Throwing Good Money After Bad

Suppose a municipality has already spent forty million pesos on a bridge that engineers now say will need another sixty million to finish, while a new design at a different site could be completed for thirty million. Many officials would argue that the original project must be finished; otherwise, the forty million will have been "wasted." Economists call this reasoning the sunk-cost fallacy. Money already spent cannot be recovered whichever option is chosen, so it should not influence the decision. The only relevant comparison is between the costs and benefits that still lie ahead: sixty million to complete the first bridge versus thirty million for the alternative, assuming both would serve the public equally well. The fallacy is powerful because abandoning a project feels like admitting a mistake, and few people, especially those who must face voters or auditors, enjoy doing that. Yet refusing to stop can turn one error into two. This does not mean that every troubled project should be abandoned. Sometimes the remaining cost of completion is genuinely the best use of funds. The point is that the decision should rest on what can still be gained, not on what has already been lost.