The Loop Trolley and the Sunk Cost Fallacy

Source: Show-Me Institute
by Jakob Puckett

“Are backers of the Loop Trolley asking the East West Gateway Council of Governments for another $1.3 million in federal funds because they say: A) people want to ride it, or B) a lot of effort has already been put into the trolley? If you guessed ‘both,’ you would be right. However, reality paints a different picture. For option A, the trolley shut down in December 2019 because hardly anybody wanted to ride it. Neither ridership nor ticket sales exceeded 10 percent of what the Loop Trolley Company predicted. Option B is an example of what economists call the sunk cost fallacy. The sunk cost fallacy is when an individual keeps doing something that isn’t working just because he’s already invested time or money into it. It’s like buying a movie ticket, realizing that the movie is terrible after ten minutes, but deciding to stay anyway because you already bought the ticket.” (08/26/21)