Sunk-Cost Fallacy and Covid-19: Making Career decisions

The Covid-19 pandemic has led to substantial changes in the livelihoods of people around the world and here in the United States. The pandemic has significantly impacted the economy, and beyond the threat of unemployment workers and students are facing significant setbacks in their careers. However, the demographics of the American work force include several different generations often at corresponding milestones in their careers. While the pandemic has negative consequences for many people regardless of the time they have invested in their career, it may be easier for younger workers to make the career adjustments necessary to adapt, because what they may lack in job security, they gain in sunk-cost analysis. 

 In the paper ‘Sensitivity to “sunk costs’ in mice, rats, and humans” by Sweis et. al the researchers examine the way different species are sensitive to “sunk costs,” or how long they will continue an activity after it has been deemed unproductive because of their irrecoverable costs (Sweis et. al 2018). The researchers found similar sensitivities across the three species they examined, and also suggested that these sensitivities to specific temporal sunk costs arise from a vulnerability distinct from the deliberation process in these species (Sweis et. al).

 In a 2019 study by HL Miller Jr and V. Tait titled “Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy” the researchers the unique and understudied connection between the sunk-cost fallacy and loss aversion. They found a negative relationship between loss aversion and the sink-cost fallacy across variables of money, time and effort (Tait 2019). 

 The Sunk-cost fallacy is a well-documented phenomenon, but has been significantly understudied in the way it operates in the decisions people make about their careers. While research has identified that the time spent in a specific job or career would be a large factor, as well as the cost of education and job training, there have not been any studies that show quantifiable data. The pandemic has opened this field and raised many more questions about how this works and how we can address it. 

 References:

 Tait V, Miller HL Jr. Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy. International Journal of Psychological Research. 2019 Jul-Dec;12(2):8-16. DOI: 10.21500/20112084.3951. 

 Sweis BM, Abram SV, Schmidt BJ, Seeland KD, MacDonald AW 3rd, Thomas MJ, Redish AD. Sensitivity to "sunk costs" in mice, rats, and humans. Science. 2018 Jul 13;361(6398):178-181. doi: 10.1126/science.aar8644. PMID: 30002252; PMCID: PMC6377599.