It’s only money

Abstract

The sunk costs fallacy is an important concept in the academic and policy worlds. It has helped explain consequential national security decisions such as the escalation in Vietnam and the surges in Iraq and Afghanistan. While previous analysis of sunk costs in international relations has made no distinction between financial and human sunk costs, there is evidence in psychology that people treat human lives and financial costs differently. The consensus in the casualty sensitivity literature is that human sunk costs should lower support for a conflict, but there is as yet no evidence on whether financial costs operate in the same way. Using the Environmental Protection Agency’s value of a statistical life to equalize human and financial costs, we create survey experiments through Mechanical Turk and GfK/Knowledge Networks about a hypothetical US military intervention to test if financial and human costs have the same effects on public opinion. We find that public reaction to sunk costs is contingent on the type of costs incurred. Consistent with the growing ‘sunk costs skeptic’ literature we find no evidence that any sunk costs induce greater commitment to a mission. Where the US contribution to the conflict is purely financial, sunk costs induce a desire to cut losses. When intervention involves US lives, sunk costs make no difference to the level of support. Finally, contrary to the implicit assumptions of past policymakers, ex ante levels of public support for sending troops and sending money are indistinguishable. These findings hold true both in situations involving high Iraq War level sunk costs and low Somalia-style costs.