The Why #12: Why do people stay in jobs they hate?

By Dan Monheit, 05.02.21

Question submitted by Amanda, Paddington

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While I’m sure you’re happy in your job and only “asking for a friend” Amanda, 2020 certainly had that ‘introspective’ feel about it.

Not since the terror of the looming Y2K bug have so many of us paused to consider exactly what it is we’re meant to be doing with our fleeting existence on this planet, and why oh why we’re still working for ol’ stink breath in that hellhole of an office.

Of course, life pressures and financial realities can force even the most ambitious professionals to stay in poor roles at terrible companies well past the glory days.

But I dare say for many of us, there’s a sobering reality that we have the complete freedom to change our careers — or at least our jobs — this very second if we choose to.

So why don’t we? Why don’t we quit bad jobs, bad relationships or at the very least, bad shows on Netflix?

Sunk Cost Fallacy

What we’re dealing with here is the behavioural bias known as the Sunk Cost Fallacy (SCF). A sunk cost refers to any money, effort or time that has already been paid and cannot be recovered, that makes us behave in a counterproductive way.

Put simply; SCF is our innate desire to want to follow through on what we’ve already invested in in the past, even if objectively, it makes no sense to do so.

Annoyingly, the more we invest in something, the greater the sunk cost becomes, making it harder and harder to abandon. Crazier still is the way that SCF causes us to plough ahead so as not to have wasted our past, and in doing so, causes us to also waste our future — the only thing we still have agency over.

A study by Arkes & Bloomer back in 1985 proposed a scenario for students on a ski trip. In said scenario, the subjects had purchased a $100 ski pass for a weekend trip in Michigan, as well as a $50 ski pass for a trip in Wisconsin, which they would find much more enjoyable than Michigan. Unfortunately without realising it, the trips fell on the same date, and the subjects were forced to choose which they would rather attend.

Rationally, it would be a no-brainer to choose Wisconsin, the more enjoyable trip, especially given both tickets had already been paid for. However, only 46% chose Wisconsin, with the majority selecting the more expensive trip to Michigan. Essentially, 54% of subjects made a decision based on how much they’d spent in the past, rather than how much fun they might have in the future.

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While we may dream of flipping careers, opening our own cafe, going back to university, or finally leaving a job that pays a big salary but ultimately makes us miserable, we tend to stay because of the three-year degree we did back in 2007 and all the time, energy and effort we’ve invested to get to this point in our career.

The Sunk Cost Fallacy has an uncanny ability to bind us to our current situation, even when it’s clearly not working out.

For brands, the Sunk Cost Fallacy can be a major driver of conversion. By inviting customers to make small investments early on in the sales process, the cost of walking away can quickly become a major motivator to stay on board. Offering free trials or helping customers import all of their data and preferences from an old system to a new one are ideal ways to start.

Behaviourally Yours,

Dan Monheit

PS If you missed the last issue of 2020, you can still check out why we aren’t shopped out by boxing day here.

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Bad Decisions Podcast
Learn more about the Sunk Cost Fallacy on episode 11 of the Bad Decisions podcast.

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Want more?
Check out Dan’s write up in on why the demand for vans is up 231% this year?

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