The study looked at how people's habits affect their willingness to take risks and invest in different types of assets. They found that habit formation makes people more cautious about changes in their consumption over time, leading them to prefer short-term investments over long-term ones. This preference for short-term assets increases the term premium, which is the extra return investors demand for holding longer-term investments. The researchers also discovered that a large portion of the equity premium, which is the extra return investors expect from stocks compared to safer assets, is actually due to the term premium. This means that habit formation plays a significant role in shaping investment decisions and risk preferences in the economy.