ECN 340 Lecture 13: ENC 340 [Week 13 Lecture Notes]
16 Jan 2018
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Document Summary
A positive relationship between past and current consumption. Example of habits: using heroin, jogging, attending religious institution. Example of complementary between current and past consumption: the more i smoked in the past, the more i enjoy smoking now. Habits are harmful if present consumption lowers future satisfaction. Example: smoking now will mean deteriorating health and a shorter life in the future. Habits are bene cial if greater present consumption raises future utility. Very strong habits more likely to be harmful than bene cial. A persistence of a habit requires that past consumption raises the satisfaction of present consumption. Listening to a song in the past, brings you pleasure now. Past and behaviour: habits and preferences formed during childhood can persist a lifetime e. g. brushing your teeth. Bad habits learned in childhood can also persist a lifetime. Even in new environments, people"s habits change slowly. Pleasure derived from most goods and services depends on how present consumption compares with past consumption.
