaging.
Small business owners are particularly prone to this and it can really hurt.
In economics, a sunk cost is any past cost that’s already been paid and can’t be recovered. For example, a business might invest £5,000 on a lovely set of Apple hardware (shiny!). This money is now gone, and the business can’t recover it.
So it shouldn’t figure into the business’s decision-making process.
Or, on a personal note, let’s say you’ve bought tickets to see Tenacious D in Austria. But when the gig comes around, you’re ill: you’ve a dodgy belly and a blinding headache. But you paid a wodge of cash for those tickets, so you go anyway because if you don’t you’ll have “wasted your money”. (I wasn’t ill and did enjoy the gig.)
You’ve just fallen for the sunk cost fallacy.
Why? Because you’ve spent the money, sure… but you can’t get it back. If you’re going to have a miserable time at the gig, you’ve made your life worse, not better, by going anyway.
It’s really, really common. Honestly, pay attention to some of the decisions you make that aren’t that fun:
“I might as well keep watching this awful film because I’ve already watched an hour of it.”
That’s a wasted hour…
“I might as well keep reading this bloody awful book because I’m 100 pages in.”
Nope. Nope nope nope. That time is gone, amigo. You can’t get it back. By carrying on, you’re simply wasting more hours of your life. Needlessly.
“I might as well carry on dating this twat because we’ve been together for 3 years.”
Really? You’re going to waste more of your life on someone? Yeah, it’s tough — you’ve put a lot of emotional investment into the relationship, but if it’s bad news or making you unhappy, nix it. Now. How much happier could you be?
Look, the best way to avoid wasting time and money is to recognise the sunk cost fallacy. If you’re not getting value from something, stop doing it / paying for it / eating that banana.
That goes for my blog posts, too. If you’re not enjoying them or finding them useful, why are you here?
If you ARE enjoying them and finding them useful, then hey! Guess what? I’ve great news: I’ve also written a book.
Vicky Fraser is a copywriter, author, and entrepreneur. She really did run away with the circus… but when she’s not swinging from a trapeze, she’s showing other copywriters and small business owners how to work with better clients, make more money, and stop missing bathtimes, first words, and dinners with angry partners. In fact, she wrote the book on it. Get your copy here.
PS It’s also available on Kindle and you can get it here. If you do get it on Kindle, let me know — because you also get free membership to my Business for Superheroes Club, with a free monthly newsletter. Email me your Kindle receipt and I’ll add you.