Wednesday, June 29, 2005

Experimental Economics--Monkeys Go On A Spending Spree

A capuchin monkey Posted by Hello

Did the monkeys you saw on your last trip to the zoo act almost human? If you answered yes, it could be that you're not too far wrong. When given "money," their spending decisions are just like those made by humans.

Keith Chen and his fellow Yale researchers have conducted an amazing economic experiment. First, they showed that monkeys follow the law of demand, just as it is taught in Economics 101. But that's just part of their results. Even more amazing is that monkeys are like most people in that, other things equal, they prefer to avoid risk.

Capuchin monkeys were given shiny metal disks--money--that they could trade for tasty morsels of food, such as pieces of apples. Researchers adjusted the "price" by changing the amount of food a disk would purchase. Sure enough, when the price decreased, the monkeys increased the amount of food consumed. Just like the law of demand predicts!

More complicated were the experiments in risk aversion. In the simplest terms, these experiments involved first offering the monkey consumers an unchanging amount of food for their money. Then the monkeys were offered an uncertain amount of food for their money, which might be more or less than amount of food offered in the first experiment. Like human consumers the monkeys preferred the sure thing to the uncertain alternative.

The lesson learned from this experiment? We now have a better understanding of why humans are risk averse. It appears that risk aversion is a built in response. Why would this be?

One possibility is that in nature, with a food supply that is often barely adequate, losses that lead to the pangs of hunger are felt more keenly than gains that lead to the comfort of satiety. Agriculture has changed that calculus, but people still have the attitudes of the hunter-gatherer wired into them.

This experiment just goes to show that the old saying, "Well, I'll be a monkey's uncle" just might be true!!!



At 8:07 AM, Blogger UTSA ECO BS said...

I love when stories are made about monkeys since they are out great great trillion grandfathers. Thanks for the great story

At 3:33 PM, Blogger Kelly Thomas said...

This is completely off the subject, but your BLOG made me think of it.

The first animal to fly into space (the chimpanzee) filled the position of the pilot.

My best friend likes to tell that to anyone he talks to, since he is a Navigator and a chimpanzee will never be able to replace a nav.

At 3:36 PM, Blogger Ronald M. Ayers said...

Kelly, your chimp story is funny.

At 4:26 PM, Blogger Guillermo said...

Great post! Goes to show that we are that much closer to solving the mysteries of man.

At 10:34 PM, Blogger biomechanique said...

or the mysteries of registering for fall classes

right now this chimp is following the law of supply!

At 10:16 AM, Blogger Maria S said...

I's amazing to see the kinds of experiments that they peform on monkeys.

At 12:48 PM, Blogger Daniel said...

I love the story about the monkey and economics.

At 1:31 PM, Blogger tasha said...

Monkey have been found to do some amazing things. I am wondering what this study has to offer us as humans other than now we know that they know how to spend money and do it wisely. Thats great and all, but is there a bigger picture here that I am not noticing?

At 5:35 PM, Blogger ElaineH said...

I believe monkeys are smart when learning something new.

At 1:06 AM, Blogger Y Nicholson said...

I don't know if this is a coincidence or just that we are interested in the same things. I made a posting on the same subject on June 25th.

At 9:36 PM, Blogger Matt Coleman said...

Yet another example that economics is degrading to human life. First they reduce us to consumers and now we are just a bunch of monkeys!

At 2:06 AM, Blogger Jennifer Krock said...

Why can't we just give the monkey food? They should do tests on people and see how annoying this is! (I'm sounding like I am a monkey!) I think that they only confused the monkey when the reduced and enlarged the amount of purchasing power the shiny coin had, and that is why it was uncertain what to do!

At 7:12 PM, Blogger Elizabeth said...

we study monkeys and apes because they're the closest relatives we have to the animal kingdom, actually chimps to be exact, and i personally see more resemblance to bonobos, which is also called a pigmy chimp, but that's off topic. I don't think they confused the money, you're trying to make it sound dumber than it is. and they aren't directly related, we didn't evolve from them, we shared a common ancestor and evolved seperately. Anyways, I think it's really interesting to see how supply and demand is animal instict.


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