The sunk cost fallacy in action

Man sitting on a pound sign submerged in water, surrounded by sharks.
Source: iStock

Earlier this year I started to plan a major redesign for my website garethjmsaunders.co.uk — most of it hasn’t had a redesign since about 2003; it’s still built around a table layout!

In the process of redesigning the site I learned a really important lesson that in the long run has saved me hours and hours of development. It’s to do with the sunk cost fallacy.

A bridge too far

I’ve completed plenty of site designs in both my personal and professional lives. This was going to be no different. I did some initial research, sketched out the layout and features that I’d like and then looked around for a suitable premium WordPress theme that I could use. I settled on Bridge by Qode, which cost me US $58 (approx. GBP £35).

Bridge seemed to offer the features and flexibility that I was looking for in a theme. But once I had downloaded and installed it on a test site on my local development server I discovered just how complex it was.

At the time it offered around 10 demonstration sites to help you get to grips with all the possible permutations. It now boasts 42 ready-to-use demos.

I spent a good two to three weeks just installing demo sites and trying to reconcile what I was learning hands-on with the documentation. And at the end of that period, to be honest, I really didn’t feel that I was anywhere closer to understanding how I might use the theme. Bridge is a hugely capable theme, however, it simply offered too much for my requirements.

But I felt that I had to persevere, I had spent both time and money on it, after all. Surely it had to get easier if I installed another demo site, and read the documentation just one more time, and… presumably spent another 2–3 weeks trying to understand the minutiae of this theme.

Sunk cost fallacy

It was at that point I realised that I was falling into the ‘sunk cost fallacy’.

In economics, a sunk cost is any cost that has already been paid and cannot now be recovered. So in this example, I had already bought the Bridge theme. I had spent £35 and wouldn’t be able to get a refund.

The fallacy that I was falling into was that I was making decisions about the future of my site based on past expenses. Or as You Are Not So Smart puts it

[y]our decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.

I felt that because I had spent money on something, even though I was finding it too complex and not entirely suitable for the purpose I’d bought it — despite all that — I still felt that I ought to persevere and try to make it fit my needs.

What a divvy!

Divi

Freed by my decision to simply let go of using Bridge for this project, I went shopping again.

When I’d been looking around for themes to start with, I had narrowed it down to two: Bridge and Divi by Elegant Themes. So I bought Divi (USD $89 per year / approx. GBP £55).

In the long run that mistake has cost me money, but the time that it has saved me is immeasurable (or rather, I haven’t actually measured it).

The theme does exactly what I need and in a fraction of the time. I find the theme’s interface really intuitive, and the restrictions it puts on me (by not trying to do everything in every possible way) challenges me to be more creative with what I’ve got. Too much choice is a bad thing, remember.

Conclusion

The sunk cost paradox is certainly something to bear in mind the next time you need to make a decision: don’t necessary let past costs (time or money) influence your decisions about the future.

Lifehack has an interesting article about how the sunk cost fallacy makes you act stupid.

Published by

Gareth Saunders

I’m Gareth J M Saunders, 46 years old, 6′ 4″, father of 3 boys (including twins). Latterly, web architect and agile project manager at the University of St Andrews and warden at Agnes Blackadder Hall. Currently on sabbatical. I am a priest in the Scottish Episcopal Church, and I sing with the NYCGB alumni choir.

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