The cancellation of Batgirl gives us an important economic lesson

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A few days ago, quite surprising news broke: Warner Bros. decided to cancel the Batgirl movie . The surprise is not because of a simple cancellation, of course, but because they had already spent million dollars on the project and it was almost finished .

The decision of the new CEO of Warner, David Zaslav, is controversial, of course. The premiere was going to be on HBO Max, and therefore the distribution costs were not going to be great. But there were still pending expenses and the cancellation allows them to recover part of what was spent through tax deductions from anticipated and unrealized income. However, despite the controversy, this situation gives us a great economic lesson .


The sunk cost is a cost
There are a few fundamental concepts in economics that, if understood well, would improve daily life and one of them is the sunk cost , money spent that will not be recovered. In this case, David Zaslav understands it quite well: it doesn't matter how much was spent on a project, that money is not going to come back no matter how much we continue with it.

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Warner has done the math. It has already spent million euros but if it continues with the project, even if the distribution is cheap, it will spend more. And if the forecasts say that they are not going to recover th  Mexico Email List  at extra expense, it is best to cancel the project. Another issue is how good the forecasts are , but the truth is that you have to pay attention to the numbers.



Stop burning money and time
Many times in our daily lives we have sunk costs . But we think it is an investment. We go to the cinema and when the movie starts we realize that it is very bad. The logical decision is to stop wasting time and go, but many times we stay because the entrance fee has already been paid and we have to take advantage of that investment . Well no, it was not an investment, it was an expense, a sunk cost. The money has already been lost, regardless of whether we stay until the end or leave. Will staying maximize satisfaction? No. The best thing is to leave.

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It can also be seen in relationships. Sometimes people stay in a relationship, even though it is unsatisfying, because they have been in a relationship for many years . It is thought that this time together has been an investment. But no, it has been an expense. A sunk cost.

Faced with the message of intuition that indicates that "I have invested a lot in this and we must continue" it is necessary to stop and think coldly if it really is an investment. An investment implies a future return and this return must be greater than what was spent to make sense. Therefore, we must determine if it is an investment or a sunk cost and if it is the latter, let it fall, whatever has been spent .

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At Warner Bros. they are clear about it. It doesn't matter that million dollars have already been spent and that almost everything is finished. If the return is not going to be enough, it is a sunk cost and it is better to nip it in the bud .