Experimental Economics--Monkeys Go On A Spending Spree

A capuchin monkey

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!!!

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