Consider two possible solutions to the same problem. One of them solves just that particular problem, but takes less time and money to do. The other takes more time and money to complete, but solves a class of problems similar to the original. Which is preferable?
Obviously, without more details on what exactly the costs and benefits of each approach are, there isn’t a canonical solution to this problem. However, I will argue that when in doubt, one should prefer the more general solution.
From a purely short-term perspective, the cheaper option probably yields just as much return for less initial investment. But more often than not, the problems in the future will be similar to the problems of today. And a more general solution will save increasingly large sums of time and money.
In addition, a more general solution can be contributed or sold to the public or other organizations who have similar problems. This saves everyone’s time and encourages more innovation.
This, I hope, is a principle that’s easily applied to both life and business.
A common economic mistake made by people is the so-called sunk cost fallacy. In everyday life, there are certain cases where this fallacy should be avoided, but is often not. Here I write about certain situations where I did not avoid the fallacy.
- When walking somewhere, I sometimes find a path that I think could be a shortcut. After discovering that it’s actually a dead end, instead of retracing my steps and starting from the beginning, I tend to continue a fruitless search. Often, I move myself further and further from my target during that search.
- If I buy a product that breaks down, I often spend some time trying to repair the product instead of throwing it out and getting a new one. This is not in itself a bad thing in itself, but if an initial attempt at repair is fruitless, it’s probably better to give up. Instead, I find myself tinkering with the product to no avail for hours, partially because I don’t want the time I spent to go to waste.
- When solving problems, I am prone to spend too much time on a path that doesn’t work, and in the end the problem can’t be solved within the time limit. I do this because I feel that I would have wasted a lot of time if I don’t complete the problem the way I began to approach it.
For a similar post, see my earlier post on sampling bias.