We are reading a book that we are not liking at all. But we paid 20 euros for it, so we decide to finish it, in spite of Pennac and the third of his list of reader’s rights which states “It is not necessary to finish a book”. We are not satisfied with our work, our energy has been waning for a few years now and we no longer find much sense in it, we would like to do something else, maybe start again in another sector, in another role, or simply devote ourselves to cooking. We have an offer for a position below ours for a job we would love. But we’ve spent years training, getting degrees and Master’s degrees to get a career, we can’ t throw away everything we’ve achieved, better to stay. The project started two years ago in the company, which seemed to promise exceptional results, is not giving the expected results, despite all the corrective actions we have tried to take, despite the increase of the dedicated budget, despite the fact that the best engineers are working on it…we cannot leave it now, we have already invested too much, sooner or later it will bear fruit.

Maybe you recognized yourself in the three examples above, or maybe you can think of other situations in which continuing has prevailed over changing, stopping, doing something else. What they have in common is that, in spite of all the signals that tell us that the decision we have made needs to be revised, it is as if there is something acting on an individual and collective level: we cannot change it. Sometimes it’s just a matter of stopping doing what we’re doing, others, as in the case of changing jobs, of choosing between two alternatives, one of which, the one we don’t choose, appears, if analyzed rationally, to be better. The root of this blockage is an unconscious evolutionary tendency. When faced with the possibility of interrupting an empty investment and therefore a future gain of resources to invest elsewhere, we tend instead to avoid losses, anchoring ourselves in the past: it is the bias (fallacy) of sunk costs, also known as Concorde effect, from the striking example of Anglo-French stubbornness in pursuing a failed investment.

This bias is not to be confused with perseverance, the ability to wait for the results of projects, actions, activities with an uncertain outcome but with a possible happy ending. The sunk costs bias concerns those situations in which there is no rational possibility of success, all the data confirm this and despite this we remain tenaciously attached. Clearly it is not only a matter of loss of an economic investment, the costs are also emotional and the higher the involvement we feel the more difficult it will be to let go of the object that has captured our energies. However, when perseverance becomes an ideal, a diktat, an absolute, when it is decontextualized and promoted as a feature always and only positive, using a male paradigm of reading success, the pressure to continue even what no longer makes sense, can become so strong that we lose sight of the rationality of persisting.

Researchers at the University of Minnesota found that this tendency isn’t unique to humans, also clarifying why it’s so hard to quit. In a paper published in 2018 in the journal Science are exposed the results of an experiment, which establish that even mice and rats are subject to this fallacy, opening, according to the researchers, many new avenues on the study, for example, of what happens to the brain in the case of addictions to drugs or other. The “sunk costs” accompany us in the towers of glass and steel in which we live our organizational life, another of the close links of the human species with the rest of the animal world. Also, in another interesting research from the American Psychological Association, sunk cost bias was studied in individuals from different cultures. The research shows that it is a cross-cultural bias that touches individuals from even very distant cultures.

The unrecoverable cost bias is not limited to damaging the rational choices of individuals, groups and organizations. It acts, and produces much greater damage, even at the level of economic and political macro-systems, making it difficult to fight climate change, especially in those sectors, such as energy, or construction, which are characterized by long-term investments, started in years of supposed/imagined continuity of low cost of fossil fuels, of non-regulation of emissions, of consumption without concern for the future of the planet. It is in these sectors, in which investments are recoverable only after decades of use, that it becomes more difficult to stop looking at the past and integrate rational elements in the decision, such as the agreement of the scientific community on the climate impacts of business as usual.

What can we do, at an individual, organizational, and societal level, to avoid falling into the trap of sunk costs?

We have seen above that the sunk cost bias finds fertile ground in an implicit understanding of the world in which the fact of letting go of what does not succeed, the abandonment of a project, of a job, of a production system, is read as a defeat, a shame, a weakness, something to be shunned. This kind of worldview does not contemplate the value of acknowledging error and vulnerability, and therefore risks anchoring us to the past, to an illusion of consistency, of equation between the effort made and the result hoped for, thus preventing us from seeing that persevering will only be the source of other irrational choices, other costs, other losses.  In Nexus we are particularly sensitive to this kind of bias because it is one of those that make regeneration impossible, preventing what must die from being let go and energy from being able to go where there is life, where the future asks us to be.

On an individual and collective level, it is important instead to slow down and bring what is unconscious to be explicit. What are the costs of continuity, what are the negative impacts on the future? The abandonment of a past in which one has invested a great deal starts with a process of revisiting, reinterpreting, allowing one to see the mental models that influence action in order to be able to transform them. It is a process analogous to that of Nature, which leads to the regeneration of the intention to align it with the evolutions of the context.