This is why you'll keep doing something you hate

I bought a dress, paid good money for it, brought it home and put it in the closet. Every few weeks I would take it out, but it just didn’t seem like the right outfit for the occasion. So I put it back in the closet. This goes on for month’s maybe even years. Sounds familiar?

Have you ever been in a relationship for years and felt that it’s not going anywhere? You know you should get out but you say to your friends. “I have put too much into this just to walk away!” or “If I leave everyone is going to tell me that they were right and I will look like a fool”. You tell yourself and your friends, “You don’t understand. There are things about him/her that are really special.” And you continue to stay.

Let’s take another example. Imagine receiving a gaudy and uncomfortable sweater from a well-intentioned relative. You learn that it’s a very expensive purchase that makes you keep it and wear it at family events, even though it’s not your style.

So why do we stay in bad relationships or hoard those clothes, hold on to socks or refuse to junk stuff, sit through a terrible movie or shovel down an awful cake baked by a friend?

An experiment carried out by Christopher Y. Olivola at Mellon Univeristy’s Tepper School of Business, found that people are more likely to choose the less enjoyable alternative when a substantial amount of money or time has been spent to obtain it. Also, we will keep forging ahead on someone else’s bad decision, feeling their aversion to loss and regret as our own.

The idea of sticking with bad decisions simply because we have already incurred costs for that decision is know as “sunk costs”. And we continue to stay stuck with that bad decision or in dead end because we are trying to “redeem” our costs. So we throw more money or time and end up worse off. We “honor” sunk costs.

An interesting fact is that humans are the only animals that honor sunk costs. If you stop rewarding a rat or a dog they will look elsewhere for rewards. They give up when the reward stops. We humans don’t!

According to Robert Leahy, Director at American Institute for Cognitive Therapy in New York City, there are several reasons that we stick to losing decisions.

1. We try to make sense of our decisions. We look back and say, “There must be some good reason that I have stuck with this.” We are constantly explaining our behavior to ourselves and we like to think that there are good reasons to stick with something.

2. We fear wasting. Imagine the following. I hold up a 2000 Rupee note and say, “For my entertainment, I enjoy burning money in front of other people. This is a 2000 Rupee note that I wont spend or give to someone. But I will burn it.” Your response is likely to be both confusion and anger. You are angry that I am wasting money. Why should you care? Because we don’t like to waste things. That is why we clean our plate and then worry later about gaining more weight.

3. We don’t want to experience the loss. Once we give up on the sunk costs we fear that we will be hit with a wave of regret and sense of deep loss. By holding on to it we can keep open the option that something will work out. We avoid the feeling of loss. But in reality we are losing every day that we hold on to sunk costs.

Remedy

1. Examine opportunity costs. Every day you hold on to a losing proposition you sacrifice other opportunities. Staying in a bad relationship means not pursuing a good relationship. You can’t buy new clothes or shoes because you don’t have enough space in your closet.

2. Consider this, "Would you buy it again?" If you didn’t have the item or relationship, would you go out and buy it again? If not, then it is a sunk cost.

3. Good decisions mean accepting losses. Smart decision-makers know that it is important to cut their losses. Riding a loser, holding on to something that is no longer rewarding, and trying to convince yourself that everything will turn around are not signs of good decision-making. It’s important to know that it makes no sense to hold on to a losing proposition.

4. Evaluate your regret. Do you really think that if you dropped the suck cost that a year from now you would regret dropping it? Haven’t you let go of other losing causes and decisions? Don’t you feel relieved later that it is all in the past?

Remember this:

Sunken costs will sink you if you don’t let them go.