Habits, Addictions, and Traditions
• Habitual Behavior: a positive relationship between past and current consumption.
Another way of looking at it is that past and current consumption are
compliments. Examples of habits: using heroin, jogging, attending religious
• The more I smoked in the past, the more I enjoy smoking now.
• Habits are harmful is present consumption lowers future satisfaction (utility).
Example: smoking now will mean deterioration health and a shorter life in the
Habits and Addictions
• Habits are beneficial if greater present consumption raises future utility. Example:
regular physical exercise.
• Very strong habits are more likely to be harmful than beneficial
• A persistence of a habit requires that past consumption raises the satisfaction or
present consumption. Listening to a song in the past, brings you pleasure now.
• Addiction is a very strong habit
• Past and behavior: Habits and preferences formed during childhood can persist a
• Traditions: habits from the distant past
• Habits economize on decisionmaking. Even in new environment, peoples’ habits
• Pleasure derived from most goods and services depends on how present
consumption compares with past consumption
• Thus, the new rich are happiest because present consumption is greater than past
• Pleasure is highest when it first reaches a permanently higher level and then
declines as person gets accustomed (habituated) to that level
• The new poor are the most miserable because they were accustomed to high
standard of living
• Long term rich may be only a little happier than middle class because they have
become used to t