Tuesday, September 11, 2012

Where is my turkey?

Good morning economists. Have you ever wished that you gave up smoking? Or that you gave up a bad habit in general? Why is breaking a habit so difficult?

Five years ago, an experiment was conducted in the United States where a company supplied its workers with a bonus turkey on thanksgiving. At first, the workers were excited. The following year, the company again provided a turkey for each worker. In the third year, the company repeated the same behavior, however, a few workers complained as to the size of their "bird". In the fourth year, the company due to cutbacks could not provide the relevant bonus and the workers almost went on strike.

So here is a situation where the workers formed an expected future utility or enjoyment after the second successive bonus year and as such they almost revolted in the fourth year due to the loss of this expected utility.
Unfortunately, bad habits create some expected utility that is forgone if we do not perform the particular action. As a result the best way to break a habit is to do it gradually. If the company did not provide any bonus in the second year, the workers would be unlikely to form the habit of demanding a bonus every year.

What is your bad habit?

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