Hibiscus Teach · Academic · Economics
Choices, Trade-offs and Sunk Costs
When does persistence become an expensive mistake?
Compare the relevant alternatives, distinguish sunk from future costs and negotiate a conditional decision.
Created by Denis M., British English teacher.
Start talking
You have spent a year on a project you no longer believe in. A colleague says: “We have come too far to stop.” Give the strongest case for continuing and the strongest case for stopping. What information is missing?
What else could you do with it?
Watch for: Why is the price of a choice not necessarily its full economic cost?
Opportunity Cost and Tradeoffs · Marginal Revolution University / Tyler Cowen · Source and credit
Clip A quiz: 6 questions
Choose one answer for each question, then check and read the feedback.
Grammar in a minuteC1–C2 · Better off: compare outcomes, not just actions
Would be better off + -ing compares how an option would leave someone. Name the alternative rather than implying a cost-free choice.
We might be better off testing the idea before expanding it.
Original practice
You say: Compare two uses of a free afternoon, including a benefit that is not financial.
Useful English
Original practice. Say your response before opening a model.
The relevant alternative is not…, but…
Make the comparison explicit.
You say: A committee compares funding a project with doing nothing, although another project is available. Respond.
One possible response
The relevant alternative is not doing nothing, but funding the strongest competing proposal.
That benefit has to be weighed against…
Recognise a benefit while naming a cost.
You say: A longer meeting could improve discussion but reduces preparation time. Explain.
One possible response
That benefit has to be weighed against the preparation time we would lose.
Critical Thinking: 3 questions
Choose one question, then follow up, challenge and revise. Use the others for another angle.
Would you pay to avoid a two-hour wait? Explain without reducing all your time to an hourly wage.
Help me start
Compare what you could do, how urgent it is and whether the waiting time is usable.
One possible response
It would depend on what the wait displaces. Missing a meaningful event could matter more to me than losing two ordinary hours.
Take it further: Could two equally careful people reasonably choose differently?
C2 challenge
Make your valuation explicit without assuming other people should share it.
An institution has an empty room. Is using it automatically cost-free? Find a realistic alternative before answering.
Help me start
Consider another use, maintenance and the possibility of leaving it available.
One possible response
There may be no rent to pay, but another group could use it. Leaving it available could also have value if unexpected needs arise.
Take it further: When might the opportunity cost genuinely be low?
C2 challenge
Do not inflate the cost by adding together mutually exclusive alternatives.
A proposal improves safety but raises costs. What else would you need before supporting or rejecting it?
Help me start
Ask how large the effects are and who experiences them.
One possible response
I would need evidence on the safety improvement, the extra costs and who bears each. The existence of a trade-off does not decide the policy.
Take it further: What alternative policy might deliver similar benefits with different costs?
C2 challenge
Identify a distributional issue that a simple total-benefit comparison could conceal.
Ignore the past, or learn from it?
Watch for: Which costs should influence the next decision, and which cannot be changed?
Marginal Thinking and the Sunk Cost Fallacy · Marginal Revolution University / Alex Tabarrok · Source and credit
Clip B quiz: 6 questions
Choose one answer for each question, then check and read the feedback.
Grammar in a minuteC1–C2 · Whether, not just how much
Whether introduces the choice between possibilities. A what-cleft can place emphasis on the real decision.
What matters is whether the next stage is worth its additional cost.
Original practice
You say: Reframe “We have spent too much to stop” with What matters is whether….
Useful English
Original practice. Say your response before opening a model.
The money already spent cannot decide what we should do next.
Separate past expenditure from current reasons.
You say: A colleague defends the project only by naming the amount already spent. Respond.
One possible response
The money already spent cannot decide what we should do next. We need to compare the remaining options.
I would support continuing only if…
Make a recommendation conditional.
You say: Support a small trial but not an unlimited commitment.
One possible response
I would support continuing only if we set a spending limit and agree what evidence would justify the next stage.
Critical Thinking: 3 questions
Choose one question, then follow up, challenge and revise. Use the others for another angle.
“Quitting wastes everything we have invested.” What is the strongest charitable interpretation, and what is the mistake in its weaker form?
Help me start
Separate possible future value from irrecoverable expenditure.
One possible response
The stronger version might be that unfinished work has future value if completed. The weaker version assumes spending more is justified simply because we spent a lot before.
Take it further: What evidence would distinguish the two versions?
C2 challenge
Explain why learning from a past investment differs from letting its size dictate the next one.
Could reputation, cancellation fees or resale value justify continuing a project? Decide which are relevant and why.
Help me start
Ask which consequences still change with the decision.
One possible response
A future cancellation fee or a credible effect on trust may matter. Potential resale value matters too. Their relevance comes from future differences, not from relabelling past spending.
Take it further: Could reputational fears themselves become exaggerated?
C2 challenge
Separate already incurred harm from additional harm that a current choice could still cause.
Should a team announce a stopping rule before a project starts? Negotiate a rule that avoids both stubbornness and premature retreat.
Help me start
Specify a review point, evidence and an exception process.
