You will be able to catch fallacies in your own thinking, especially after you have already put in time or money.
Before you read further, write down one thing you are still paying for or still giving time to, and next to it, the main reason you have kept it going. Keep that note beside you while you read.
The first two lessons in this module were about spotting fallacies in what other people say. The same test now turns inward. The fallacies that cost you most are often the ones you commit yourself, and they are hard to see because from the inside they feel like common sense. Two of them come up constantly in money and work decisions: the sunk cost fallacy and post hoc reasoning.
Farhan works on a team building a customer rewards feature. They started it eight months ago. The feature is now four months late, early tests show customers barely use it, and finishing it needs another three months of two engineers' time. (Farhan and these figures are an invented example.) At a planning meeting someone says, "We've already put so much into this, we can't stop now." People nod, and Farhan nods too. Walking out of the meeting, Farhan realises they do not actually agree.
A sunk cost is money, time or effort already spent that you cannot recover whatever you decide next. The sunk cost fallacy is continuing something because of what you have already put in, rather than because of what you expect to get out of it from here. The eight months on the rewards feature are gone whether the team stops or carries on, so they should play no part in the decision. The only things that differ between stopping and continuing are the work still required and what the finished feature would bring in. The question worth asking is whether the next dollar, or the next hour, is worth it from where you stand now.
A thought test helps. Imagine you had just joined the team and were offered the half-built feature, with its current test results, for the cost of the remaining three months of work. Would you take the deal? If you would not, the past spending does not change the answer.
The same trap shows up in ordinary life. You sit through a bad movie because you paid for the ticket. You keep a gym membership on a twelve-month contract that you have not used since March, because you want to "get the value". You stay in a course you dislike because you have already paid half the fees. In each case the money is spent whichever way you go. The real choice is between spending more time on something you do not want and getting that time back.
There is an honest limit to this. Stopping can carry real costs of its own: a cancellation penalty, a promise made to a client, or the effect on team morale. Those are future costs, so they belong in the decision. The fallacy is only about past spending you cannot recover.
Work projects collect sunk costs faster than anything in personal life, and they are harder to stop because several forces push people to keep going. Stopping feels like admitting the original decision was wrong. The person who championed the project may be sitting in the room. Budgets were approved, and someone may have to explain money spent on nothing. The team worked hard, and stopping can feel like telling them their work was wasted. And there is always some reason to believe the next stretch of work will turn things around. None of these forces says anything about the project's future value. They are about pride, blame and how things look.
One useful move is to separate the two questions out loud. Ask, "Leaving aside what we've spent, would we start this today?" That gives people room to answer honestly without having to defend the past. After the meeting, Farhan writes one line to the lead: "If we were starting today, with the test results we have, would we fund three more months on rewards?" It is a fair question, and it does not blame anyone.
It is easier still if you agree stopping or review conditions before a project starts. A later review then becomes a check against something everyone agreed to at the beginning, which is a calmer conversation than an argument about whether the project failed. This is the rebuttal idea from Lesson 1.3, Qualifiers and rebuttals make a claim stronger, applied to a plan. Lesson 6.2, Imagine it failed: the pre-mortem, builds on the same idea.
Post hoc ergo propter hoc is Latin for "after this, therefore because of this". Post hoc reasoning assumes that because B followed A, A caused B. You start drinking green tea and your skin clears up. A new manager arrives and sales rise. You wear a lucky shirt to an interview and get the job. In each case many other things changed at the same time. Skin changes with the weather and with stress. Sales move with the seasons and the economy. And you probably prepared well for that interview.
The habit to build is noticing when your only evidence that A caused B is that B came after it. When you catch yourself doing it, ask what else changed around the same time, and whether B would have happened anyway. Post hoc reasoning is also the bridge between this module and Module 4, which covers correlation and causation properly.
At work the two traps often turn up together. A small win follows a change, the change gets the credit, and the team spends more on it. If the win was luck or seasonal, the extra money becomes more sunk cost.
The cure for both traps is the same: look forward from today's position. Work through it in this order:
List the options you have from here. Estimate what each one will cost from here, including any genuine future costs of stopping. Estimate what each one is likely to bring. Use what has already happened only as information about what might happen next, and never treat it as a debt you have to repay by continuing.
Most people have at least one of these running in their own life right now: a subscription, a course, a side project or a commitment kept going mainly because of what has gone into it already. In the activity below you will pick one and decide about it as if you were starting from today.
Write down one project, subscription or commitment you keep mainly because of what you have already spent. Decide whether to keep it based on where you stand today.
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