When I grew up, my mother told me about this club. It was a ritzy club that had very exclusive, prestigious members. It was praised by the masses as something that everybody wanted to be in. Every day, she would encourage me to do everything I could to join. Fortunately, membership had a relatively low barrier of entry, but it required an ongoing activity. One that would be the death of me, but my mother assured me it was worth it.
The name of the club?
The Clean Plate Club.
Okay, so I was being somewhat facetious with that first paragraph, but it was true. My mom was adamant about me finishing my plate off at every meal because she hated waste. I can't really blame her, but it unfortunately had some seriously negative ramifications into my adult life. Namely, I still force myself to eat everything on my plate because I cannot see something go to waste. It doesn't matter if I'm about-to-burst full, I'll eat it anyway!
But is it really wasteful? I'm not so sure now when I think about the principles of sunk cost.
Let's talk about how sunk cost is relevant to this situation and, more importantly, its pertinence to learning. If you're unfamiliar with what sunk cost is, Investopedia provides a pretty good definition:
A sunk cost is a cost that has already been incurred and thus cannot be recovered. A sunk cost differs from future costs that a business may face, such as decisions about inventory purchase costs or product pricing. Sunk costs (past costs) are excluded from future business decisions, because the cost will be the same regardless of the outcome of a decision.
Don't get trapped in the "money" bubble here. Sure, sunk cost is relevant to money, but it is equally relevant to other assets. In the case of my poor eating habits, there is a dollar amount associated to the cost of food. So from that perspective alone, yes, there is waste.
HOWEVER, what I have learned recently is that there is another cost to balance. One that doesn't involve dollars. Instead, it involves calories.
This is where opportunity cost comes into play. I also like Investopedia's definition for that:
An opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made. This cost is therefore most relevant for two mutually exclusive events, whereby choosing one event, a person cannot choose the other.
In my eating scenario, there is an opportunity cost I have to make. Either I "save money" by not wasting food and get fat, or I choose to be okay with the fact that I am throwing away food to stay trim. I hate making these choices, but it's a necessity in life!
So how is this relevant to learning?
Much like my eating scenario, people are highly likely to continue forward with an education track if they have already "sunk" a lot of time and money into it. The problem with this is that they may not be analyzing the opportunity cost here.
For example, if a student is two years deep into a degree on underwater basket weaving, he or she may continue to press forward with it even if they realize it was an awful choice of major. Why? Because that student already spent that much time and money. It would be a waste to not continue!
But it's not actually a waste. In my food scenario, "wasting" food wasn't actually a waste because I was saving myself calories. Likewise, abandoning avenues of learning may not be a waste as it frees up your time to pursue worthwhile things.
I'm picking on undergraduate schools because that is more easy to demonstrate, but it doesn't have to be formal education. A few years back, I tried to get my CompTIA A+ certification, but when it became apparent that my career track wasn't heading toward helpdesk-like support, it didn't make sense for me to continue pursuing. I was out a $40 book and about 3 weeks of studying. If I had kept pushing forward, it would have taken me several more weeks of studying, and for what? A piece of paper that would have looked nice on my fridge.
Ask yourself: are you focusing your energy on learning a new skill because you are already "this far into it"? Is it worth continuing? It's a sunk cost. You're not going to get that time or money back. Your best bet may be to cut your losses and pursue something else.
The name of the club?
The Clean Plate Club.
Okay, so I was being somewhat facetious with that first paragraph, but it was true. My mom was adamant about me finishing my plate off at every meal because she hated waste. I can't really blame her, but it unfortunately had some seriously negative ramifications into my adult life. Namely, I still force myself to eat everything on my plate because I cannot see something go to waste. It doesn't matter if I'm about-to-burst full, I'll eat it anyway!
But is it really wasteful? I'm not so sure now when I think about the principles of sunk cost.
Let's talk about how sunk cost is relevant to this situation and, more importantly, its pertinence to learning. If you're unfamiliar with what sunk cost is, Investopedia provides a pretty good definition:
A sunk cost is a cost that has already been incurred and thus cannot be recovered. A sunk cost differs from future costs that a business may face, such as decisions about inventory purchase costs or product pricing. Sunk costs (past costs) are excluded from future business decisions, because the cost will be the same regardless of the outcome of a decision.
Don't get trapped in the "money" bubble here. Sure, sunk cost is relevant to money, but it is equally relevant to other assets. In the case of my poor eating habits, there is a dollar amount associated to the cost of food. So from that perspective alone, yes, there is waste.
HOWEVER, what I have learned recently is that there is another cost to balance. One that doesn't involve dollars. Instead, it involves calories.
This is where opportunity cost comes into play. I also like Investopedia's definition for that:
An opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made. This cost is therefore most relevant for two mutually exclusive events, whereby choosing one event, a person cannot choose the other.
In my eating scenario, there is an opportunity cost I have to make. Either I "save money" by not wasting food and get fat, or I choose to be okay with the fact that I am throwing away food to stay trim. I hate making these choices, but it's a necessity in life!
So how is this relevant to learning?
Much like my eating scenario, people are highly likely to continue forward with an education track if they have already "sunk" a lot of time and money into it. The problem with this is that they may not be analyzing the opportunity cost here.
For example, if a student is two years deep into a degree on underwater basket weaving, he or she may continue to press forward with it even if they realize it was an awful choice of major. Why? Because that student already spent that much time and money. It would be a waste to not continue!
But it's not actually a waste. In my food scenario, "wasting" food wasn't actually a waste because I was saving myself calories. Likewise, abandoning avenues of learning may not be a waste as it frees up your time to pursue worthwhile things.
I'm picking on undergraduate schools because that is more easy to demonstrate, but it doesn't have to be formal education. A few years back, I tried to get my CompTIA A+ certification, but when it became apparent that my career track wasn't heading toward helpdesk-like support, it didn't make sense for me to continue pursuing. I was out a $40 book and about 3 weeks of studying. If I had kept pushing forward, it would have taken me several more weeks of studying, and for what? A piece of paper that would have looked nice on my fridge.
Ask yourself: are you focusing your energy on learning a new skill because you are already "this far into it"? Is it worth continuing? It's a sunk cost. You're not going to get that time or money back. Your best bet may be to cut your losses and pursue something else.
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