Sunk Costs

Wisdom from the Field #2

This is a public post from my new series “Wisdom from the Field”, which includes a brief story, what we can learn from it, and reflective questions to apply the ideas into our practice. Become a full subscriber today to receive all posts! -Matt

Financial advisor Morgan Housel recalls a story by Jason Zweig, a writer partnering with organizational psychologist Daniel Kahneman. Zweig sent one chapter back to Kahneman with suggestions.

When Kahneman returned the revised chapter, it was a complete rewrite. This draft did not resemble the previous one. Zweig was stunned. How was Kahneman willing to throw out all that previous work and start again?

Here was Kahneman’s response:

“When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea.”1

The Art of Letting Go

Sunk cost is defined as “a greater tendency to continue an endeavor once an investment in money, effort, or time has been made.”2 This is not always a bad thing. For example, signing up for a gym membership may increase the likelihood that we will exercise.

But an investment can also trap us in unproductive commitments. As a principal in my previous school, I agreed to several trainings in Positive Behavior Intervention and Supports (PBIS). Some of the practices, such as the intervention check in-check out, were positive and are still used in my current position. But other activities like rewards were problematic. We also were not seeing a reduction in negative student behaviors.

When I was challenged about PBIS by a colleague, my initial response was denial. My ego held tight to this initiative; in my mind we had invested too much money, effort, and time into it. Eventually I did let go of this commitment once I accepted that it was not getting the results we wanted to see.

Of all the lessons to be posted here, this one might be the most important. In a rapidly changing world, how do we learn the art of letting go and adapt to new environments? Specific to literacy, what outdated practices can we replace with better approaches? Educators and schools who develop flexibility will be the most successful in the future.

Reflective Questions

  1. Think about your current investments, such as a schoolwide literacy initiative or a reading-writing practice. What evidence do you have that it’s working for kids?

  2. Is the evidence you have valid and reliable, or is it confirming your own biases?

  3. Are there any external partners/coaches available who could give you a new perspective about an investment you have questions about?

  4. How can you reframe a challenge as an opportunity to change your mind?

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1

Housel, M. (2020). The Psychology of Money: Timeless lessons on wealth, greed, and happiness. Harriman House Limited.

2

Arkes, H. R. & Blumer, C. (1985). The Psychology of Sunk Costs. Organizational Behavior and Human Decision Processes. 35(1), pages 124-140, available: https://doi.org/10.1016/0749-5978(85)90049-4