They said they had invested too much to choose another path.
This person has a bachelor's in economics
Man, of all people that ought to know about the "sunk cost" fallacy...
This person has a bachelor's in economics
Man, of all people that ought to know about the "sunk cost" fallacy...
If you accept that middle-income, professional jobs are decreasing relative to lower-income and higher-income positions, then many students with a non-trivial amount of debt are in a trap. For example, say you graduate with a B.A., $120K in debt, and the only job you can get out of school pays ~40K, but low upward mobility long-term (pay-wise).
Your options are (for this hypothetical):
(1) Take the ~40K job with low upward mobility long-term.
(2) Purchase a $120K graduate degree that offers a 65% chance at a six-figure job out of school (and high upward mobility long-term) and a 30% chance of a ~$60K job (and medium upward mobility long-term) and a 5% chance of ending up in outcome (1).
Which is more rational?
Now, we could get into questions of how well this maps to reality, or what the expected value of each outcome is, or how to even compute expected value in a situation with myriad messy variables and reductionist assumptions, etc. Regardless, I think we can say that if income and upward mobility resemble a barbell distribution more than a normal distribution, then we have defeasible justification for believing the following:
(Proposition) A non-trivial number of students face decision traps which lead to a choice less akin to the sunk cost fallacy than a non-confident choice when living between 'a rock and a hard place'.
At times, people will say something about having invested so much already that their decision is pretty much pre-determined even though they're attempting to convey having made a non-confident choice after being stuck between 'a rock and a hard place'.
In fact let's look at it: what's the probability that given your inability to gain one of the lucrative jobs at this level of education you can gain one with a higher level of eduction? Well we can speculate, a higher level of education can be sought for two reasons: you're acadmically gifted and genuinely want to get more education, or you're not academically gifted and you want the magic fairy wand to wave to get into Brothers and Brothers LLP. Well let's face it, you're in group number 2, and it's the people in group 1 who are the actual successful candidates. So given that your pay off looks way off. You won't get the top jobs - you're not good enough, you won't get the medium jobs - you're overqualified, and you won't get the cheap jobs - you can't afford to work for that amount.
(2) Even assuming your argument goes through successfully, it is irrelevant to whether the person committed the sunk cost fallacy, which is the issue under discussion. Now, you could argue that subjective assessments of expected value always track the true underlying expected value (i.e. the actual expected value for any individual's objective abilities). In that case, all non-academically-gifted students who chose further education would likely be committing the sunk cost fallacy. That's not the case though, and you know that. Or you should, because it is prima facie absurd.
(3) It is relatively uncontroversial that there is a substantive disconnect between the supply of graduates and the number of jobs paying a salary justifiably commensurate with the debt-levels we are seeing. This has a couple of knock-on effects. For example, an across the board devaluing of degrees, which unjustifiably increases hiring requirements for lucrative professional jobs, further exacerbating prestige whoring, etc. This turns high school seniors deciding to attend elite private schools into even greater gamblers as the cost of an initial degree rises. Maybe they are or maybe they aren't rational to take that gamble (Are gambles by definition irrational? If so, pick a different term.). However, after having taken that gamble and come up short, they don't automatically become irrational in taking it again. Or, at least, the irrationality wouldn't necessarily have anything to do with the sunk cost fallacy.
So given that they'll just not even get back to zero net worth if they stop, the "better" option is to continue. Despite the negative dollar value standing next to it.
That's something that's just not considered here. When it comes to net worth, -$1000 has exactly the same consequences as -$99999999999 for that individual. So if you're going to be negative anyway, why not be as deep as possible ?
For society, that is a very negative outcome, but not for the individual. But the individual chooses (even in societies that like to pretend otherwise).
I'm not sure I follow your point... -$1000 could be paid off in a month. -$99999999999 probably couldn't be paid off in 100k lifetimes.
That's one thing people keep forgetting about, for example, take population figures. Species specifically refuse to multiply unbounded. And that's weird the first time you realize that DNA contains a distributed regression algorithm that estimates to what size the population of it's species can grow under the current circumstances and then blocks reproduction, or enables asexual (or otherwise really fast) reproduction. Why ? Because if you get it wrong, population numbers will fluctuate.
And that seems "what's the problem ?". Well the problem is that there is a very special number, called "zero". And if the population of any species randomly fluctuates, it might randomly hit zero. And then it's over. There's no coming back from zero. Then you will realize that the number where that happens is not actually zero but can in fact be quite large a number and you see why fluctuation is an extremely undesirable property.
So for debt you can't pay, "zero" is the magic number. Once you cross it, your mission in life changes. It's no longer to get out of debt, but rather to get in as deep as you possibly can, while refusing any and all attempts to get back out (except of course to deceive others to let you get deeper in debt). That behavior by itself is the only thing that might get you back out of debt (just look at the president)
And in economics in general you should keep in mind that while individual humans are stupid, large groups of humans are incredibly good at finding optimal Nash Equilibria. If large numbers of people "randomly" or "out of stupidity" do something, fact of the matter is that the stupidity is yours, for not seeing the whole picture. Stupidity at large scale only exists at very short timeframes, if at all. Lots of people going into debt is not stupidity.
The way to think about it isn't that to leave would be to throw away 2 years of tuition, it's to consider whether the next 2 years of tuition is worth a 4 year degree. And the answer could easily be, yes, it absolutely is worth it.
I had plenty of experiences where I realized "dude can only do exactly what I say ...".
Hard to know if it is any worse or better than in the past, but man, it was disappointing to see.
What struck me again later was finding out that 24 is the tipping point for the brain. That's about when the majority of brain matter is "gray" instead of "pink" (aka the process of myelination), which seems to be a biological rather than an environmental process. So this has likely been the case for a very long time (like 40,000 years or more).