USA Today has an article on the Iraq War, relating to the Sunk Cost Fallacy. This fallacy, often described as “throwing good money after bad,” is usually described as when an investor keeps investing in an unprofitable venture, merely because he has put so much money into it already. He figures if he doesn’t keep investing then all the money he has put in was wasted, but by staying in all he does is waste more money. The phrase “sunk cost” refers to the fact that the money is gone, and there’s no way to retrieve it, and therefore the decision to invest further should be made on the basis of future costs alone.
The article does a good job of explaining the trap this fallacy leads to, as it is with the Iraq war:
Here’s the problem: As our involvement continues, X gets bigger and
bigger, making withdrawal increasingly costly, pressing on easier to
justify, and the decision itself less sensitive to the potential and
rewards of victory. Incorporating sunk costs into our war
decision-making does wrong to those called upon to make future
sacrifices as we strive to make lost lives count.
Why do our leaders consider X in their decision-making over the war?
Probably because we feel a strong emotional response toward X,
unlike, say, the merely financial sunk costs incurred by firms. It is
hard to bear the idea that the sacrifice of these American lives would
be devoid of existential meaning. Moreover, the more we have invested
in the war, the worse we look by withdrawing.
In the rhetoric of the difficult decisions over whether to extend
our involvement in the war, including X as a cost of withdrawing
inappropriately inflates the cost of a withdrawal. Just as it is harder
to quit Silver Falls after wasting $10 worth of quarters, it is harder
to quit a war after incurring 3,600 dead and tens of thousands wounded, and spending the better part of a trillion dollars in a failed effort.
Although it may seem callous, we need to forget about X in our
decision-making about the war. The correct way to think about whether
or not to proceed is to weigh the costs and benefits from pressing on
from this point forward. What value do we place on victory? What are
the chances that we will prevail if we do press on? And what will be
the costs of pressing on in terms of lives and resources? Our country
may be divided on this issue, but we owe it to those who may yet be
called to make the ultimate sacrifice to properly count our costs.
Wise words, but good luck getting Bush & Co., or even most of the current crop of Presidential candidates (Ron Paul excepted), to understand it.