Who exactly invented the phrase “Sunk costs do not participate in major decisions”?

You can see it every day on Xiaohongshu, but it always feels wrong. This is a classic fallacy, packaging an economic fact into some kind of life advice.

Sunk costs are not about avoiding participation in major decisions, but about not engaging with all decision logic, because sunk costs are fundamentally not costs at all. A cost that has already occurred and cannot be recovered is essentially nonexistent, because at the decision point (the present), these so-called “costs” are merely facts, and there is no need to consider them in decision-making.

Humans are loss-averse, so they deceive themselves. One point many people are unaware of from the start is: the cost paid to maintain the status quo and avoid realizing losses far exceeds the actual loss from stopping loss.

Thus, people deceive themselves into pretending everything is smooth and good, showing their best side outward, while internally digesting, chewing, complaining, and hiding the bad side. Later, they realize that to avoid accepting a $100,000 loss, they have spent a million dollars to maintain it— the former is a sunk cost, but the latter is real operational cost.

Therefore, when we become aware of sunk costs, what stops is not the sunk costs themselves, but the opportunity cost paid to maintain those sunk costs.

A love affair that consumes both parties, or a nerve-wracking investment, all fall into this category. Some people continue a terrible relationship until marriage and children; some top up losses until they lose everything. In the end, they see “sunk costs do not participate in major decisions,” but fail to realize they are burying endless opportunity costs themselves.

Be responsible for the future, not the past, because the past is merely a certain fact, while the future is an uncertain decision. Obsessing over the past is irresponsible for the future. Rational people always calculate future benefits and costs—that is the rationality assumption in economics.

Always focus on the chips at hand and future development.