One of the most important concepts in decision making is "Sunk Cost". If you don't know what "Sunk Cost" is, this blog will try to explain it.
When I was teaching Decision Theory at a major university, one of the hardest concept to get across to students was "sunk cost". Sunk cost is something that has happened in the past and no future decision can change that fact. Here is a simple example. Let's say that you purchased a car for $10,000 and you have been making payments on it so that now you only owe $7,000. Your wife finds exactly the same car as the one you have for only $5,000. She suggests that you let the loan company take your old car back and that you buy this other car for $5,000 for a savings of $2,000. You disagree with her stating that if you do that you will lose the $3,000 that you have already paid. The fact is, the amount you have already paid is "sunk cost" and should be ignored and you should buy the other can and save $2,000. I don't know if you follow this or not.
When people say that 201,000 people have died from the Covid-19 virus and that we need to close down the economy even though the death rate is far below what it was in the past, this is an example of Sunk Cost. The decision for the future needs to be based on the future not on what has happened in the past. We know that, in the case of New York they made some very bad decisions that will not be repeated in the future. Claims like we have to "respect" those who have died and need to do this or that in the future is also an example of sunk cost.
In the beginning the focus was on "cases" and "tracing". Once the infection rate has gotten above some level, the whole business of "tracing" becomes less efficient to the point that at some level, it is totally worthless and a waste of time and effort. Cases are the same as we develop better and better treatments. Now deaths are the focus and that focus needs to be on those who are most vulnerable. As we get more and more knowledge, it is clear that the risk group for death is very small and well identifiable. Like all decision making we need to be forward focused and on actions that will affect the future. Looking backwards has value to the extent that it helps us predict the future, but that is all.
