Divorce and the Sunk Cost Fallacy

Divorce and the Sunk Cost Fallacy

Posted By The Manely Firm || 17-Feb-2015

When you practice family law and divorce, for over 25 years, you spend a lot of time trying to understand every aspect of it from the intricacies of law to the nuances of relationships. I've recently been studying the economic theory of the Sunk Cost Fallacy and applying it to divorce and the re-casting of relationships.

The Fallacy pertains to our willingness to continue to expend resources based upon our prior expenditure of resources. Whenever you have invested in a project, you will tend to continue to invest in that project, just because you've already sunk costs into it. A frequent example of this as a fallacy is: you are walking to a store that is 10 blocks away. Eight blocks down the road, you remember that the store is closed at this hour. Logic says you don't continue walking the remaining two blocks. Unfortunately, our choices are seldom so clear.

Applied to relationships, the fallacy is continuing to invest in that relationship because of the time on task you've already expended. Yeah, you're not happy but you've already spent five years with her. It would be a shame to give that up. But from the fallacy's view point, that is like throwing good money after bad. That five years is spent, you aren't getting that back no matter what you spend in the future. If the now is not worth it, history is a poor substitute.

The problem with the proof of the fallacy is that the examples are always offered from the perspective of hindsight, looking back at the now obvious warning signs of inevitable demise.

There is great merit to the Sunk Cost Fallacy. There is great truth to the Sunk Cost Fallacy. But it necessarily leaves one element out. Since the situation would only be relevant in the present moment, "what should I do now" perspective, hindight doesn't help. We can all figure out the wrong fork in the road after we've taken it and met an undesirable end. But before we get to the end, we continue to hope. That hope, then, is central to the fallacy.

But should we have no hope? How can we not?

An economist gave an example on NPR last week. After her breakup, she recalled a conversation she and her boyfriend were having with a stranger in a bar about three years earlier. The boyfriend said to the stranger, "I don't think you should say 'I love you,' until you know you have the right one. I haven't said it to her (the economist) and I don't see it happening for a long time to come." To the economist, her remaining in the relationship afterward was proof of the fallacy.

If you have such an obvious example, yes, you are sinking your time into a relationship that will not prove worth it. But most examples are not so obvious. Most examples are subtle. Most examples from real life are slights against each other, quick jabs of contempt in seemingly civil conversation. It is a good marker of impending demise. Divorce is not necessarily yet a settled issue.

So, is the fallacy fallacious? No. It is true. But does it answer your question in the moment? It advises your question in the moment but does not answer it. It places the time on task element of your analysis front and center. If your history together looms large in your reason to stay, you are living the Sunk Cost Fallacy.

If that's you, it's probably time to cut your losses, it's probably time to stop spending good money after bad. But if your analysis of your relationship contains the element of hope, which springs eternal we're told, perhaps it is time to drop another quarter in the juke box and see if some dancing ensues.

Michael Manely

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