The Concept of Habit in Economic Analysis

The concept of habit has had a small role in the social sciences since the 1930s. The concept has never been used widely in orthodox economics, but it often is found in the early literature of institutional economics, particularly in the works of Veblen, Dewey, and Peirce. While habit has been treated as largely ceremonial in character, there also has been an awareness of its role in increasing the efficiency and effectiveness of human activity. In order to reconsider the concept of habit, one must acknowledge the existence of nonreflective behavior. Habit is automatic in its performance. Because of its nonreflective character, habitual behavior is hard to change. It is the nonreflectiveness of habitual behavior that creates serious problems for orthodox economics. Habitual behavior is not irrational, but it is simply behavior patterns that occur in the absence of conscious decision or choice. Orthodox economics rests on the assumption of rational, reflective behavior.