Saturday, January 23, 2010

Political Sunk Costs

They're different for different people for different reason, but one of the big light-bulb-above-the-head moments for me in graduate school was the idea that political costs and benefits differ from economic costs and benefits. I don't think I've gone through a paper on an appropriate topic that I haven't taken a good look at the idea from political vs. economic costs and benefits. For me, it's a great tool to get my thinking going in the right direction.

Now, in light of the surprise Republican win in recent Massachusetts election for Kennedy's vacant Senate seat, I'm wondering if the idea of sunk costs differ in the political realm versus the economic realm. I'm paraphrasing, but the gist of what is coming out of Washington is "we've worked this hard on the health care bill, it would be a shame if we didn't do something." Economic rationale would say if the benefits of moving forward outweigh the costs of moving forward, then full steam ahead. If not, then cut the cord-- but either way, it doesn't matter what you've already done.

But it doesn't seem the same in politics. There may or may not be a large political cost of not getting something done-- but now you're factoring in the past into your future decisions. I know of some studies that have shown that people don't tend to act in the homo economicus manner of ignoring sunk costs, but to me, it seems that nothing's sunk when it comes to politics. To that end, cram another wedge between economic and political costs and benefits.

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