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

Filed Under (Other Topics) by Jeffrey Brown on Dec 1, 2009

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.