See these green things? They are reusable straws, purchased from Wawa.
A lot of times people say “sunk costs” like it’s a bad thing. Part of Poker’s Appeal is thinking conditionally, and one way to do that is to avoid sunk costs. Here’s Maria Konnikova talking with Annie Duke:
“The chips don’t remember they used to be in a stack this tall and there used to be more of them. All they know is they are chips. It’s hard mentally, but it’s really important to forget what happened and how much you had because bias is going to creep in: I need to make it back, I need to be more risk averse because I can’t lose the rest.” – Maria Konnikova, Alliance for Decision Education, July 2021
Bill Gates says it is “very important” to bring in outsiders in part to avoid sunk costs.
When we say (with hindsight!) ‘sunk costs yada yada’ what we mean is: ‘This person used unhelpful information to make their decision.’ Sometimes the mechanism with sunk costs is ego, admitting we were wrong is hard.
So I won’t admit it. I was right to buy the straws!
My reusable straws are not going to save the world. They are not going to make a marginal difference. But we will use them, and we will use them because of sunk costs. I paid for these darn things so I may as well use ’em. Here, the mental barnacle that usually afflicts decision making navigation can steer me in the pro-social direction. Like a person who commits to working out if only to use their gym membership I dutifully wash the straws after each milkshake, Frappuccino, and coke my kids consume.
How we even ended up with the straws is a testament to the Wawa ordering system. After ordering drinks, the whole screen filled with a picture and prompt offering the straws and I said yes. Only forty-nine cents! While my use is negligible, Wawa’s is not. Our family of four’s lifetime will probably use fewer straws cumulatively than one-week of lunch orders at a busy Wawa. And there’s the trick. It doesn’t make sense individually but it does collectively. It’s a case of Large N small p being used to change the world.
One of the best changes in my life has been to accept things as they are, rather than upset at the way they should be. Things should not be a way, things just are. Human psychology is like that. It’s not that humans have biases but that we have tendencies in how we understand the world. We have sunk costs because that approach works, conditionally.
To be the most right, and affect the most change, we must see the world as it is. That means noticing sunk costs as a tool, and using it as needed.
Eric Bradlow of Wharton talks a lot about Large N small p. He also wonders about the “effect size” and with-regard-to straws I have no idea.