I had to take some small guilty pleasure this weekend in the fact that Charlie Sheen bombed in his first show this weekend. It was so bad that many people walked out after 30 minutes and he ended up walking out on himself. It got me thinking yesterday as I was doing some reading on Behavioral Economics for a project I’m working on. The study rests on the theory that people repeatedly and predictably make the wrong decisions. For example, people are more likely to sit through a bad movie than walk out.
Recognizing that even the most apparently rational decision is emotional, behavioral economics combines aspects of psychology and economics to explain why we make irrational decisions and sheds some light on how we could change some of these patterns. You can find out more about it in several recently popular books from Predictably Irrational by Dan Ariely (who relates how he used his learnings in the study to convince his wife to marry him) to Nudge by Richard H. Thaler.
A lot of 40-something women recall making the same mistakes over and over…from dating the wrong guys, procrastinating at work or spending time with toxic friends. Perhaps behavioral economics was responsible for some of these behaviors. One principle is that people hate to waste money and avoid sunk costs. So say you plunked down 13 bucks for a movie and find it’s awful…you are loathe to leave as you have paid good money for it. Or as I often hear about friendships, I have a long history with her so even though it’s not a rewarding relationship now…we’re still friends.
An entrerpreneur I interviewed recently to gain insight on helping women make career changes spoke of this analogy in explaining why he was able to leave a 8 year long medical career to start his own business.
“It’s like having paid for a bad movie. You should walk out of a bad movie because you are wasting your time on top of the money you already spent. That sunk cost feeling is very hard for people to overcome. Yes I’ve done it 8 years but every additional day I waste from here on out would just make it worse. So stop the bleeding and start doing what you want to do with your time.”
It sounds like common sense. Particularly on the more simple level. Why would you spend time in a bad movie? But over and over people do these things. I guess it’s why why stick with bad boyfriends in our twenties no matter how stupid we kind of know it is. Love is nothing but irrational. Looking back, 40-year old women wonder why they didn’t see it sooner. This from one of them:
“You think it’s okay to date an a#*hole. There’s always the challenge of keeping that hot guy but you lose so much of yourself it’s not worth it. He’s always got his eye on the next hot girl and you think I’m too fat, not pretty enough. It’s a terrible feeling. But I did it for years in my twenties because I thought I invested my whole college dating career in this guy.” – 40-something, mom, wife, executive, Chicago, IL
This woman did leave that guy… but not without wasting more time than she wished she had because of this feeling of having invested so much time. Maybe that is we can all make some shifts in our thinking. Rather than thinking of invested time as a sunk cost….think of what you may be missing out on. There is also excitement in the unpredictable…think impulse purchases. Start out small. Maybe if you left that bad movie you might start a conversation with someone interesting on the way out about how bad it was…and who knows where that goes. Or consider that you just gave your self back the gift of some unexpected time to indulge in something you truly enjoy. As the other saying goes, don’t throw good time after bad.