“The Sunk Cost Fallacy” and President Obama’s Decision about the War in Afghanistan

Posted by Jeffrey Brown on Dec 1, 2009

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This evening, President Obama will make a prime-time address to the nation announcing his decision about whether or not to send more troops to Afghanistan.  This decision will fundamentally shape the future of that conflict, the world’s perception of our war on terrorism, the lives of those who live there as well as those who are sent to fight there, and, of course, our nation’s economic commitment.  


I do not pretend to be an expert on foreign policy in general or on Afghanistan in particular.  So I write this post today with no intention whatsoever of speculating about what course President Obama will choose or of critiquing whatever decision he does make.  I do, however, think it is worth making a simple observation about one possible rationale that is often used to justify a continued commitment to a conflict.  This is not a rationale that I have heard this President use – it will be interesting to see if he does so tonight – but it is one that has been uttered by many other elected officials.  The “rationale” is that we must continue fighting so that those who have given their lives in the war thus far “will not have died in vain.”


I, like the overwhelming majority of Americans, have tremendous respect, admiration and gratitude for all of the men and women who are willing to sacrifice so much to defend our nation.  These sacrifices are not limited to those who give their lives, but also include physical and psychological injuries, tremendous strain on families, and financial sacrifices, among many others.  As a nation, we should honor and provide assistance to all of those who have served in uniform as well as their families.


But do we need to continue fighting in order that those who died did not do so in vain? 


Believe it or not, the economics discipline provides a useful perspective on this issue.  (And it is a perspective that does not require that one think in terms of quantifying lives lost in dollar terms – an idea that economists often find useful, but that non-economists typically find extremely distasteful).


The idea from economics is known as the “sunk cost fallacy.”  One definition of this fallacy is “when we have a greater tendency to continue an endeavor once an investment in money, effort, or time has been made.”  More importantly, it is the tendency to do so even when the past investment of time, effort or money is completely irrecoverable.  This is fundamentally irrational, because if the costs cannot be recovered, then they should be irrelevant for making decisions about how to proceed.  Rather, future decisions should be based only on future benefits and costs. 


In the context of Afghanistan, the idea that “we must continue to fight so that those who died did not die in vain” is a manifestation of the sunk cost fallacy.  The rational counter-argument to this is that there is no decision that can be made on the future of Afghanistan that will bring our loved ones back.      


Those who bravely fought and died in Afghanistan did so in the service of their country, and nothing about President Obama’s decision this evening will change that.  To borrow Abraham Lincoln’s famous line in the Gettysburg Address, it is “far above our poor power to add or detract” from the honor that is due to those who died there.


So whatever decision is announced this evening, let us hope it is justified on the basis of whether it is the right decision for our nation going forward.  And let’s honor those who have died, rather than using their memory as a justification for supporting or criticizing whatever path we choose.

8 Responses to ““The Sunk Cost Fallacy” and President Obama’s Decision about the War in Afghanistan”

  • Brian Hulbert says:

    It is very interesting to think that an idea that I learned in my ECON 102 class could be used to analyze our situation in Afghanistan. I always thought that it seemed like an honorable idea to continue fighting so that those who have died would not die in vain. However, I never actually thought about what that saying actually meant. It’s true that we can never bring back those brave people who have sacrificed so much for our country. Another way of looking this is to think what the soldiers who have given their lives would want us to do. I don’t believe they would want to sent more troops over there just so they would not die in vain. I believe they would, however, (again this is just speculating and I don’t begin to believe that I know what these people would say) agree that if the future benefits outweigh the future costs, then more troops should be sent over. This goes back to basing the decision on whether its the right decision for our nation going forward. I also strongly agree with your statement, “And let’s honor those who have died, rather than using their memory as a justification for supporting or criticizing whatever path we choose.”

  • Michelle Miranda says:

    I wonder if President Obama has fallen victim of the sunk cost fallacy. It was just a few months ago that he campaigned that he would bring home the troops, and then to turns around and increases troops in Afghanistan.

