The Hidden Cost of Holding On: A Life Beyond the Fallacy
Sunk Cost Fallacy: Letting Go to Move Forward
On July 25, 2000, an Air France Concorde flight suffered a fatal accident at Charles de Gaulle Airport in France, resulting in a massive fireball and the tragic loss of 109 lives. Concorde’s journey began on November 29, 1962, when the United Kingdom and France signed a treaty to develop a supersonic airliner—initially estimated to cost nearly £70 million. However, after years of intensive testing, significant delays, and overcoming formidable technological and design challenges, Concorde was certified for commercial service in 1976 with a total development cost ballooning to approximately £2.1 billion. Throughout its 27 years of service, despite its engineering brilliance, Concorde was a financial failure.
This outcome was compounded by decision-makers succumbing to the sunk cost fallacy—persisting in heavy investments because enormous resources had already been spent, even as mounting challenges raised doubts about the project’s viability. Ultimately, when Concorde was retired in 2003, it was clear that 41 years of money, time, and effort had been irretrievably sunk.
This article explores how that fallacy doesn’t just apply to business or aviation. It also governs how we approach careers, relationships, belief systems, and our identity. By understanding and confronting this fallacy, we can make clearer, more courageous decisions—and invest in a future that serves us.
What Is the Sunk Cost Fallacy?
In economics and business decision-making, a sunk cost is an expense that has already been incurred and cannot be recovered. The sunk cost fallacy occurs when decision-makers continue to invest in a project or endeavor solely because of the resources (time, money, or effort) already spent, rather than evaluating future benefits.
In simple terms, if a project's ongoing production costs consistently outweigh its potential returns over a certain period, the rational decision is to cut your losses and move on to a more promising opportunity. By setting aside these unrecoverable costs and focusing on prospective outcomes, companies are able to make more objective and profitable decisions.
Why Is It Difficult to Move on from Sunk Costs?
The human mind has evolved to be loss averse—we naturally dislike losses and often feel compelled to persist in our endeavors, even when it isn’t in our best interest. A part of this persistence stems from our ego and emotional attachment; we want to validate past decisions and prove that our previous investments were worthwhile, regardless of future returns.
Amos Tversky and Daniel Kahneman were among the first to identify the cognitive biases behind such behaviors, including loss aversion. This bias can lead directly to the sunk cost fallacy, where we continue to commit time, money, or effort to a failing project simply because we’ve already invested so much, rather than cutting our losses and pursuing better alternatives.
In essence, our ego—combined with our emotional responses and ingrained belief systems—causes us to view past investments in an overly positive light, even when the evidence clearly indicates that the project is no longer viable.
So, when was the last time you spent time, energy and effort on a project that resulted in an outcome that was not desired for yourself - or simply your own sunk cost fallacy.
The Art of Letting Go of Sunk Costs
Our perception of reality is often clouded by personal biases and subjective beliefs, which can obscure the absolute truth. We tend to view our perspectives as the sole measure of truth—even though they represent only a fragment of the complete picture. We subjectively ignore the absolute truth. This ignorance in the long run leads to loss as our belief system does not allow us to view the truth objectively.
In practice, we anchor our sense of truth to familiar reference points—often the status quo and the expectations we set for ourselves (belief system). This fixed perspective can make the idea of letting go feel like a loss, even when it might pave the way for greater opportunities. The fixed perspective in our current level of truth. Fortunately we can upgrade our level of truth, by raising our consciousness by becoming aware of our mode of ignorance. Consider this: if you were facing a near-death situation today, would you persist with a project burdened by irrecoverable sunk costs, or would you have the courage to cut your losses and pivot toward something with real promise?
When we step back and observe the vastness of the universe, we realize that our individual achievements are minuscule—and our lives, fleeting. Our pursuit of the status quo to preserve our current identity or to remembered, compels us to stick to our belief system, ignorant routines and failing ventures. The reality is this pursuit is our absolute true sunk cost fallacy or life’s true fallacy. We continue to invest in our past choices not because they serve our future, but because of the emotional need to validate our previous commitments and actions.
Imagine a newborn giraffe taking its first tentative steps moments after birth. In the wild, letting go of dependence is necessary for survival. Animals instinctively adapt. Humans, however, often resist. We don’t let go because we fear loss—of status, identity, recognition, or validation.
A famous example is Warren Buffett. Early in his career, Buffett invested in a struggling textile business through Berkshire Hathaway. Despite accumulating losses, he initially hesitated to abandon the venture. However, recognizing that his insistence on propping up an unviable enterprise was driven by past investments rather than future potential, Buffett decisively shifted his focus. Rather than pouring more resources into a losing battle, he transformed Berkshire Hathaway into a diversified holding company—a strategic pivot that laid the foundation for its extraordinary success. Buffet in that crucial moment, clearly identified the problem by facing the truth, adjusting the strategy to minimize the downside risks and maximizing returns by simply being unattached with the previous inherited losses. His success didn’t come from stubborn persistence—it came from clarity, honesty, and the courage to pivot.
Ultimately, true clarity comes from realizing and reflecting that unbiased decisions require us to let go of both our ego and emotional comfort of a familiar status quo. Overcoming the fear that keeps us tethered to past investments—despite clear signs of loss—is essential. The world moves on, and so should we, by embracing a broader, more objective perspective on the absolute truth and potential. Expanding our consciousness is understanding that our perspective is limited and has bias and ego attached to the decision. With reflection and having several candid conversations with trusted mentors outside the specific fallacy scenario, leads to crucial insight and realization of our emotional attachment to the past.
Letting go isn’t just a financial or logical act. It’s a psychological process that requires self-awareness, humility, and courage. Here are a few steps to help navigate that process:
Ask Yourself: “If I hadn’t already invested in this, would I still choose it today?”
Seek External Perspective: Talk to someone outside the situation who can be objective.
Weigh Future Value Over Past Costs: Focus on what’s ahead, not behind.
Practice Detachment: Your past does not define your worth or your potential.
Mindvesting Summary
The Concorde example is a powerful illustration. Despite clear early signs that the project would face insurmountable challenges, those involved continued to invest 41 years of effort, money, and time—long after it should have been evident that success was unlikely. In many ways, they succumbed to their own version of the sunk cost fallacy.
The lesson here is to recognize when our emotions, ego, and cognitive biases—such as loss aversion, escalation of commitment, and cognitive dissonance—are compelling us to persist with a failing pursuit. Letting go of sunk costs is not merely an economic decision; it’s a psychological process that requires candid self-reflection and a willingness to embrace change.
The sunk cost fallacy is not applicable to material investments and financial situations. The principle can be be applied to our inherent fallacy in relationships, career, extracurricular pursuits, belief systems and more.
The truth initially hurts as it goes against our belief system. But letting the truth hurt in the short term by acknowledging the ignorance leads to a peaceful mind over the long run as you remain unattached from loss. The absolute truth is of loss is there is no loss in reality. We build our perception of loss aversion and loss as result of belief system.
Loss is an opportunity to rise. Rising is an opportunity of loss. The absolute truth is there is no loss or rise.
The mode or our ignorance stops us making unbiased decisions, due to our fear of losing of what we have materially gained or rising to what we can become.
The truth is, our achievements are transient, and when we depart from this world, we leave everything behind. So, why allow outdated fallacies and attachments to dictate the remainder of our days? Embrace clarity, let go of the past, and invest in the future that beckons with untapped potential.