About three weeks ago, a number of guys in my office started talking about having a handlebar moustache growing contest as we raced towards our end-of-quarter targets, sort of like a playoff beard ritual for tech geeks with no hope of ever making a professional, semi-pro, amateur, recreational, or co-ed middle school sports team. I’m always game for any sort of competition that requires me to do precisely nothing other than refrain from doing a normal task like shaving, so I was enthusiastically on board. The plan was that, in order to avoid looking like total fools for the next few weeks, we would grow out “normal” beards and then shave down to a Hulk Hogan-esque moustache on the judging day, determined to be in exactly three Wednesday’s time. Much to my wife’s chagrin, I put away my razor and let nature take its course. Within a week I began to look like Teen Wolf. On the plus side, strangers on the street began to offer me spare change so that I could get a hot meal and a shower, which is always nice.
Judgment day quickly arrived, and I was looking forward to shaping a beautifully ridiculous moustache out of my beard. I hopped out of the shower, lathered up my face, and was about to put razor to skin when I heard my morning show radio host talk about his favourite April Fools Day pranks. I looked at my Dilbert calendar- yup, this particular Wednesday, supposedly arbitrarily selected by my coworkers, was April 1st. I was the unknowing mark in an elaborate April Fools prank. Dammit.
At this point, most people would just smile, shave off everything and show up for work as if everything was normal, boasting that they had caught on. Not me- I’m much to stubborn to capitulate that easily. Doing so would be a tacit admission that I had indeed been led down the garden path. Admitting that I had only caught on at the last minute would be too humiliating, too humbling. So I did what any other self-respecting person would do- I left my beard in tact and pretended that I had been planning on going all Hasidic anyways, and that my boasting about the competition was just an effort to trick other poor souls into embarrassing themselves. I wasn’t a victim, I was an aggressor. Take that, coworkers! As a result of my stubborn pride, here I sit fully bearded waiting until memory of the prank has passed before returning to my normally clean-shaven ways. And boy, am I ever itchy…
Thankfully, my stubbornness on this occasion has only resulted in a bushy beard, a strained marriage, and suspicious looks from security at the airport. However, this same trait can often have major financial consequences thanks to a little thing called the sunk cost fallacy. For those of us with particularly mule-headed ways, once we’ve spent some money on something we feel like we need to continue to do so. In other words, we throw good money after bad. One of the best descriptions of this phenomena I’ve ever seen comes from J.D. Roth over at Get Rich Slowly* in his article about the sunk cost fallacy:
Often we succumb to the sunk-cost fallacy because we don’t want to feel wasteful or to admit we made a mistake. All that Stuff I’m trying to get out of my life is nothing more than a manifestation of this: I know how much money I’ve spent for the things I own, and so am reluctant to let them go. What I need to realize is that it’s not what these things were worth to me in the past that’s important, but how much they’re worth to me now. If I do not value them, and they’re just taking up space, then they’re better off out of the house.
Sometimes succumbing to the sunk cost fallacy means continuing to hold a losing investment (or even pumping more money into it) even when it no longer makes much sense; sometimes it means wearing those unfashionably short pants because we want to “get our money’s worth”. On more than one occasion I’ve gone to a show that I had no real desire to see just because I had already paid for a ticket, and I can’t even begin to tell you just how much useless junk I have cluttering up my house because I feel silly getting rid of an unused juicer, melon baller, or chia pet after having spent my money on it in the first place.
Chasing sunk costs is a natural human behaviour, and I’m not sure that there’s any easy way to overcome it. But as with most matters of personal finance, acknowledging this tendency is the first step towards defeating it. Now if you’ll excuse me, I need to go brush bagel crumbs out of my beard.
* I HATE linking to J.D. because his blog is fantastic and makes me feel bad about mine. I feel like a nerdy kid in high school telling the hot cheerleader that she should get a ride home with the sexy quarterback instead of me because he drives a Camaro and doesn’t spit when he talks. Strategically it’s a terrible move, but it’s the right thing to do.
Photo by Breakfast for Dinner.
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Just want to say that I was wondering at the beginning of the article if that was your beard after 3 weeks and feeling very compassionate for your wife (and also wondering what brand of razor you used so I could buy shares LOL). Thanks for a good laugh when I saw where the picture came from.
@Rena - Okay, my beard wasn’t that bad, but it was close.