When Sunk Costs Take Flight
Have you ever bought a pair of shoes that never really fit, but you kept wearing them in hopes you’d break them in? All because you didn’t want to feel your money had gone to waste—even as you felt blisters forming?
In this episode of Choiceology with Katy Milkman, we explore how focusing on past, irrecoverable costs can skew our judgment and future commitments.
Bill Kolb takes us inside the Evergreen Aviation & Space Museum in McMinnville, Oregon. He shares the story of “The Spruce Goose” seaplane and why its creator, Howard Hughes, was so committed to the project despite many challenges and several opportunities to back out.
Next, Katy speaks with Richard Thaler, economics Nobel laureate and Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. Thaler reveals why we tend to dwell on sunk costs that cannot be recovered and shares insights from his updated book The Winner’s Curse: Behavioral Economics Anomalies, Then and Now.
Check out the additional papers mentioned in this episode: “Paying Not to Go to the Gym” by Ulrike Malmendier and Stefano DellaVigna and “The Realization Effect: Risk-Taking After Realized Versus Paper Losses” by Alex Imas.
Choiceology is an original podcast from Charles Schwab. For more on the show, visit schwab.com/choiceology.
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Important Disclosures
The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.
Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.
Investing involves risk including loss of principal.
The books How to Change: The Science of Getting from Where You Are to Where You Want to Be and The Winner's Curse not affiliated with, sponsored by, or endorsed by Charles Schwab & Co., Inc. (CS&Co.). Charles Schwab & Co., Inc. (CS&Co.) has not reviewed the books and makes no representations about its content.
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Learn Learn Home Market Insights & News Explore by Topic Learn by Goal Browse by Media Search Learn When Sunk Costs Take Flight Katy Milkman explores why people tend to keep investing time, money, or effort into something even when future benefits no longer justify continuing. April 6, 2026 : opens in a new window : opens in a new window : opens in a new window Choiceology with Katy Milkman | S17 EP2 When Sunk Costs Take Flight Current time: 0 seconds, 0:00 / Duration: 0 seconds 0:00 1 X Current time: 0 seconds, 0:00 / Duration: 0 seconds 0:00 Read Transcript After you listen For more practical insights on how biases like the sunk-cost fallacy can affect your financial decisions, check out the Financial Decoder podcast. Have you ever bought a pair of shoes that never really fit, but you kept wearing them in hopes you'd break them in? All because you didn't want to feel your money had gone to waste—even as you felt blisters forming? In this episode of Choiceology with Katy Milkman , we explore how focusing on past, irrecoverable costs can skew our judgment and future commitments. Bill Kolb takes us inside the Evergreen Aviation & Space Museum in McMinnville, Oregon. He shares the story of " The Spruce Goose " seaplane and why its creator, Howard Hughes, was so committed to the project despite many challenges and several opportunities to back out. Next, Katy speaks with Richard Thaler, economics Nobel laureate and Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. Thaler reveals why we tend to dwell on sunk costs that cannot be recovered and shares insights from his updated book The Winner ' s Curse: Behavioral Economics Anomalies, Then and Now . Check out the additional papers mentioned in this episode: " Paying Not to Go to the Gym " by Ulrike Malmendier and Stefano DellaVigna and " The Realization Effect: Risk-Taking After Realized Versus Paper Losses " by Alex Imas. Choiceology is an original podcast from Charles Schwab. If you enjoy the show, please leave a rating or review on Apple Podcasts . Check out more episodes. Listen now More from Charles Schwab Plan Beyond Your Next Tax Bill Podcast | Apr 27, 2026 The Illusion of Number One Podcast | Apr 20, 2026 Both Sides of Inheritance Podcast | Apr 13, 2026 Explore more topics Behavioral Finance The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party. Investing involves risk including loss of principal. The books How to Change: The Science of Getting from Where You Are to Where You Want to Be and The Winner's Curse not affiliated with, sponsored by, or endorsed by Charles Schwab & Co., Inc. (CS&Co.). Charles Schwab & Co., Inc. (CS&Co.) has not reviewed the books and makes no representations about its content. 0426-XMGE