Our weekly explainer on economics using lessons from popular culture. In Installment 8, Ajay Devgan commits the Sunk Cost Fallacy.
‘Maine pyaar tumhi se kiya hai/ Maine dil bhi tumhi ko diya hai/ Ab chaahe jo ho jaaye/ Main duniya se ab na daroon/ Tumhi se main pyaar karoon.’ — Ajay Devgan in Phool Aur Kaante
Many years ago, at the tender age of 17, I went to watch the first-day-first show of Phool Aur Kaante in a theatre in Pune. We couldn’t get balcony tickets — who remembers ‘balcony’ in this age of the multiplex? — and had to settle for front-row seats in the stalls. It was horrendous — our necks would jerk from side to side during the fight sequences, and the film itself was awful. At the interval, my friend and I considered leaving. But we figured that we had paid for the tickets, watched half the film, and that effort would be wasted if we left now.
We did not know it then, but we were making the same mistake that Ajay Devgan made in the film.
In the song above, Devgan sings: I have loved only you/ I have given my heart to only you/ Now whatever happens/ I will not be scared of the world/ I will love only you. This is equal parts sweet, naive, and downright creepy in that typical Bollywood stalking sense. Devgan is saying that now that he has made the effort of giving his heart to the lady in question, he will stick with it and go all the way. He has committed the Sunk Cost Fallacy.
A sunk cost, in economics, can be defined as “a cost that has already been incurred and cannot be recovered.” We commit the Sunk Cost Fallacy when, by one definition, we “continue a behavior or endeavor as a result of previously invested resources (time, money or effort).” For example, the time, effort and money that my friend and I had spent in watching Phool Aur Kaante until the interval was a sunk cost. It was already gone. The only factor in our decision-making should have been whether we’d have a better time sitting through the rest of the film or going off and doing something else. (The good time we could have had elsewhere was, in fact, the Opportunity Cost of finishing the film.)
The Sunk Cost Fallacy is everywhere in our lives. Investors in the stock market commit it when they refuse to sell a stock that is going down because they have already lost money on it, which they want to recover. (‘Throwing good money after bad’ is another way to describe this fallacy.) People stay stuck in bad marriages for years or even decades because they figure that the time they have already invested would be wasted if they bailed now. People force themselves to finish a meal they have ordered at a restaurant after they are full, even when they are getting no more pleasure from it. And hell, how often have you forced yourself to finish reading a boring book just because you’ve already spent time reading the first few chapters?
Devgan, in his insistence that now that he has loved, there is no going back, is also committing the Sunk Cost Fallacy. What if the lady he is wooing turns out to be wrong for him? What if she does not reciprocate? What if she marries him and turns out to be a husband-beater? What if she is a zombie with makeup on? Well, maybe he’s just going to say, “Oh, but I gave my heart to her, and I sung that song for her, and I even bribed my friends to dance with me in the college lawns, and I’ll be damned if that effort is wasted!”
The lesson here is that we should ignore all sunk costs, and just be rational about what is best for us going forward. The past is past. The rest of your life begins now.