To construct their theoretical framework, the US institutionalist authors, Thorstein Veblen and John Commons, drew on the conception of habit which had been developed by Charles Sanders Peirce, William James and John Dewey from the pragmatist movement. Peirce, James and Dewey see habit as a generally effective form of action conduct, although Dewey focuses more on an analysis of habit transformation and transaction than on habit itself. At the heart of this process of transformation is emotion. Emotion signals the need for change and at the same time is an active agent in habit reconfiguration. Compared to nudge theory, Dewey's approach, therefore, emphasises the emotional (and not just cognitive) dimension of habit change. © 2021 The Author(s) 2021. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.