Sunk Costs and Opportunity Costs
I graduated with a degree in Integrative Neuroscience.
When I tell people this, I imagine they think it means that I spent 4 years in school holed up in laboratories with a lot of rats, studying their brains. While yes, I did do some of that, my college experience meant so much more than just learning about the brain.
It also meant taking a class on the history of religions, learning how to swim and dance, discussing race in politics, philosophy, and the law, researching the use of technology tools among Nigerian students, learning about child behavior, and helping others with mental health concerns or in stressful situations through an anonymous call line.*
One of my favorites was the economics class I took in my senior year. It was there I learned about opportunity costs and sunk costs. In short, opportunity cost is what you give up when you make a choice, while sunk cost is what you pay already and cannot get back.
notes and doodles from said economics class
Both sunk costs and opportunity costs are part of everyday life, and not just in an economics class.
They influence decision-making and, sometimes, explain our actions, such as why it is difficult to quit a job even when one hates it or why it is so hard to part with our old clothes even when they don't fit anymore.
Recently, I had to give up a project for another one and come to terms with the fact that I was losing something. This was hard, really hard. Project A had its benefits and would have probably positioned me for a good outcome, but in the end, it was the opportunity cost for choosing Project B, which simply felt like the right thing to do. I went with what my heart desired the most, but it came at the cost of something that also could have benefited me.
Giving up certain things can be hard: Giving up anything comes at a cost you sometimes will have to acknowledge and then ignore. The hardest to ignore are the sunk costs (for instance, how much you've already invested in a business and will have to forfeit when you give up) and the opportunity costs (for instance, giving up a promotion at work so you can focus on building your business on the side).
What holds us back: The sunk cost fallacy often causes us to hold on longer than reasonable, and opportunity costs can often distract us from making decisions on time. These things hold us back. Recognizing this can be freeing because once you know what is cognitively holding you back, you can consciously move on.
Free unsolicited advice: So, if you ever find yourself stuck at decision-making touchpoints, I'm encouraging you to take inventory of your sunk costs and opportunity costs and let them go. It might not be the easiest thing to do, but it could give you the clarity you need to take the next step.
*Ps: If you're wondering why & how - it's because I designed my education to be so. I started college all over America after spending three years as a university student in Nigeria because I knew I wanted something different for myself. I didn't just want to be one thing. So while on paper, I was an Integrative Neuroscience major, I was taking other courses that had nothing remotely to do with the human brain or nervous system, and I loved it!
