• Dr. Francis Yoo

COVID contemplations - Spring Break - Sunk Cost Fallacy (snippet)

Article: “Spring breakers say coronavirus pandemic won't stop them from partying”


By Christopher Brito


Article Summary


Amongst the many examples of news about people disregarding governmental and public health recommendations to avoid public gatherings to reduce the transmission of COVID, this article is one of my favorites because we get the opportunity to hear the words directly from the mouths of the people involved. This news article is about college students who carried out their March spring break travel plans to party in Miami, FL during the COVID pandemic despite recommendations to the contrary.


This article is based on the interviews of six spring breakers reporting their perspective and plans on video. Besides quoting the spring breakers, the article reports on the reactions of people on social media and from the government.


Analysis: Sunk cost fallacy and plan continuation bias


We can learn a lot from each spring breaker’s decision and actions, but I am going to focus on only the first spring breaker in this video. He states,

"If I get corona, I get corona. At the end of the day, I’m not going to let it stop me from partying. You know, I’ve been waiting, we’ve been waiting for Miami spring break for a while, about two months we’ve had this trip planned, two, three months, and we’re just out here having a good time. Whatever happens, happens."


Here is a reorganization of this statement as separate thought processes. I took the liberty of filling in some implications.


  1. (stated) I spent a significant amount of effort in preparing and planning for this trip.

  2. (stated) I spent a significant amount of time (two to three months) waiting for the trip.

  3. (implied) I will not be able to recoup these costs (effort and time).

  4. (implied) If I do not go on this trip, I will have wasted my time and effort.

  5. (implied) COVID can make me sick and prefer not to be sick.

  6. (stated) I do not mind if I get COVID.

  7. (stated) I have a lower chance of getting COVID if I do not go on this trip as planned.


There are a few things we do not know:


  1. Does he know how sick COVID can make him? (I will assume not.)

  2. Does he know that he can contract the virus and transmit it to others without getting sick himself? (I will assume not.)

  3. Would his actions have been different if he knew how sick COVID could make him and that he can get others sick? We cannot say for sure. (This invites several other discussions that are outside the scope of this book.)


The sunk cost fallacy is a combination of cognitive biases that illustrates that people do not abandon a project or plan because of the high cost that went into it already. For example, let’s say you traveled for a whole day to eat at a specific restaurant and spend $1,000 on a meal. You find the food to be terrible tasting and even vomit the food out after two bites. Do you continue eating this food that you spent so much effort, time, and money on? If so, you are guilty of the sunk cost fallacy.


Oh, by the way, there is no refund or exchange policy.


This man commits the sunk cost fallacy by not cancelling his plans even though he knows he can contract and get sick with COVID. If he were truly concerned about his health, he would cancel his plans and accept that the effort and time he spent preparing and waiting for this trip are “sunk costs” that cannot be recovered.


Question / Exercises


We all have committed the sunk cost fallacy at some point. Maybe you spent a lot of money for a ticket to a show and found it extremely boring but stayed to the very end because you spent so much money on it. Maybe you stayed in a dating relationship with someone, even though you knew it would not progress to marriage. Maybe you used your personal savings to fund your business that has been losing and will continue to lose money. Maybe you continue to work for a company that you hate working for because you have spent so many years and decades there. Maybe you continue to spend time with a “friend” whose company you do not enjoy anymore or do not want because you have been with them for years.

The sunk cost fallacy makes it easier to continue spending time, money, effort, and energy on a lost cause because otherwise we have to earnestly think about our situation and acknowledge our mistake while having little to nothing to show for the costs that went into it.


This can be extremely painful, but if we do not face it, we do harm to ourselves in the long term by not moving on with our lives.


Identify one sunk cost you have in your life right now.


Does it make sense to stay at your current work or keep going with your business?


Is there a relationship that you need to move on from for your own good?

Do you have trouble moving on from an organization that you have spent a lot time in but are not getting as much value or support from as you used to get?



References

1. Brito C. Spring breakers say coronavirus pandemic won’t stop them from partying. CBS News website. https://www.cbsnews.com/news/spring-break-party-coronavirus-pandemic-miami-beaches/. Updated March 25, 2020. Accessed June 13, 2020.

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