The habit-forming effects of feedback: evidence from a large-scale field experiment.

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We provide a unique test of competing models of persistence in behavior. We propose a new attention-based behavioral mechanism for habit formation and contrast its predictions with the Stigler and Becker (1977) consumption-based mechanism. We test both mechanisms using a large-scale field experiment in shower water consumption. Our experiment varies cycles of household-level real-time feedback that temporarily draws attention to individuals’ water consumption. Combining this design with real-time consumption data, we test the mechanism for persistence in behavior that our experiment generates. Our results strongly support a dynamic attention-based model of habit over the workhorse habit stock model used in economics.