One possible response
We could review after a limited pilot and continue only if the evidence meets agreed criteria. An exception would need a new prospective reason, not just embarrassment about stopping.
Take it further: Who should be allowed to challenge the criteria?
C2 challenge
Explain how a stopping rule can remain credible without becoming inflexible when new information arrives.
Mastery: use your English
Mastery: 6 questions
Original cases. Choose, then explain one answer aloud.
Grammar masteryC1–C2 · Were we to…: test a proposal
Were + subject + to-infinitive introduces a hypothetical option. Use would or might to express the imagined consequence with appropriate confidence.
Were we to stop now, we could redirect the remaining resources.
Original practice
You say: State one consequence of continuing and one consequence of stopping, without claiming either is cost-free.
Critical Thinking: The million-pound decision
- Which past cost is irrelevant to choosing the next step, and which past information might still help?
- What is the strongest alternative use of the remaining budget?
Fictional case: a university has spent £1 million on a little-used student service. A full improvement would cost another £100,000. The team must choose a full improvement, a limited trial or closure. All figures and roles are invented for this exercise.
Open only your own role. Share its information by speaking, without showing the card.
Private Role A
Project lead: students who use the service value one feature. A £20,000 trial could test whether that feature attracts more users. You do not yet know the likely uptake. You want the team to assess future usefulness rather than dismiss the idea solely because the launch disappointed.
Private Role B
Budget committee member: the £100,000 could fund a competing student-support proposal. Closing the current service now would require £5,000 of transition support. The completed £1 million expenditure cannot be recovered. You want a capped commitment, a fair comparison and a decision rule.
- Each person gives a 45-second recommendation and names the most important missing information.
- Compare at least two genuine alternatives, including the costs that differ from now on.
- Negotiate a decision, a spending limit and a criterion for revisiting it.
- Explain your joint decision in 30 seconds, separating sunk costs from future consequences.
What a strong response does
- Identify the next-best alternative rather than adding every possible use together.
- Treat the irrecoverable £1 million separately from live costs and benefits.
- Do not assume a trial, closure or continuation is automatically best.
- Use a concession, a conditional recommendation and a concrete review criterion.
Help me start
“I recognise the potential benefit. The relevant comparison is…” / “We would continue only if…”
One possible exchange
Project lead: The earlier spending cannot justify another £100,000, but a small trial might give us valuable evidence.
Committee member: Possibly. We must compare that information with what £20,000 could achieve elsewhere, and include the transition cost if we close.
Project lead: Then let us assess the trial and the competing proposal against the same student-benefit criteria.
Committee member: Agreed. Any trial should have a cap and a pre-agreed review point, with no automatic commitment to the full improvement.
New information: try again
New information: a buyer now offers £30,000 for reusable equipment if the service closes. Revise the comparison: its present sale value matters even though the historical £1 million bill cannot be undone. Explain which part of the earlier irrecoverability assumption needs to be qualified.
On my own
Give a one-minute argument for each option, then choose conditionally. Challenge your own recommendation with its strongest opportunity-cost objection.
One last thought
Complete aloud: “The decision should turn on ___, not merely on ___.”
Practice audio
This full track includes vocabulary, useful phrases and model responses. Try the tasks before hearing all the models.
Tutor route and optional support
- Opening dilemma: 3 minutes
- Clip A block: 21 minutes
- Clip B block: 21 minutes
- Mastery quiz and brief spoken justification: 4 minutes
- Final grammar microcheck: 1 minutes
- Final Critical Thinking role task: 9 minutes
- Spoken exit: 1 minutes
Twenty-one minutes per clip block is a budget. If a clip lasts less than eight minutes, transfer the saved time to Critical Thinking, not extra teaching text. In the standard 60-minute route use one main prompt plus responsive follow-ups per block; the remaining prompts and C2 challenges are alternatives, not a requirement to discuss every question at length. No repeated full viewing in the core route. If discussion is unusually rich, retain the mastery quiz for later oral self-study rather than rushing the final exchange, and record the lesson as an extended route rather than claiming every activity fitted.
At the full eight-minute allowance for both videos, the planned oral stages provide about 29 minutes of interaction, including vocabulary examples, phrase practice and tutor turns. Shorter clips increase discussion time. This is not a claim of 29 minutes of individual student talk.
- Assume advanced English but no economics prerequisites. Require reasons, comparisons and qualifications rather than numerical fluency.
- Opportunity cost is the value of the next-best alternative forgone, not the sum of all imaginable alternatives or just the price paid.
- A sunk cost is irrecoverable. Potential resale proceeds, cancellation fees, reputational effects and benefits of learning can be relevant future consequences; they are not automatically sunk.
- Do not teach “ignore sunk costs” as “always quit a disappointing project”. Continuing can be justified by prospective benefits.
- All numbers and institutional scenarios in the original activities are fictional. This is an academic English lesson, not personal financial advice.
- MRU examples are the subject of discussion, not unquestionable policy prescriptions. Ask which costs, benefits and affected people have been included.