    Although, I have not looked very heavily into his decision I do have an opinion on his choice. I definitely think it is a job that needs to be finished, but I think it should have been finished awhile ago. I don’t think a fallen soldier would want his friends to continue fighting for a lost cause. However, if it is a cause worth fighting for then I think Obama has made the right choice.

    I think the US has a bad habit of getting involved in things that maybe it should not be. To me a victory is not a real victory unless the country fully pulls out its troops after winning. This is something the US has not done since 1917. I think there are a lot of other problems that Obama needs to focusing on. Personally, I think a war is just a way to stimulate economy. The formula for GDP involves money spent on military, which just leads to inflated numbers that will make it look like the economy is doing better.

  • Adam Rose says:

    I don’t believe the decision made by President Obama and his administration to increase military presence in Afghanistan is a result of the “sunk cost fallacy”. While it is unfortunate that not all campaign initiatives are always followed through with as expected, it has to be believed that any actions taken of such magnitude are done so with the perception that it bests serves the interests of the American people.

    I feel that the lives of those men and women that have been lost in the line of duty would be honored with the job “completed” rather than troops fighting with no resolution in the future to look forward to. Therefore, the “sunk cost fallacy” should not have played in the decision to continue the war on terror; Obama’s decision was made on the basis that the United States Army has a legitimate expectation to win with an additional troop injection.

  • Gagan Bhatia says:

    There is a strange phenomenon that is ubiquitous in all the state leaders of the world. In order to get in the office they promise a change and when they get in the office they continue with the same things. It is really difficult to change the policies at time for the state leaders.

    I really appreciate your Economic theory of Sunk Cost fallacy and its application in this regard. I think one more economic theory can be used to help solve Afghanistan problem. I am from India and understand the region’s problems.

    I will take the case of Kashmir; I know the differences and the similarities of both the places. In Kashmir a lot of money is spent in the army operations and they are very important part of the Indian Defense forces’ budget.

    In all the terrorism affected places, the common problem is the absence of opportunities of development. For the youth the only options are either to abstain from the crime or to participate or to take refuge in other areas. The first one becomes very difficult in that kind of an environment. In order to survive in the first option, one has to help one of the warring parties in lieu of the protection. The second one seems to be an easy option. Third one is again difficult.
    The last prime Minister of India Mr. Atal Biahri Vajpayee tried to solve the problem in a very strange way. He used the principal of economics called the “opportunity cost philosophy”. He asked the administrators, Ministry of Railways and Indian Army to work jointly expedite the process of connecting Kashmir region to the rest of the India by railroads (railways). Railroads play a very important part in India and are owned by Government of India. The project costs a lot of money and the work is in progress. The idea is to increase the opportunity cost for the people to participate in the fight/war. If they have tasted the fruit of development they may abstain from either participating or encouraging the war/terrorism.

    Using this strategy, USA can also divert more of the money spent in the army operations to build some infrastructure as soon as possible. I know the building of infrastructure is going on and India is also participating in it. But more money needs to be spent there to connect people and let them taste the fruit of development.

  • Darrien J. says:

    Having served in the military, I’m well aware of the emotional reasons to continue fighting. However, your point is very valid and Americans should look to find sound reasons to invest more in this war effort. Now, it appears that we do not have the proper portfolio of options to complete our original aims (Capture/Kill bin Laden, break Al Queda and the Taliban) but I don’t think the American public has the capacity to accept and understand why that is. I can only hope that President Obama’s decisions can meet acceptable, reasonable goals that can further both Afghan and American security going forward.

  • Andrew says:

    Its a good point. Unfortunately in national security where future credibility is an important consideration the larger the sunk cost the larger the credibility impact of any decision.

  • Jeffrey Brown says:

    That is a very good point Andrew. And, without a doubt, future credibility is a legitimate ground for decision-making. But if that is the real reason, let’s state that it is the reason, rather than suggesting that the honor of those who died is somehow contingent upon a particular course of action.

  • Jeffrey Brown says:

    Thanks Darrien for your service. You are absolutely right that what we need are some well defined goals.