Ignore the sunk costs

I’ve noticed over the years that many students who agonize over a decision are hung up on what they perceive as the sunk cost.

In business-speak, a sunk cost is money that you’ve already spent and can’t get back. The non-refundable deposit you put down to secure office space in a building is now gone. It’s a sunk cost. And business schools teach their students to ignore sunk costs. If a new building with better, cheaper office space becomes available, one that will ultimately save you more money over time than the current space you put a deposit on, ignore the sunk cost and make a new decision based on the future cost.

For high school students, sunk costs sound like this.

I don’t want to take AP Spanish, but I’ve spent the last three years taking Spanish…

I’d rather play in the Dixieland band after school, but I played club volleyball for so long…

I’ve lost interest in this club and we never seem to do anything. But I can’t quit now. I’ve been a member since freshman year…

These struggles are almost always based on two things: the perceived sunk cost, and the perception that colleges don’t like students who quit.

If you’re wrestling with a decision that involves sunk costs, give Seth Godin’s podcast “Ignore sunk costs” a listen (I speed his episodes up to 1 ½ times in iTunes as his speaking runs a little on the slow side for me). And please pay particular attention to his remarks about quitting. Ignoring sunk costs doesn’t mean that you should indiscriminately quit anything. It just means not allowing the sunk cost to deter you from what might be a much better decision based on new information or realities.

And I can’t think of a college that wouldn’t endorse the same approach.