Physical Activity, Present Bias, and Habit Formation: Theory and Evidence from Longitudinal Data

Abstract

We investigate temporal decisions to participate in exercise in a dynamic model featuring present bias and habit formation. The model highlights naivete about present bias and projection bias about habit formation/decay and implies that promoting participation in physical activity must both encourage the inactive to start and discourage the active from quitting as behavioral biases apply to both. Our empirical analysis using data from the British Household Panel Survey (BHPS) develops evidence consistent with predictions about present bias and habit formation/decay and an interesting asymmetry between starting and quitting that furthers understanding of existing empirical evidence.

Keywords: present-bias, physical activity, habit formation, habit decay, projection bias

JEL Classification: D1, I12, L83