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Sunk Costs

Let It Go!

60 Minute Session

Session Objectives

By the end of this lesson, students will:

  • Understand what sunk costs are and why they shouldn’t influence future decisions.

  • Recognize situations where people continue with a choice because of past investments.

  • Learn to make forward-looking decisions based on current and future benefits and costs.

  • Apply the concept of sunk costs to personal scenarios.

Why Do We Keep Going When We Should Stop?

Time: 10 minutes
Have you ever been stuck watching a really boring movie, but you kept watching just because you’d already seen the first hour? Or maybe you kept playing a video game you weren’t enjoying anymore just because you’d spent so much time learning how to play it?

Let me share something that happened to me recently. I started reading a book that everyone said was amazing. After three chapters, I really wasn’t enjoying it. But I kept thinking, “Well, I already spent time reading these chapters… I should probably finish it.” Then I realized something – those chapters I’d already read?

That time was already spent. I couldn’t get it back no matter what I did next.

This is what we’re going to talk about today – why we sometimes keep doing things just because we’ve already put time, money, or effort into them. These things we’ve already spent? We call them “sunk costs” because they’re like a ship that’s sunk to the bottom of the ocean – we can’t get them back no matter what we do.

Think about a time this happened to you:

  1. Did you ever finish eating something you didn’t like just because you paid for it?
  2. Have you kept wearing uncomfortable shoes because they were expensive?
  3. Did you stick with an activity you didn’t enjoy because you’d already learned part of it?

Let’s explore why we do this, and more importantly, why understanding “sunk costs” can help us make better choices moving forward. Because here’s something surprising – what we’ve already spent shouldn’t affect what we do next!

Would you like to share a time when you kept doing something just because you’d already started? What made you want to continue even though you weren’t enjoying it?

Teaching Note: This opening helps students recognize the common tendency to consider sunk costs in their own lives, setting up the more detailed exploration to come.

The Mountain Ahead: A Story About Moving Forward

Time: 15 minutes

Let me tell you about Miguel, a young professional from Manila who had a big dream: to climb Mount Apo, the highest peak in the Philippines.

For an entire year, he prepared for this adventure:

  1. He bought expensive hiking gear
  2. Trained every weekend at smaller mountains
  3. Took special climbing classes
  4. Booked a non-refundable flight to Davao
  5. Arranged time off from work
  6. Got all his permits and guides organized

But two weeks before the climb, something changed. Miguel started having second thoughts. The excitement he once felt about climbing Mount Apo wasn’t there anymore. Instead, he found himself more interested in starting a small business with his friends in Manila.

Here’s what was going through Miguel’s mind:

“I’ve already spent:

  • ₱15,000 on hiking gear
  • ₱8,000 on the flight to Davao
  • ₱12,000 on training and permits
  • Countless weekends practicing
  • A year planning this trip“

Miguel kept thinking, “I can’t quit now – I’ve put too much into this! What would everyone think? All that money and time… I can’t just waste it!“

But here’s the interesting part: whether Miguel goes to Mount Apo or not, he can’t get back:
  • The money he’s already spent
  • The time he used for training
  • The weekends he used for practice
These are all “sunk costs” – they’re gone no matter what he chooses to do next.

What do you think Miguel should do? Should he:

  1. Go on a climb he’s no longer excited about just because he’s already invested so much?
  2. Or accept those costs as part of the past and follow his new interest?

Think about it this way: The only thing that matters now is how Miguel wants to spend his future time and energy. The past is the past – it can’t be changed. But the future? That’s still up to him!

What would you tell Miguel if he were your friend? Why? Have you ever been in a situation like this, where you felt you had to continue something just because you’d already put a lot into it?

Teaching Note: This localized story helps students understand sunk costs through a relatable scenario while highlighting the emotional challenge of letting go of past investments.

What's Gone is Gone: Understanding Sunk Costs

Time: 10 minutes

You know how sometimes we hold onto things just because we’ve already spent time or money on them? That’s what we call a “sunk cost.” It’s like throwing a rock into a deep pond – once you’ve thrown it, you can’t get it back no matter what you do next.

Let’s break this down with some examples you might relate to:

Imagine you bought a new video game for $40. After playing for an hour, you realize you don’t really like it. You might think, “Well, I spent $40 on this, so I should keep playing.” 

But that money is already gone – it’s a sunk cost. Whether you play for 1 more minute or 100 more hours, you won’t get that money back.

Here’s another example: You’re eating at a restaurant and order a huge burger. Halfway through, you’re completely full. But you paid for it, right? So you feel like you should finish it. That’s the sunk cost trick again! The money is already spent whether you finish the burger or not. Remember what we learned last time about opportunity costs?  Those are different:
  • Opportunity costs are about what you give up in the future
  • Sunk costs are about what you’ve already spent in the past
Think about it like this:
  • If you’re deciding whether to keep playing that video game, don’t think about the $40 you already spent
  • Instead, think about whether you’d enjoy spending the next hour playing this game or doing something else
Here’s a quick way to spot a sunk cost: Ask yourself, “Can I get this back?” If the answer is no, it’s a sunk cost, and it shouldn’t control what you do next. Let’s practice!
  • Can you think of some sunk costs in your life right now?
    • Maybe time spent learning something you don’t want to continue?
    • Money spent on something you don’t use anymore?
    • Effort put into a project you’re not sure about finishing?
Remember: Just because you spent something in the past doesn’t mean you have to keep spending more in the future!

Teaching Note: Help students distinguish between sunk costs and opportunity costs, emphasizing that good decisions focus on future benefits rather than past investments.

Should I Keep Going? Making Smart Choices

Time: 20 minutes

Let’s look at some interesting situations where people face tough choices because of things they’ve already spent or invested. We’ll figure out whether they should keep going or try something new.

