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God and economics

Exposing the gospel flaw in the sunk cost fallacy

I've spent my study leave this week attending Acton University in Grand Rapids. Why? Because nothing beats 4 days of lectures on political and economic theory, applied theology, and well reasoned dialogue on how various concepts from these disciplines enable us to experience and extend the life-changing love of Christ in our homes, the workplace, and our communities.

One of the economic concepts that came up is how the “sunk-cost fallacy” often keeps money and resources flowing to areas of the economy where it is no longer beneficial. What is the sunk cost fallacy you say?

We like to think that we make rational decisions based on the future value of objects, investments and experiences, and that we are able to stop doing something when everything screams, “Stop!” Like fixing up your 1994 Ford Taurus. 

The problem is, that's not true. Our decisions about spending and investment are heavily influenced by what we've already invested and emotional attachment. Meaning, because you really love that old car, you've already invested thousands, and you don’t want that money to go to waste, you'll go ahead and replace the transmission, and the brakes, and the tie rods, and the head gasket, and the struts. Again.

Of course, the smart decision is to cut your loses and move on. A well-reasoned investor recognizes and overcomes the sunk-cost fallacy. And while that has real benefits for economies, and marketplace innovation, thankfully, it's not how God deals with us. 

Our Father started his relationship with us by incurring the cost of offering up his Son to redeem us from sin and bondage. What he got, shall we say, has needed a lot of work. 

And yet, God keeps on investing in us even though everything in the world says that we're a bad investment. We continue to break down, cause problems, and not operate the way we were intended. Despite repeated investment and maintenance, there seems to be no end to our need for more investment, even when there seems to be little hope of gain.

Consider Jesus’ commitment to a Peter. Despite repeated small steps forward, Peter continued to fail. He doubted when Jesus asked him to walk to him on the sea, he denied Jesus three times, and even later returned to eating only with the Jews. But, Jesus never gave up on Peter.

Why? Because the heart of the gospel is that God redeems us because he loves us, and not because of what we can do for him. Not only that, he continues to invest in us because he is a God of steadfast love and faithfulness, not a God interested in overcoming the sunk-cost fallacy.

The church has a long, and sad, history of being done with people when we feel like we've invested enough, and determine that our time and energy would be better spent somewhere else. If your reading this and feeling like your not worth the continued investment - you're wrong. There is no end to God’s steadfast love and faithfulness towards you, and the church will do our best to reflect that in our relationship with you.

If you're reading this and realizing that you've been guilty of cutting people loose and moving on – be thankful that God’s grace also covers your sin. 


And then, start re-investing. Because, well, because of the gospel...which is not a fallacy!

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