Monkeys Exhibit the Same Economic Irrationality As Us

grrlscientist writes "Laurie Santos is trying to find the roots of human irrationality by watching the way our primates make decisions. This video documents a clever series of experiments in 'monkeynomics' and shows that some of the stupid decisions we make are made by our primate relatives too."

One big difference

[DriedClexler]

I think one significant difference between humans and monkeys, is that if you convince monkeys that little tokens can be traded for grapes, but then "suspend convertibility", they will go -- pardon the term -- apeshit.

In contrast, if you convince humans that their paper banknotes can be redeemed for an indicated quantity of gold and then suspend convertibility, they handle it pretty well.

I'm in talks with some central banks to try the experiment again...

Re:One big difference

[ElectricTurtle]

Your example is not parallel, as you assume that the transition from tokens for grapes to tokens for nothing is the equivalent of silver certificates for whatever you want to purchase transitioning to fiat currency for whatever you want to purchase. Let me see if you pick up the key element there...

...

That's right, people still get whatever they want to purchase. That they cannot trade a certificate for a set amount of precious metals is immaterial to most people, as precious metals themselves are of little direct utility outside of certain industries and therefore are as representational as the fiat currency itself.

This is not to say that I don't wholly support trying to accumulate concentrations of materials that have a real value irrespective of government policy (per se).

Re:Irrational Market Behavior

[hsthompson69]

In other words, the above research points towards falsifying the primary economic ideology that has been used to govern America since Reagan

I'm not sure if that's quite the case - the economic ideology of the free market and the economic ideology of centralized control are *both* confounded by irrational humans.

Myself, I am more of a Keynsian. I think the market is useful, but it can run amok if not attended to by a government powerful enough to guide it towards the public good.

Any casual search of google will reveal refutations of Keynsian economics, I'll leave that as an exercise for the reader. On the other hand, I might suggest Bastiat's "The Law" (http://www.fee.org/pdf/books/The_Law.pdf) as a refutation of the idea of a flawless government (emphasis my own):

"The Superman Idea
The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority."

Re:Irrational Market Behavior

[jbeach]

Disagree that Keynesian economics relies completely on "rationality", at least as defined as "free individual rational choice". Keynesian policies such as FDR used to help the US out of the great depression involved a massive increase of government spending to give money and jobs to the poor and middle class, regardless of deficits - and NOT leaving things to the "invisible hand of the free market". Which you can guess how I feel about by my sig.

And the current bubble collapse we're still suffering from, the housing market, is more adequately described as a Milton- Friedman-esque bubble. As it certainly was not produced by the Bush administration following Keynesian policies.

Re:Irrational Market Behavior

[L0rdJedi]

Disagree that Keynesian economics relies completely on "rationality", at least as defined as "free individual rational choice". Keynesian policies such as FDR used to help the US out of the great depression

FDRs policies did not get us out of the Great Depression (which was only called that in the US). What got us out of the Great Depression was getting into a war. Pulling millions of men out of the labor market had the obvious effect of lowering unemployment.

Nobody ever got rich by spending more money than they have. If an individual can't get out of debt that way, it is irrational to believe that a nation can. In fact, no nation has ever done it and ever single nation that tries it ends up in revolution or has their money inflated out of existence.

The current bubble collapse we're experiencing was caused by policies provided by Jimmy Carter and Bill Clinton (under a Republican congress). So at least there I agree with you.

Re:Irrational Market Behavior

[Antisyzygy]

Right around the 1920's, the top 1 percent wealthiest people had 70 percent of the money in the United States. That disparity in wealth is fast approaching again. The problem is that the majority of us owe debts to the "wealthy" for everything from houses to cars to education costs to medical bills. Not enough money comes our way to pay it back because part of the nature of being "wealthy" and used to it is to retain as much of your wealth as possible. People assume that wealthy people blow all their money on services and products, but this is simply not true. The cost of living over income is WAY higher for the average person than it is for those that make half a million plus a year. You can only eat so many lobsters and drink so much wine. I understand every once in awhile you see some idiot blow all their wealth, but this doesn't create more wealthy people that it lost. Generally people move down in wealth class rather than up. The only way to solve the problem short of exterminating or starving people is to employ as many people as possible and pay them good wages. It would need to basically be funded by the government through taxes on the top 1-10 percent since financial institutions as well as manufacturers and IP corps are simply not hiring even with the recent spike in their profits. Massive government hiring is precisely what happened during the recovery from the Great Depression and also during WWII. These essentially fixed the problem for the last 50 years. Its about time it happens again because we need to hit the rest button on the wealth disparity in this country.

I use the term "wealthy" not because I am some tin foil hat nut job that believes in the illuminati or whatever. I use it as a blanket term for financial institutions, wealthy families/individuals, and even government.

Re:Irrational Market Behavior

[nine-times]

I'm not sure if that's quite the case - the economic ideology of the free market and the economic ideology of centralized control are *both* confounded by irrational humans.

Well it's a bit more complicated than that, isn't it?

Because one of the ideas that has worked out pretty well for humans is the idea of careful distribution of power (checks and balances). This idea would hold that you don't want centralized power in a government or in large corporations, and in fact you actually want tension between large private organizations and large public organizations. The two can ideally balance each other out. So in this view, you want a strong market with good competition, but lightly regulated with a public interest in mind.

However, the prevailing "conservative" view (which is not conservative, but is actually fairly radical) is basically to do away with the checks and balances that governments can provide through regulation, and instead concentrate *all* power in whichever body has the most economic power. From there, magical "free market" forces will sort everything out, because supposedly economic power cannot be abused.