 

Scenario 1: The Movie Marathon
You rented all five movies in a famous series for $25 total. After watching two movies (about 4 hours), you realize you really don’t like the story.

Should you:

  1. Watch the remaining three movies because you’ve already paid for them?
  2. Do something else with your time and accept the money as a sunk cost?

Let’s break it down:

  • What’s already spent (sunk costs)?
    1. $25 for rentals
    2. 4 hours watching first two movies
  • What’s at stake for the future?
    1. 6 more hours of your time
    2. Enjoyment (or lack of it)
    3. Other activities you could do instead

Scenario 2: The Science Fair Project
You’ve spent $30 on materials and 10 hours working on a complex robot project for the science fair. It’s not working well, and you have one week left. You could start a simpler project about plant growth that would take 5 days to complete.

Let’s analyze:

  • Sunk costs:
    • $30 in materials
    • 10 hours of work
  • Future considerations:
    • Chance of success with current project
    • Time needed to complete each option
    • Potential grade
    • Stress level

Scenario 3: The Rainy Concert

You bought a $50 ticket to an outdoor concert. On the day of the show, it’s pouring rain. You’ll have to stand in the rain for 3 hours to watch the show. You could stay home and watch a movie instead.

Think about:

  1. What’s already gone:
    • $50 ticket cost
  2. What matters now:
    • Your comfort
    • Risk of getting sick
    • Enjoyment of the show
    • Alternative ways to spend the evening

Here’s what makes this interesting: you get to “vote” with your tokens based on what matters most to you. You could put all your tokens on one thing if that’s super important to you, or you could spread them around if several things matter. There’s no right or wrong way to do this – it’s all about what YOU value.

For each scenario, let’s:

  1. Write down everything that’s already been spent (time, money, effort)
  2.  Cross it out (because it’s gone no matter what!)
  3. Look at what we can still control
  4. Make a decision based only on future benefits and costs

Remember: The money, time, and effort you’ve already spent is gone. The only thing that matters is what happens next!

Teaching Note: Guide students through each scenario, helping them identify and then mentally “cross out” the sunk costs before making decisions based solely on future consequences.

Making Better Choices by Looking Forward

Time: 5 minutes

Take out your journal. Today we learned something really important about decision-making – that what we’ve already spent or invested shouldn’t control what we do next. Let’s think about how this applies to our own lives.

Think about a time when you kept doing something just because you’d already put time, money, or effort into it. 

Write about:

  • What was the situation?
  • What had you already invested in it?
  • How did focusing on these past investments affect your choice?
  • Looking back, what would you do differently?

For example, you might write:
“I kept playing on a team I didn’t enjoy because I had already learned all the plays and spent money on equipment. I ended up having a miserable season. Now I know that just because I spent time and money in the past doesn’t mean I have to keep doing something I don’t enjoy.”

Now, think about a decision you’ll need to make soon. How will understanding sunk costs help you make a better choice? 

Write about:

  • What decision are you facing?
  • What have you already invested?
  • How can you focus on future benefits instead of past investments?

Would you like to share what you wrote? Sometimes hearing how others deal with sunk costs can help us make better choices in our own lives.

Remember: The past is past – you can’t change it. But the future? That’s still up to you!

Moving Past Sunk Costs: Looking Forward

Today we learned something really powerful about making decisions – just because we’ve already spent time, money, or effort on something doesn’t mean we have to keep going with it. Remember Miguel’s story about Mount Apo? He taught us that it’s okay to change direction, even when we’ve already invested a lot.

Here’s what we discovered today:

  1. Sunk costs are like rocks thrown in a pond – we can’t get them back
  2. What’s already spent shouldn’t control what we do next
  3. Good decisions focus on future benefits, not past investments
  4. Sometimes letting go is the smartest choice

Your Sunk Cost Challenge

For the next week, become a “Sunk Cost Detective.” Watch for situations where you or others might be making choices based on past investments rather than future benefits.

Write down:

  1. What’s the situation?
  2. What are the sunk costs (time, money, effort already spent)?
  3. What really matters for the future?

For example:
“I noticed I kept reading a boring book because I was already halfway through. Then I remembered what we learned about sunk costs – those hours of reading were already gone whether I finished or not. What mattered was whether I’d enjoy the hours ahead. I decided to start a new book I was excited about!“

When we meet next time, we’ll learn about biases – the sneaky ways our minds can trick us when we’re making decisions. Bring your sunk cost observations – I’d love to hear what you discovered!

Remember: The past is fixed, but the future is full of possibilities. Don’t let what you’ve already spent stop you from making the best choice for your future!

What was your biggest “aha moment” about sunk costs today? How might understanding sunk costs change decisions you make this week?

Song: Let It Go (When It's Gone)

Verse 1:
Like Miguel and his mountain dream
Sometimes things aren’t what they seem
All that time and money spent
Cannot change which way we went
Past investments, yes they’re real
But they shouldn’t guide how we feel

Pre-Chorus:
What’s done is done, what’s gone is through
(The past can’t change what’s right for you)
Look ahead to what comes next
(Don’t let old choices make you vexed)

Chorus:
Let it go when it’s gone
The money, time, or dreams that’s done
Yesterday’s investments they
Can’t show tomorrow’s better way
What matters now is what’s ahead
Not all the tears we might have shed

Verse 2:
Half a movie, boring game
Staying just to dodge the blame
Of giving up what we began
But that’s not how to make a plan
Future joy and future gain
Should guide the paths that still remain

(Pre-Chorus)
(Chorus)

Bridge:
Sometimes the bravest thing to do
Is say goodbye to what’s not true
For you anymore
And walk right through a different door

(Chorus)

Outro:
The past is written, set in stone
But tomorrow’s still unknown
So make your choices fresh and free
From what has been, to what could be

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