Do our habits matter more than we think?

Would you rather take $1,000,000 in a month or $0.01 that doubles in value every day for 30 days? While the option for a million dollars seems compelling to our unchecked intuition, those who appreciate the magic of compounding can fathom how one cent can multiply into the excess of five million dollars. Similarly, habits are not something that we intuitively understand. A better appreciation of why they exist can help us fully embrace good habits in our own lives.


Habits are essentially shortcuts that humans, dogs and even whales use to support learning. According to leading habit researcher Wendy Wood, most mammals have comparable neural structures in the brain for habit formation. That’s why we can train a dog to repeat a behaviour using similar principles that apply for humans. Like dogs, we respond to cues from our past in anticipation of a future reward. Over time, the mind tends to associate an action and reward, in a specific context, without the effort of really thinking about it. Through this process of repetition, the small actions we undertake for a future reward becomes a lasting habit.


The Fogg Behaviour Model suggests that we need motivation, ability and prompts to come together for a behaviour to occur. As we get more of a reward from a specific action, we are firstly more motivated to repeat the action, and secondly, we create cues in the same environment which prompts us to achieve our goal. A mindful deliberation of this feedback loop allows us to focus on improving our ability to perform the desired behaviour. Simplicity is key. As BJ Fogg at Stanford University highlights, the weakest link in the 'ability chain' determines how difficult your new habit will be.

“Habits are the compound interest of self improvement” - James Clear

One of the central propositions put forward by James Clear, in his book Atomic Habits, is that all our positive and negative habits add up over a period of time. While they don’t seem to make much of a difference on a given day, this illusion may lead us to underestimate the impact of habits over many months or years. The author demonstrates that if we get 1% better at something every day, we will become 37 times better at this over the course of the year. Compounding can be extremely powerful, both for positive and negative behaviours.


We can be so narrowly focussed on seeking instant measurable results that it is actually hard to recognise this long term interaction between habits and rewards. The slow rate of transmission from habit to reward also means that it's easy to allow bad habits, like eating unhealthy or not exercising, to creep into our lives. This is summarised succinctly by James Clear in the powerful insight - "Time will multiply whatever you feed it. Good habits make time your ally. Bad habits make time your enemy."

Vishal George is our Chief Behavioural Scientist and hosts the Wellington and Auckland Behavioural Economics Network.

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