sunk costs

It was only recently that I came to fully understand not only what sunk costs were, but also its significance. My friends and associates have often heard me at a buffet or restaurant say, “hey, gotta get my money’s worth!”, which indicated that I had no clue what sunk costs meant. Economists would argue that because I already ordered or paid for my meal, that to gorge myself for the sake of ‘getting my money’s worth’ is the wrong strategy, since I cannot recover the costs and that eating beyond what is ‘good’ for me, in terms of tastes and quantity, would actually reduce the overall utility and make the prolonged process, counterproductive.

At the airport this morning, I got a sausage egg and cheese croissanwich and an odwalla tango mango smoothie drink. Normally, I would make sure that “i’m getting my money’s worth” and finish everything, but since I’m more conscientious of my health these days, I drank only half of the odwalla drink. Yeah, i paid a premium for this at the airport ($3.49), but the optimal amount for me to quench my thirst was roughly half the bottle. Drinking more than that would net reduced gains in terms of my enjoyment and higher costs in the form of time spent at the gym to burn off the additional carbs and calories.

Being reminded of this important concept will hopefully help me to control the amount of food that I eat. I wonder if our country’s obesity epidemic is a reflection of the general population’s not understanding the sunk cost fallacy….