Barry Schwartz Quote
Aversion to losses also leads people to be sensitive to what are called sunk costs. Imagine having a $50 ticket to a basketball game being played an hour’s drive away. Just before the game there’s a big snowstorm—do you still want to go? Economists would tell us that the way to assess a situation like this is to think about the future, not the past. The $50 is already spent; it’s sunk and can’t be recovered. What matters is whether you’ll feel better safe and warm at home, watching the game on TV, or slogging through the snow on treacherous roads to see the game in person. That’s all that should matter. But it isn’t all that matters. To stay home is to incur a loss of $50, and people hate losses, so they drag themselves out to the game.
Aversion to losses also leads people to be sensitive to what are called sunk costs. Imagine having a $50 ticket to a basketball game being played an hour’s drive away. Just before the game there’s a big snowstorm—do you still want to go? Economists would tell us that the way to assess a situation like this is to think about the future, not the past. The $50 is already spent; it’s sunk and can’t be recovered. What matters is whether you’ll feel better safe and warm at home, watching the game on TV, or slogging through the snow on treacherous roads to see the game in person. That’s all that should matter. But it isn’t all that matters. To stay home is to incur a loss of $50, and people hate losses, so they drag themselves out to the game.
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