Could monkeys run the financial system better than us?

We spoke to Laurie Santos, a Yale professor studying whether we're the only species making irrational decisions

Mostly we hear about scientific experiments testing whether monkeys are as smart as we are. But Laurie Santos is looking at things through a slightly different lens.

Humans make some silly choices. And sometimes, they have pretty serious consequences.

Ever since the finance world crashed in 2008, people have been asking how we could possibly have let this happen. Psychologists and economists in particular have begun working more closely together to look at how humans deal with money and risk – both bankers working with huge amounts of money to strike deals with companies, and people taking out loans or mortgages. The results aren't great, but they do help us understand how the banking system got so out of hand.

A lot of the decisions we make in finance aren't very , but if you know a little bit about how our brains work, they are understandable. Laurie Santos is a professor at Yale studying whether we can find out from species similar to us where our irrationality comes from, and how to design systems to protect us from ourselves. And judging by her work so far, it looks like we're not so different from our monkey cousins – in fact, they could probably run the financial system just as well (or just as badly, depending on how you look at it) as we do.

We got in touch to talk to her about all this in more detail. Here's our interview:

Tell us about you – what you do, how you came to study monkeys, and what you're up to now!

My name is Laurie Santos and I'm a cognitive psychologist (that’s someone who studies the mental process of thinking and getting information). Specifically, I’m looking at how animals think about the world.

I focus on two sets of species: monkeys, who are some of our closest living relatives; and domesticated dogs, who are one of the few non-human species that live in human-like environments.

I started working with monkeys because I was really curious to learn more about what makes humans special. To test this, you need to explore cognition in a close evolutionary relative. Monkeys are a nice window into what human cognition might look like if we didn’t have culture, teaching, and a human-like environment.

Could you sum up your 'monkeynomics' experiment in a few words – what you were trying to find out, what you expected, and what you found?

The goal of our "monkeynomics" work (done in collaboration with researchers Venkat Lakshminarayanan and Keith Chen) was to test whether some of our more common behavioral biases were unique. People often make decisions in pretty irrational ways – we pay too much attention to losses, we evaluate our choices in relative and not absolute terms, and we tend to overvalue our own stuff.

We asked whether humans are alone in these irrational behaviours, or whether other animals have them too. So we gave a group of capuchin monkeys their own ‘token economy’ and explored the strategies monkeys use when they’re making decisions. The way we did this was basically to let monkeys pay for their own food with small tokens.

It turns out that we’re not alone in our irrational ways: monkeys were just as irrational with the way they spent their tokens as humans. Like us, they’d evaluate their choices in terms of totally insignificant reference points. They paid too much attention to losses. And they overvalued the stuff they owned – we call this the ‘endowment effect’. Overall, they showed all the same classic biases as humans… [which you could take to mean that monkeys are just as dumb as humans, or humans are just as dumb as monkeys, depending on how you look at it.]

You say in your TED talk that you feel humans need to figure out systems that protect us from our irrational ways, rather than pretend they're not there. Do you think the banking and finance world has managed to do that at all?

I think there's a lot of room for improvement. I'd love to see more of the work on behavior change and our own implicit biases being used to better design financial systems.

Do you think we'd have a more stable banking system if people understood how it works more clearly?

Definitely! The nice thing about human irrationality is that it's really systematic – we show a set of biases that can be worked around if people think creatively. So I think there's a lot to be done to make the systems we use a little more irrational-user-friendly.

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Reader Comments

  • WhereAreTheVikings

    What a terrible, terrible shame. Western Civilization nurtured capitalism, and now capitalism is destroying it. And these young people seem to welcome the invasion of their homeland. The media and schools have been very efficient in wiping out all traces of blood and soil.

    • prollawalllynotahumanoid

      Capitalism isn’t the problem. It’s corrupt politicians taking bribes and kickbacks from Globalists and the Chinese.

      • WhereAreTheVikings

        Maybe I should have said crony capitalism. Although Italians importing Chinese to make “Italian leather” shoes is not crony capitalism. It is capitalism, pure and simple.

        • prollawalllynotahumanoid

          That would be crony capitalism and globalism combined. They aren’t concerned with the affect their policies have upon their citizens, the health and welfare of their society and culture or their economy. What it isn’t is fair-free trade to further national interests.

          • WhereAreTheVikings

            I’ve always seen them as one and the same, but perhaps they need to be named individually, just to bring home the point.

      • WhereAreTheVikings

        But now that travel is so easy and borders are virtually down through H1bs and the like, theoretically you can’t blame capitalists for the pursuit of cheaper labor, although I do heartily blame them not being more patriotic than that. Perhaps the emerging nationalism will force them to voluntarily do what they should have morally been doing all along, and that is employing business practices that preserve their countries and nationalities. The government should be doing everything it can to encourage that, to the extent that small government should do anything but guard the borders and strictly, drastically, limit immigration.

      • Henry Lam

        It is China with its corrupted mindset affecting the world.

        • prollawalllynotahumanoid

          No it is not. Capitalism is the fairest and least corrupt system of all.

          Socialism and communism is based on authoritarianism, coercion and police intimidation. It has and always will be rife with criminality, bribes and kickbacks.

          Corruption can be anywhere but it is the very basis of socialism and communism.

    • Henry Lam

      The government is too weak. They do not understand the mindset of communists and how they educate their people. Those communist people are only loyal to their country and could be dangerous. The immigration law should only accept those who accepted multiculturalism and taught from a democratic education system. This virus events clearly has shown how stupid to take China as a friend.

      • WhereAreTheVikings

        The government is not too weak. Just weak-minded about some things.

  • Gabi Rodrigues

    For how many days can a country maximum close their borders to foreigners maximum? Like now, with the virus, everyone is using 30 days. Can it be more?