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This particular individual may have fallen prey to it. However, I think students in similar situations face something a bit more nuanced than the sunk cost fall

This particular individual may have fallen prey to it. However, I think students in similar situations face something a bit more nuanced than the sunk cost fallacy. If you accept that middle-income, professional jobs are decreasing relative to lower-income and higher-income positions, then many students with a non-trivial amount of debt are in a trap. For example, say you graduate with a B.A., $120K in debt, and the only job you can get out of school pays ~40K, but low upward mobility long-term (pay-wise). Your options are (for this hypothetical): (1) Take the ~40K job with low upward mobility long-term. (2) Purchase a $120K graduate degree that offers a 65% chance at a six-figure job out of school (and high upward mobility long-term) and a 30% chance of a ~$60K job (and medium upward mobility long-term) and a 5% chance of ending up in outcome (1). Which is more rational? Now, we could get into questions of how well this maps to reality, or what the expected value of each outcome is, or how to even compute expected value in a situation with myriad messy variables and reductionist assumptions, etc. Regardless, I think we can say that if income and upward mobility resemble a barbell distribution more than a normal distribution, then we have defeasible justification for believing the following: (Proposition) A non-trivial number of students face decision traps which lead to a choice less akin to the sunk cost fallacy than a non-confident choice when living between 'a rock and a hard place'. At times, people will say something about having invested so much already that their decision is pretty much pre-determined even though they're attempting to convey having made a non-confident choice after being stuck between 'a rock and a hard place'.

slivym 8y ago
Your number 2 scenario is dead wrong. The reason the person is in that scenario in the first place is because they mis-judged the payoff from having the first degree. The likelihood they misjudge the second degree is just as high. In fact let's look at it: what's the probability that given your inability to gain one of the lucrative jobs at this level of education you can gain one with a higher level of eduction? Well we can speculate, a higher level of education can be sought for two reasons: you're acadmically gifted and genuinely want to get more education, or you're not academically gifted and you want the magic fairy wand to wave to get into Brothers and Brothers LLP. Well let's face it, you're in group number 2, and it's the people in group 1 who are the actual successful candidates. So given that your pay off looks way off. You won't get the top jobs - you're not good enough, you won't get the medium jobs - you're overqualified, and you won't get the cheap jobs - you can't afford to work for that amount.
- anongraddebt 8y ago
  (1) Your group number 2 describes a sizeable portion of law school graduates who actually do end up in six-figure corporate jobs, as well as a decent (though smaller) portion of medical school students. Unless, only those persons who obtain the six-figure jobs out of graduate school are academically gifted. This would mean, however, that sizeable portions of the graduating classes of many such schools (even just the elite ones) harbor non-academically-gifted students. That's not an indefensible position. However, it would be rather odd and not terribly convincing on its face, as presumably only the academically gifted could have arrived there in the first place. (2) Even assuming your argument goes through successfully, it is irrelevant to whether the person committed the sunk cost fallacy, which is the issue under discussion. Now, you could argue that subjective assessments of expected value always track the true underlying expected value (i.e. the actual expected value for any individual's objective abilities). In that case, all non-academically-gifted students who chose further education would likely be committing the sunk cost fallacy. That's not the case though, and you know that. Or you should, because it is prima facie absurd. (3) It is relatively uncontroversial that there is a substantive disconnect between the supply of graduates and the number of jobs paying a salary justifiably commensurate with the debt-levels we are seeing. This has a couple of knock-on effects. For example, an across the board devaluing of degrees, which unjustifiably increases hiring requirements for lucrative professional jobs, further exacerbating prestige whoring, etc. This turns high school seniors deciding to attend elite private schools into even greater gamblers as the cost of an initial degree rises. Maybe they are or maybe they aren't rational to take that gamble (Are gambles by definition irrational? If so, pick a different term.). However, after having taken that gamble and come up short, they don't automatically become irrational in taking it again. Or, at least, the irrationality wouldn't necessarily have anything to do with the sunk cost fallacy.

slivym 8y ago

Your number 2 scenario is dead wrong. The reason the person is in that scenario in the first place is because they mis-judged the payoff from having the first degree. The likelihood they misjudge the second degree is just as high. In fact let's look at it: what's the probability that given your inability to gain one of the lucrative jobs at this level of education you can gain one with a higher level of eduction? Well we can speculate, a higher level of education can be sought for two reasons: you're acadmically gifted and genuinely want to get more education, or you're not academically gifted and you want the magic fairy wand to wave to get into Brothers and Brothers LLP. Well let's face it, you're in group number 2, and it's the people in group 1 who are the actual successful candidates. So given that your pay off looks way off. You won't get the top jobs - you're not good enough, you won't get the medium jobs - you're overqualified, and you won't get the cheap jobs - you can't afford to work for that amount.

anongraddebt 8y ago
(1) Your group number 2 describes a sizeable portion of law school graduates who actually do end up in six-figure corporate jobs, as well as a decent (though smaller) portion of medical school students. Unless, only those persons who obtain the six-figure jobs out of graduate school are academically gifted. This would mean, however, that sizeable portions of the graduating classes of many such schools (even just the elite ones) harbor non-academically-gifted students. That's not an indefensible position. However, it would be rather odd and not terribly convincing on its face, as presumably only the academically gifted could have arrived there in the first place. (2) Even assuming your argument goes through successfully, it is irrelevant to whether the person committed the sunk cost fallacy, which is the issue under discussion. Now, you could argue that subjective assessments of expected value always track the true underlying expected value (i.e. the actual expected value for any individual's objective abilities). In that case, all non-academically-gifted students who chose further education would likely be committing the sunk cost fallacy. That's not the case though, and you know that. Or you should, because it is prima facie absurd. (3) It is relatively uncontroversial that there is a substantive disconnect between the supply of graduates and the number of jobs paying a salary justifiably commensurate with the debt-levels we are seeing. This has a couple of knock-on effects. For example, an across the board devaluing of degrees, which unjustifiably increases hiring requirements for lucrative professional jobs, further exacerbating prestige whoring, etc. This turns high school seniors deciding to attend elite private schools into even greater gamblers as the cost of an initial degree rises. Maybe they are or maybe they aren't rational to take that gamble (Are gambles by definition irrational? If so, pick a different term.). However, after having taken that gamble and come up short, they don't automatically become irrational in taking it again. Or, at least, the irrationality wouldn't necessarily have anything to do with the sunk cost fallacy.