Dr. Laurie Santos’s studies of monkey “economics” suggest that greedy, loss-averse human behavior may have deep evolutionary origins.

Question: What has your research revealed about monkey and human economic reasoning?

Laurie Santos:  Yeah so a lot of the work with primates actually tries to explore all these aspects of human cognition that we’re in some sense most proud of.  You know, things like a theory of mind and so on.  But less work is actually focused on some of these processes that are just universal in humans but are kind of dumb and in some ways really systematically dumb.  So we took up the charge of saying well you know are any of these dumb biases shared with other primates.  And we started in the economic domain, in part because this is really a spot where humans can be bad and the fact that we’re bad can have really enormous consequences such as the current financial collapse and so on.  But to do this, to sort of study this question you know do monkeys share our economic biases we had a bit of a challenge because of course our monkeys don’t actually use money yet.  So the first task was actually to introduce a new currency to our monkeys.  We did this by giving them little metal washers and teaching them that they could trade with human experimenters for food and the amazing thing was that they actually picked this up really quickly so the monkeys got really flexible with this and we just then put them in a market.  So they get a little wallet of tokens in the morning and they got to go into their enclosure and they had a choice of different experimenters who sold different foods at different prices and we just said you know, “How do they do?”  “How do they compare to humans?” And what we found was really striking because in the spots where humans are very rational, where they obey all of the economist’s models, the monkey did the same.  So when different goods go on sale so if apples go on sale today the monkeys would buy more apples.  And they do it in a way that all the economic math would predict almost perfectly, almost amazingly even though they had you know pretty much no experience with the market.  The other striking thing was that the monkeys seemed to show exactly the same biases that humans show and one of the important ones is what’s often called Loss Aversion.  Basically,  this is the idea that we don’t like losing things and we get more emotional about losing things that we get happy about gaining things and this can actually lead to a bunch of biases that play out in real markets.  Like the fact that many people would be better off selling their home  at a slight loss than holding on to it while the market kind of careens downward and so on.  So our Loss Aversion plays out in all these ways we said you know are the monkeys loss averse?  And the way we looked at this was to present the monkeys with a choice between traders; one trader gave a piece of apple as promised, so he showed the monkey a piece of apple, and then when the monkey paid him he got that piece of apple.  The other experimenter always showed the monkey two pieces of apple but when the monkey paid that experimenter, the experimenter only got one.  And the idea was does the monkey take into account what they think they’re going to get or do they just care as they probably should in what they get overall?  And we found is that the monkeys reliably avoid the guy that gives them less than what they expect.  It seems like they too might be averse to losses, averse to these situations that seem like their losing out even though it doesn’t actually affect how much food their getting overall.  The cool thing about all of this is it suggests that many of these biases that play out in the financial crisis might actually be shared with capuchin monkeys, which means they might actually be thirty-five million years old.

Recorded on January 26, 2010
Interviewed by Austin Allen