The Power of Habit – Charles Duhigg

Market Meditations | October 5, 2020

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” – Aristotle

Everybody understands how important habits are in our day to day lives. According to researchers at Duke University, habits account for about 40 percent of our behaviors on any given day. Your life today is essentially the sum of your habits, good and bad ones. Few understand that habits can be changed. We can choose our habits, once we know how. In his seminal book ‘The Power of Habit’, Charles Duhigg writes about the habit loop as a three-step loop:

  • Cue: a trigger that tells your brain to go into automatic mode and which habit to use.
  • Routine: an action which can be physical or mental or emotional.
  • Reward: which helps your brain figure out if this particular loop is worth remembering for the future.

It’s important to realize that cravings (for the reward) drive habits. Therefore, figuring out how to spark a craving makes creating a new habit easier. Any behavior can be changed if you take a cue, provide the same reward, but shift the routine that gets you there. According to Duhigg, these are the steps to take if you want to change a habit:

  1. Identify the routine (you want to change)
  2. Experiment with rewards until you identify which one it is you crave
  3. Isolate the cue
  4. Have a plan

Realizing the cue that puts your brain into automatic pilot is the first step towards breaking a bad habit or introducing a good one. Cues can be location, time, emotional state, other people or actions. One you’ve found the cue and you know the reward that your brain or body craves, all you have to do is change the routine.

It ultimately comes down to this: “If you use the same cue, and provide the same reward, you can shift the routine and change the habit. Almost any behavior can be transformed if the cue and reward stay the same.”