Break free, be you
In business, a sunk cost is any cost that has already been paid or incurred and cannot be recovered. This money is now gone and cannot be recovered, hence it really shouldn’t figure into the business’s decision making process. Making future decisions based on what you have already spent in the past, is known by a term that seems like a tight slap in the face - ‘fallacy of sunk costs’.
We are good at managing our money, yet so terrible in managing our lives. Then it should really come as no surprise that we indulge in the above mentioned fallacy, not in our dealings with money, but with our life decisions themselves. For example, you want to become a director and make movies for the rest of your life. But you studied engineering, that too from IIT and got an MBA to go with it. It would be a terrible waste of time and money to not utilize these degrees right? Ergo, you got a job that was available for an Engineer with an MBA. Fallacy of sunk cost.
In life, there is not just a cost implication, but also an added factor of ‘time’ which makes it even harder to get out of this fallacy. We have got this idea that ‘time’ is an accumulation, like a heavy chuck of rock that we lug around everywhere. I have 20 years of experience in this, I am a veteran in that, I can shit on my own since I was 3 etc. etc. People around you, as well as your own mind keeps telling you that you invested all this ‘time’ in doing something that it really feels you should give it some attention even though it might be completely against your present situation and desires. But what is time? It is just this moment, this very second, and it keeps ticking turning each moment into your past. What you did today morning is already in the past. You cannot accumulate time. It does not listen to you. Whether you like it or not, it keeps ticking away. We have tried to make some sense of this by calling it ‘experience’.
What is experience? It is an accumulation of information and things that have come into your awareness over an elongated period of time. Some experiences are useful. For example, the first time you touched fire, you burnt yourself and the next time you knew not to touch it. It helped you survive. Experience has an inherent property of helping you survive. It serves the most basic need. And that is all its function is. The problem arises when we think experience is a knowledge which we can use to predict the future. And we do this mistake with every single decision of our lives.
Let us take the example of our Engineer, MBA who wants to be a director. He spent all his life studying hard and clearing all those torrid entrance exams and projects to finally be an Engineer, MBA. All the while, he dreamt of being Nolan. He got campus placed and went on to a job which he did ardently for 2 years. Now, it has come to the brim of what he can tolerate about his job. He wants to quit and do something else (in his mind he wants to join classes to become a director, but he hasn’t told that aloud). The voices of reason pour in; most of them enunciating with conviction that one should not let an education go waste. Also, he now has 2 years of work experience too. My, my. You are now a valuable asset in the Engineer, MBA market with 2 years of valuable experience with a good company. It would seem a rock-hard foolish decision to drop it all. Also, your parents will say, look, we also tried all this in our youth. It didn’t work for us; our wisdom is for you to use. We don’t want you to make the mistakes that we did. Do the practical thing. You have a good career and if you continue this path, you will lead a prosperous life. The future is all rosy and happy with this job.
And suddenly what they say makes sense. Why would you throw away all that? And you quit and join another company that probably did the same thing as the one you just left. Maybe you got a bigger pay-packet, but yes you’ll be probably doing the same thing. Seems all sensible in the beginning, but dude, you just got attacked by the fallacies of sunk cost!
The future is as dicey and abstract as the past. Both are just concepts, never real. But we make both of them so real. One a rock we lug around, and the other an ever moving target that we keep chasing. Most of our lives, life moves in a routine, which fools us and makes us think that maybe the future is predictable. We use the past to predict the future. How wonderful is our imagination that we use abstract concepts to make decisions in the real moment which is right here and right now! The future is unknown and can completely surprise you. It can be a scary thing, but if you really think about, it is quite a wonderful thing. To not know the future.
If I knew what was going to happen in the future, I’d stop living now.
We have built enough experience in our life that we can manage to survive, isn’t it? Now that we have taken care of survival, shouldn’t we all be doing something more than just survive? We build all these grand plans for the future, like we are immortal.
‘Oh, let me first make my future secure, then I will start making those movies’
‘I need to first gain some experience, and only then it makes sense to start-up’
‘I will write that novel, tomorrow. Promise’
Tomorrow never comes, my friend. It is just a temptation in your head - A river that you dream of in a desert. What is tomorrow? Has someone seen it? Have you? You know only today. Wouldn’t it be the wisest thing to work on ‘today’? The most important gift you have is just that.
We build all these grand plans for the future, like we are immortal. But what about death? Death can come unseen, sneaking upon you. And boom! Where are all those grand plans now? I apologize for taking such a grim view, but death is not so grim when you really think about it. It is perhaps the best gift we have. To know that you’ll die one day, is the only knowledge you need to start living your life.
If you have an idea of what you are and what you want to be. Don’t let it pass.
The fallacy of sunk cost is not just a costing or economics concept. It is speaking a truth, of life too. Don’t let the weight of the rock of past weigh you down. Snap it off your back. Time and Life change so much with each passing day that it would be almost foolish to hang on to memories old and ancient. You were made free, but along the way you bound yourself to many things. And of course, it hurts you, as well others around you when you try to be free again. Because you are bound to things and people are bound to you. People can’t stand you being free when they are bound themselves. But it would never hurt as much as the weight of past that you are carrying around every day. That is the bigger pain that you deal with every day. Of not being true to your nature.
Break free. Be you.
About the writer - Vishal S Rao
An MBA from IIM Bangalore and a rank holder Chartered Accountant, Vishal is a deep thinker. A man of few words, Vishal more than makes up for it through his writings. His words are measured with intricate meaning hidden in them.
Vishal has worked for KPMG and was in leadership role at Aditya Birla. Currently, he is trying his hands at restaurant business.