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Sunk Cost Fallacy and 3 Traps to Avoid

Published 1/22/2016

In today's episode, we will discuss the sunk cost fallacy and 3 traps that lead to the sunk cost fallacy that you should avoid.

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Today's episode is sponsored by Linode! Head over to Linode.com/developertea or use the code DeveloperTea20 at checkout for a $20 credit towards your cloud hosting account! Thanks again to Linode for your support of Developer Tea.

Transcript (Generated by OpenAI Whisper)
Hey everyone and welcome to Developer Tea. My name is Jonathan Cutrell and in today's episode we're going to be talking about sunk costs. Specifically we're going to talk about the sunk cost fallacy and I'm going to give you three traps to avoid. These traps lead to sunk cost fallacy moments. Today's episode is sponsored by the Leno. Leno has been sponsoring us for a while now. Later on in today's episode we will talk a lot more about Leno but Leno is providing a $20 credit to Developer Tea listeners. Of course you can find out more about that in the show notes but first I want to get straight into today's topic. We're going to talk about four things. First is what sunk cost actually is and then I'm going to tell you about three traps that you should avoid to avoid the sunk cost fallacy. One cost is basically the idea that you have spent an X amount of money or time or energy on something so you might as well continue down that same path. So imagine that you buy a set of movie tickets and then you're deliberating over perhaps not going because you don't feel well and you convince yourself well I have already bought them so it would be a waste for me not to go but the reality is that that is actually a sunk cost even if you don't go no one else is going to go and the money that you spent was spent already and your life quality is probably going to go down if you go out while you're not feeling well that's not going to be an enjoyable experience for you and it's possible if you have something that's contagious you're going to get somebody else sick so it's not a good idea for you to fall victim to that sunk cost fallacy in that moment that the idea being that you spent the money so you have some sort of obligation to follow through with the other end of that transaction. Now how does this apply to developers? Well we're going to talk about three traps that you can avoid as a developer to make sure that you aren't falling victim to the sunk cost fallacy. Now of course these are not comprehensive as with everything on the show you can continue this conversation with your peers and with other people around you about what things may be sunk costs and what things may not be. For example it would not be true that if you have paid for 90% of a home or a car that suddenly you decide that you don't want to continue paying for it and you cite the sunk cost fallacy. Well that's actually not a great use of the of the citing of the fallacy because if you pay that extra 10% now you are the owner of the car you have finalized your payments and you can do whatever you want with the car there is extra incentive for you to finish those payments out. So you should be aware that the sunk cost fallacy does not apply to every single situation where you are spending time or money. But I want to jump straight into this first trap and then we'll talk about today's sponsor, Lynn Ode and then we'll get back and talk about the other two traps. The first trap is when you're building out a particular feature especially one that a client or maybe a boss has asked for specifically but the user need for that feature has either been shown to be non-existent or relatively small. Now this happens all the time we get part of the way through a feature and we find out that the that the client or perhaps the user no longer needs it but because it was on our list of things to do we still fulfill that particular need and part of the reason for this is because we don't feel good scrapping code that is well written we don't feel good throwing away something that functions well. What the reality of this situation if you encounter it is that if that feature doesn't provide value then no matter how good the code is it doesn't really matter in the end right it doesn't really help the goals of the customer it doesn't help the goals of the user and therefore that code is not really valuable to the product that you are building. So let's take a quick break and talk about today's sponsor Lynn Ode. Lynn Ode allows you to instantly deploy and manage an SSD server in the Lynn Ode cloud. You get a server running in seconds with your choice of Linux distribution resources and the location of the node. Now they have eight data centers their plan start at $10 a month you can get a server running in just under a minute they have hourly billing there's a month a cap on all of their plans all of their add on services including backups node balancers and long view you can have a VM up and running you can run Docker containers they have encrypted disks VPNs you can run a private get server and if you're looking for fast if your primary motivation is to find highly performance servers well Lynn Ode is a great option because they provide native SSD storage they have a 40 gig a bit network that is incredibly fast these these servers run on Intel E5 processors and beyond all of these things you can try out Lynn Ode and you can get a seven day money back guarantee so go and check it out Lynn Ode.com but of course Lynn Ode has provided a special offer for developer to listeners if you use the code Developer Tea 20 at checkout and you can also use the special link in the show notes which will automatically apply that code you will get a credit of $20 added to your account automatically and that's just for being a Developer Tealistener that's equivalent to two months for free so go and check it out Lynn Ode.com but of course check the show notes use the code Developer Tea 20 or the special link in the show notes which can be found at spec.fm thank you so much to Lynn Ode for sponsoring