Meditating on Those Sunk Costs

By Freakonomics, The Hidden Side of Everything

The sunk-cost fallacy leads to all sorts of poor decision-making — like staying too long at a bad job or refusing to drop out of a hopeless mayoral campaign. Here’s how Dubner explained it in our podcast on quitting:

A “sunk cost” is just what it sounds like: time or money you’ve already spent. The sunk-cost fallacy is when you tell yourself that you can’t quit because of all that time or money you spent. We shouldn’t fall for this fallacy, but we do it all the time.

But there’s new hope for all you sunk-cost believers out there: new research (abstract; PDF) from Andrew C. Hafenbrack, Zoe Kinias, and Sigal Barsade shows that a 15-minute mindfulness meditation practice can help. Here’s the BPS Research Digest’s summary of the study:

The researchers first surveyed 178 adults online and found that across the sample, a natural tendency to stay in the moment (called “mindful attention awareness”) tended to correlate with being less prone to the sunk-cost bias.

In two further experiments, involving hundreds of undergrads, Hafenbrack and his colleagues found that just fifteen minutes of guided, breathing-based mindfulness meditation led to less vulnerability to the sunk-cost bias, as measured by one of two hypothetical business decisions.

Resistance to the sunk-cost bias in the first scenario required choosing to buy a superior printing press even though money had already been invested in older technology; resistance in the second scenario required making the decision to discontinue investment in a stealth plane because a rival model made it obsolete. In both cases, participants who undertook the mindfulness training demonstrated less sunk-cost bias (78 and 53 per cent resisted it, respectively, across the two studies), as compared to participants in the control conditions who were instructed to spend the same amount of time mind wandering and thinking of whatever came to mind (just 44 per cent and 29 per cent, respectively, resisted sunk-cost bias).

One further study with 156 online participants looked for mediating factors. This showed that the benefit of mindfulness meditation was mediated by less focus on the past and future, and less negative affect.

 

Read the article: Freakonomics, The Hidden Side of Everything. (2014). Meditating on Those Sunk Costs.

Photo courtesy of Balint Földesi.



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