The Fallacy of the Sunk Cost

I was an economics major in college (through my school's business school). As I mentioned, I probably would have been better off if I took a concentration in finance, accounting, or IT instead. As the joke goes, however, at least economists (or those who study economics) know why they're unemployed.

If I had known the supply curve of lawyers was bowed so far to the right that it had brought the equilibrium price/wage down to the point where we have to beg to GIVE our services away, I would probably have avoided law school. Sadly, that empirical evidence escaped me.

Fortunately, I did gain the understanding of another economic concept: The fallacy of the sunk cost. A sunk cost is a cost that has already been incurred. No future action can help you avoid what has already been lost. (This is the "no use crying over spilled milk" concept of economics.)

The fallacy that often tempts people is that simply because they've already incurred a cost, they need to continue following a related course. This is fallacious reasoning because future decisions should be based upon their own cost/benefit analysis not upon costs that can no longer be avoided.

For example, say you purchased a non-refundable movie ticket. Later you learn that the movie is awful. You would derive no pleasure from seeing it. You'd much more prefer to sit at home watching TV. Still, you might try to rationalize to yourself that "I've already paid for the ticket, I might as well go." This is irrational. You'd be maximizing your utility (happiness) by staying at home, and you've already paid for the ticket either way.

When it comes to law school, this fallacy is a powerful force which can get you into trouble: I've already taken the LSAT, I might as well apply to law school. I put the time and effort into applying to law school, I might as well try it out. I hate law school and I have crummy grades, but I already completed the worst year of it, so I might as well just plug along to get my degree. I don't really want to practice, but I might as well take the bar. I'm a licensed attorney, but the profession stinks and the pay is low, but I might as well try practicing. I hate my job and I'm wasting my life, but I might as well put on a good face and log onto JD Underground to rebuke the posters for daring to criticize my profession.

Despite understanding this concept theoretically, I sadly failed to apply it to my own decisions regarding law school. When I didn't get the LSAT score I wanted, I shouldn't have applied. When I didn't get into the school I wanted, I should have done something else. When I realized I hated law school, I should have bailed out.

Well, the Esq. Never blog is dedicated to stopping this trend. I'm personally stopping myself from continuing down the road of least resistance towards destruction. Yes, I have taken on six figures of debt and wasted three year of my life. I labored tirelessly and passed the bar. I've been duly sworn in as an officer of the court. I, however, am perfectly happy to "throw it all away".

I don't want to be a lawyer. I certainly don't want to earn under $40k to work for some legal chop shop. I don't want to chase ambulances. I don't want to represent scumbag drunk drivers. I don't want to take part in the local court's daily cattle call. I don't want to harass (fellow) debtors. I don't want to click a mouse "reviewing documents" for the next several years. I don't want to work for a slime ball whose picture and 1-800-Lets-Sue advertisement appears on the side of the municipal buses. I don't want MY picture on the back of the bus. I don't want to deal with low life clients. I don't want to fill out redundant and wasteful forms. I don't want anything that comes with being an attorney.

Should I have realized this before I enrolled in law school? Sure. Nobody wishes that I did more than me. It's too late to take that decision back. It's not too late, however, to stop pushing forward. Say I land a low level PI, ID, debt collection, or similar position. In five years, I'll be that much further down the road towards destruction. I won't have any transferable skills. It'll be even harder for me to spin my experience to get out the industry. I'll have to take a pay cut to switch industries, and if I get laid off I'll have few options but to go solo or find some other sleazy firm to take me on.

I'm under thirty. I'm not that far removed from my non-legal career/experience. The income based repayment plan will help make my debt more manageable. It's time to right the ship, move forward, and look back at law school as an expensive "lesson learned".

Readers, if you're in the same boat, don't wait until you're in too deep that there's nothing you can do about your situation. Put your pride and law degree behind you. They took three years of your life and a ton of money, don't let them take everything else.