the show and let's get back into our discussion about the sunk cost fallacy we mentioned the first trap to avoid is building a particular feature especially a feature that has been requested specifically by a client or a boss even though you found that the feature is no longer necessary or that it's no longer being demanded by the users another example is continuing to invest time learning a platform or a language even if you don't want or need to learn it simply because you've studied a significant portion of it already and you know enough to be functional in that language so this happens to people all the time we think that just because we know a little bit of Ruby that the most likely thing that we should learn next would be Rails or Sinatra right we think that just because we know JavaScript that we should also learn how to use node and that's not necessarily true unless you know for sure that you want to or you need to learn a particular language or a framework you have to be very careful because this doesn't feel like cost but your knowledge has taken time and energy to cultivate it takes you time and energy to learn a language and you can't look at that time and energy as purely investment some of that time and energy should be considered sunk cost this is time and energy that you can't get back anytime that I spent learning a now long abandoned JavaScript framework in many ways that is a sunk cost because I'm not going to be able to build on that framework and and consider it reliable anymore but I did gain some information that I can use and that can inform other things in my career so that's not to say that the time that you spend learning these things is totally totally useless and it's also not to say that you shouldn't continue learning something necessarily but it is to say that you shouldn't continue learning something solely because you've already started learning that thing if you find that you don't enjoy a particular language then it's my opinion that unless you have a really incredibly compelling reason professionally to learn that language you don't have to continue learning it just because you started learning it you can drop that and move on to something else entirely and that is something that is a little bit difficult to do because of the sunk cost fallacy we have the feeling that we've invested partially in something and that to actually see the fruits of that investment we have to go all in and that's simply not true and that leads me into the third and the final trap that we're going to talk about today with relation to the sunk cost fallacy and that is choosing not to do something simply because you haven't done it for a very long time so you think well why should I start now or why should I start back now all right let me say that one more time the third trap is choosing not to do something simply because you haven't done it either for a very long time or maybe ever so you think well since I haven't done it in a long time or I've never done this then I might as well not try to start it now and this is particularly important for developers because people start the process of understanding how to code the process of learning how to become a developer at all stages of life even when when you are very young as a child you can start as a developer there are probably plenty of teenagers listening to this show but you can also start learning to become a developer very late in life it is a wide open field and there's plenty of information openly available on the internet so if you are interested in becoming a developer and you're 35 40 45 years old and you're afraid that that is too late for you I'm here to encourage you by looking at the sunk cost fallacy you can tell yourself it is not too late you haven't invested all of the time of your life into other things necessarily so you have the time now now is the time anytime that you spend deliberating over learning how to become a developer it's time that you could be spending learning how to become a developer so I highly encourage you to not fall victim to the sunk cost fallacy that just because you spent most of your life not doing something that you can't do it now today so I highly encourage you if you are even tangentially interested in technology in development software engineering to go and read more do a little bit of research on the internet there's plenty of information completely openly available many locations online so go and check out some of these locations I will include some links in the show notes for some introductory information into the world of computing and the world of code is is an incredibly fun and interesting world to be involved in even if you are just looking to kind of get your feet wet and do this as a hobby I would encourage you to to take a look at some of the materials that I'm going to post in the show notes at spec.fm thank you so much for listening to today's episode of course if you have other traps that you fall into I would love for you to share them with me you can find me in the spec community slack channel that's kind of a tongue twister spec.fm slash slack now that slack community will always be free to the listeners of the spec FM shows including Developer Teaby the way go and check out the other shows on spec.fm you can find them on the front page of the spec site suspect out of them of course all the show notes for Developer Tea and every other episode of Developer Teacan be found at spec.fm you can follow me on twitter at at Developer Teaou can email me your questions at developertea@gmail.com thank you again so much to Linode for sponsoring today's episode you can get $20 of credit by going to a spec.fm and using the special link to go to linode.com or you can just use the code Developer Teaat checkout linode is providing a $20 credit to Developer Tealisteners for SSD servers in the linode cloud thank you again to linode for sponsoring today's episode of Developer Teaake sure you subscribe and rate the show in iTunes that is the best way to help other developers just like you find the show thank you so much and until next time enjoy your tea