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The sunk-cost fallacy has also been dubbed the Concorde Fallacy.

Examples of the Concorde Fallacy in the academic literature and beyond

I believe Dawkins and Carlisle (1976) were the first to use Concorde as an example of the sunk-cost fallacy, though they did not mention it by name:

A government which has invested heavily in, for example, a supersonic airliner, is understandably reluctant to abandon it, even when sober judgment of future prospects suggests that it should do so.

Thereafter, the Concorde project would be frequently cited as a "classic" example of the sunk-cost fallacy. Examples: evolutionary biologists — Grafen and Sibly (1978), Dawkins and Brockmann (1980), Curio (1987), Arkes and Ayton (1999); economists — Höffler (2008), Ahlstrom and Bruton (2009), McAfee, Mialon, and Mialon (2010), Baliga and Ely (2011); media and blogs — Forbes (2011), The New Yorker (2013), Tim Taylor (2014), FEE (2015).

The Australian Strategic Policy Institute (2013) writes:

One of the most egregious examples is the development of the Concorde supersonic transport aircraft at a total cost far in excess of the initial predictions and which was persevered with long after it became clear that there was no hope turning a profit on the venture. It’s such a clear case of the sunk-cost fallacy that 'Concorde fallacy' is now a synonym.

In every instance, it is simply asserted without any evidence that the British/French governments egregiously and foolishly fell victim to the sunk-cost fallacy.

But were the British/French governments actually guilty of the sunk-cost fallacy?

Given the huge number of citations, I had myself assumed that Concorde was indeed a "classic" example of the sunk-cost fallacy that I could cite. I thought it would be very easy to find evidence that some British/French government officials were indeed guilty of the sunk-cost fallacy. (With another less well-known example of the sunk-cost fallacy — the Tenn-Tom Waterway project, I was easily able to find examples of several US government officials committing the sunk-cost fallacy.)

However, in my brief investigation, I have been unable to find any for Concorde.

Instead, I found this 29 Nov 1971 British memo expressing a very clear understanding of the concept of sunk costs and cautioning against falling for the sunk-cost fallacy. It began:

Concorde is a commercial disaster. It should never have been started. On 30 November, 1971, it had cost the British Government an irrecoverable £350 million. If continued, development and production will cost us at least £475 million more (£392 million present value) from 1971–75. Concorde will make little money for its manufacturers and precious little, if anything, for the airlines who buy it. The total liability to the United Kingdom alone could be about £550 million excluding the written off £350 million mentioned above.

... The decision whether or not to abandon Concorde must start from where we are now—much of the milk is already spilt.

The memo then cited three political arguments against cancellation:

(a) Given President Pompidou's personal commitment, cancellation would have to be precipitated by unilateral British withdrawal. This would do great harm to Anglo- French relations and, before 1 January, 1973, might imperil Ratification. British withdrawal after that date might seriously hinder co-operation with France.

(b) Cancellation in 1972 would destroy 26,000 jobs in the United Kingdom, when unemployment and, possibly, redundancy rates will be high. Redeployment may be very difficult.

(c) Now that the public believes Concorde is a spectacular technological success, cancellation would be a severe, almost emotional, blow to the average man and woman in the United Kingdom. The CPRS believes this is a real consideration, if only from the point of view of getting people to work and enjoy it.

After reviewing the worst-case and most-likely-case scenarios, the memo recommended on p. 6 that

The Government should commit itself whole-heartedly and publicly to Concorde, with a professionally run sales and publicity campaign.

My tentative view is thus that the so-called Concorde Fallacy may itself be a fallacy and yet another academic urban legend — an influential academic makes a mistaken assertion that is then picked up, repeated, and converted into gospel over the subsequent years, without anyone bothering to check if it was ever true in the first place.

I am however not an expert on the history of Concorde and am therefore looking for any evidence to the contrary. In particular, at each juncture in the project's history, did any British/French government official cite sunk costs as a reason for continuing with the project?

(So far, my reading of the history of the Concorde project is that at every critical juncture, the British/French government may have chosen to plod ahead for a variety of reasons that one could label "foolish". But at no point did anyone argue that they should continue "because they had already sunk so much into the project".)

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I doubt that the sunk-cost fallacy was a major reason why the Concorde project was pursued for so long (approved by the UK government 1962, entered commercial service 1976). Any "emotional impact on British citizens" that it was feared cancellation would cause would more likely have been due to a loss of national prestige (this was a time when many in Britain still - unrealistically - thought of their country as a great power).

An account of the project (Myddelton They Meant Well: Government Project Disasters pp 107-127) identifies the following factors which may have contributed to decisions at various times to keep the project going (see especially Conclusion p 127):

  1. A belief that cancellation would have upset France, who were a partner in the project, with risks of being sued (p 119) and of jeopardising negotiations on entry to what is now the European Union.
  2. Over-optimism about potential sales based on a belief that passengers would be willing to pay a very high premium for shorter flight times due to travelling at supersonic speed.
  3. Failure to take sufficient account of the environmental problems from take-off and landing noise and sonic booms.
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One additional point for the reluctance to show a failure would be the first steps of the European Consortium Airbus starting at the same time, finally disputing the US-dominated market of commercial airliners (at the time with McDonnel-Douglas DC9/10 and Boeing 727/737s).

As both BAC (British) and Aérospatiale (French) were manufacturers highly involved in the construction and marketing of new airliners such as the A300, it was in their interest to be have the Concorde as a success story. Concord was an icon for the British/French capacity to make airplanes, playing as free publicity: "If a company can make the fastest commercial airliner in the world, it can also be trusted to make medium-range aircraft." Having a failure in the Concorde project could affect the market for other models like the A300 and the new A310 at the time, endangering the whole European aircraft industry in France and Britain.

By the way, Vox made a 10-min documentary on the history of the concorde. Not necessarily academic, but interesting and a lead for more sources.

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Well presented question.

I think that the government was probably not a victim of the fallacy but the British people were. If the British people - falsely - feel that they should continue the project a self-interested government will rationally conclude that continuation is worthwhile for reelection porpuses. You cite a part of the memo that I find crucial: "political reasons against cancellation [...] emotional impact on British citizens".

Why do academics conflate the two?
Doubtless there are some who embrace the example without knowing much about the subject. (Another frequently retold but incorrect example is potatoes as Giffen goods during the Irish Potato Famine.)
But one may also argue that the government ideally represents the people. The people were victims of the fallacy and this incentivized the government to act as if they too were taken in by it. Separating the two agents may seem an unecessary step at this point.

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