Skip to main content

Curing writer's block with sunk cost fallacy

I paid $20 to renew this blog's domain in July. But the truth is, I had been suffering from writer's block ever since the start of this year and hadn’t posted a single thing. At one point, I was ready to give up on the blog altogether, but a voice in my head kept reminding me of all the time and money I’d already invested in this blog. So, this week, I sat down to write this imperfect, patchy article—about none other than that voice itself. 

Let me start with a classic scenario where you might have also encountered this voice. Suppose you’re at an Italian restaurant and ordered some pasta and tiramisu. After finishing the pasta, you realize you’re full, and there’s no way your stomach can handle that delicious tiramisu sitting right in front of you. But then, that beautiful brain of yours reminds you that you’ll be paying for the tiramisu whether you eat it or not. In a desperate attempt to avoid wasting money, you reluctantly eat two quick bites. And just like that, my friend, you’ve fallen victim to the "sunk cost fallacy." 

The money you paid for that tiramisu was a sunk cost, with no chance of recovering it. So, in theory, it shouldn’t affect whether you eat the tiramisu or toss it in the trash. But in practice, it's not that simple. In fact, if you replace the tiramisu in that story with my blog's domain renewal, you’ll see how this fallacy crept into my thinking. 

Now, let’s say you don’t like Italian food and you're not a big fan of my blog. Are you safe from the sunk cost fallacy? Not really. Sunk costs are all around you. Sure, you can spot the obvious cases—like if I told you I lost a million dollars in a Ponzi scheme and now I’m heading to Vegas to gamble another million to recover my losses. But what about the less obvious, harder-to-spot cases? One such situation cost the British and French governments billions in investment. 

So far, I’ve made this fallacy seem like a purely negative thing. But I can also put a positive spin on it by sharing countless personal examples where it helped me stick to hard commitments. One such example is from a year ago when I spent $100 on new running shoes, which motivated me to run daily for almost a month. Had I not bought those shoes, I probably would have quit after just three days. Or take a more famous example - NASA, after the sunk costs of Apollo 1, could have abandoned their goal of landing humans on the moon. But they pressed on, and history witnessed the success of Apollo 11.

There’s a lot of nuance tied to this fallacy in our thinking, and I doubt I’ll fully grasp it in my lifetime, let alone summarize it in one article. So, ignoring expert advice that better decision-making requires not letting sunk costs influence our choices, I’ll let my $20 investment in this domain renewal dictate my decision to keep writing on this blog.

Comments

Post a Comment

Popular posts from this blog

Solving Customer Churn with a hammer!

Learning when data should take a back seat and give way to domain knowledge is a valuable skill. Suppose you built a machine learning model on the data of your customers to predict churn risk. Now that you have a risk score for each customer, what do you do next? Do you filter the top n% based on the risk and send them a coupon with a discount in the hopes that it will prevent churn? But what if price is not the factor driving churn in many of these customers? Customers might have been treated poorly by customer service, which drove them away from your company's product.  Or there might have been an indirect competitor's product or service that removes the need for your company's product altogether (this happened to companies like Blockbuster and Kodak in the past!) There could be a myriad of factors, but you get the point! Dashboards and models cannot guide any company's strategic actions directly. If companies try to use them without additional context, more often tha...
Post a Comment
Read more

A new detail that helps you step up your ‘window’ game in SQL!

  I have a love-hate relationship with the window functions in SQL. I love how it allows one access to data from rows beyond the current row as it simplifies the tasks like creating rolling averages or ranking values within a group. I hate it when I have to write a complicated query involving the usage of window functions along with joins, subqueries, CTEs, etc. But I learned a new detail recently about window functions that made me gasp and admire it. To understand it, let us consider the task of creating a 3-day rolling average on a numeric column. This task requires data from the current row and the preceding two rows. Hence, it is a no-brainer to use window functions here. The usual syntax of the window function for averaging is as below: AVG() OVER () This window function considers the value of the current row and the value of all the preceding rows to calculate and display the average. (Let us overlook the functionalities of PARTITION BY and ORDER BY clauses for a while.) But...
Post a Comment
Read more

What is SUTVA for A/B testing?

Imagine if person B’s blood pressure reading depends on whether person A receives the blood pressure medicine in a randomized controlled trial. This will be violating Stable Unit Treatment Value Assumption (SUTVA) SUTVA states that the treatment received by an individual should not influence the outcome we see for another individual during the experiment. I know the initial example sounded absurd, so let me try again. Consider LinkedIn A/B testing a new ‘dislike’ reaction for its users, and the gods of fate chose you to be part of the initial treatment group that received this update. Excited after seeing this new update, you use this dislike reaction on my post and send a screenshot to a few of your connections to do the same, who are coincidentally in the control group that did not receive the update. Your connections log in and engage with my posts to use this dislike reaction, but later get disappointed as this new update is not yet available to them. The offices of LinkedIn are tr...
Post a Comment
Read more