Sunk cost and opportunity cost are two sides of the same coin.
Sunk costs are lived predictions.
If you’ve been busy digging a hole and wake up one morning with yet another brilliant idea on digging better or faster – that’s sunk cost.
Merely improving, tweaking, defending our life stories only takes us deeper into that hole.
Opportunity cost is the flip side – predictions you never made: “Why am I digging this hole again?”
Questions like these force prediction errors.
They aren’t just new ideas, but a whole new you – embodied cognition that lights up your brain and body alike.
“Opportunity cost is a superpower, to be used by all people who have any hope of getting the right answer.” – Charlie Munger
No wonder in behavioral economics, we call it a fallacy when we hold onto sunk costs… and a neglect when we forget opportunity costs.
Okay, but how do I flip the coin?
🍪 Fortune Cookie:
Glad you asked.
Unlike a coin toss, a game of chance, flipping our lives toward opportunity cost awareness is simple.
Don’t chase decisions by addition. Chase decisions by subtraction.
To your already burgeoning list of urgent and important, add a third column: “unnecessary”.
Start filling it.
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