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Does Learning Economics Make You Less Susceptible to the Sunk Cost Fallacy?

Author

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  • Milovanska-Farrington, Stefani

    (The University of Tampa)

  • Mateer, Dirk

    (University of Texas at Austin)

Abstract

The sunk cost fallacy is typically covered in introductory economics courses. It is among the most important biases that influence decision making. Ronayne et al. (2021a,b) find evidence of behavior consistent with the sunk cost effect and utilize eight questions that measure individuals' susceptibility to the sunk cost fallacy. We extend their research by examining whether a "pop culture" teaching intervention in principles of microeconomics lowers students' predisposition to the fallacy. We find that students become -14.95% less susceptible to the sunk cost fallacy after learning about it. We also observe that students who have taken economics previously exhibit lower susceptibility in all time periods.

Suggested Citation

  • Milovanska-Farrington, Stefani & Mateer, Dirk, 2025. "Does Learning Economics Make You Less Susceptible to the Sunk Cost Fallacy?," IZA Discussion Papers 17639, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17639
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    More about this item

    Keywords

    controlled experiment; empirical test; introductory economics; sunk cost fallacy; teaching economics;
    All these keywords.

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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