Monkey Business, Promiscuous Penguins & Trading: Are We Alone In Our Understanding Of Economics?
Perhaps on a slower day on the forex markets, you’ve allowed your mind to drift off and found yourself wondering if we humans are alone in our understanding of economics. Do other animals understand currency or economic systems? If they do, can they “invest” items of value or adjust to changes in that system?
Adam Smith thought not. In ‘Wealth of Nations’ he argued: “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that is yours; I am willing to give this for that.”
But was he right? Driven by both their curiosity and their will to create an army of cheap financial advisors and investment brokers, researchers at Yale launched a study where they tried to teach monkeys the concept of money. Through months of repetition, the monkeys were taught to exchange small silver discs for food.
Eventually, they taught the monkeys that different food cost different prices and allotted each monkey 12 discs to see what they would do. As it turned out, monkeys are a lot like humans in that they are miserable savers; most of the monkeys spent all of their tokens at once.
Soon after (presumably driven to crime by his newfound poverty) the first-ever monkey bank robbery occurred when an impetuous primate leapt from his cage and seized a tray full of discs before scampering back to safety.
Contemplation, Gambling & Indecent Proposals
Changes in the market economy were simulated by raising and lowering food prices. Researchers presented the monkeys with two equally desirable options, but slashed the price on one. The capuchins flocked to the cheaper item – the same utility maximization behavior seen in the average consumer. Further, the researchers claim that the monkeys appeared to carefully consider and “size up” their purchasing options before deciding, a behaviour previously only ever seen in humans.
They also noted that their little furrowed monkey brows were “completely adorable”.
The capuchins were taught to gamble in games where they stood a chance to win additional food or lose it all. The monkeys showed a natural aversion to risk, a trait researchers now believe to be more innate than learned, leading to the researcher’s amusing conclusion that the monkeys are “statistically indistinguishable from most stock-market investors.” But that’s when things got really interesting.
Researchers observed one of the males making a dubious exchange with a female – a barter seemingly of money for, er pleasure. . As soon as the deed was done, she ran off to the store to buy herself some grapes.
Clearly, the value of the disc was understood by both parties. Scandalous to say the least; but an interesting insight into monkey morality and perhaps the first observed instance of animal prostitution in captivity.
But while monkeys have shown a surprising aptitude for so-called Monkeynomics, the question arises if anything like this happens outside of a lab. The answer is yes – kind of.
Promiscuous Penguins – Economics in the Wild
Cue the Adélie penguins. As it turns out, female Adélie penguins will swap sexual favours for – of all things – pebbles. Penguins use stones to make their nests – but in 1998, there was a devastating stone shortage. Desperate for rocks, the breeding females left their unsuspecting mates at home and took to the colony fringes, seeking single males with hefty stone collections. They then tried to barter a memorable night in exchange for building materials. Again, both parties appeared to understand the value gained in the exchange.
Of course, raucous monkey love and penguin prostitution are still a far cry from finding a tweed-vest-wearing Bubbles the chimp making last-minute deals before the closing bell. So, knowing that we’re more or less alone in our intricate economic practices, the question becomes, why?
Punishment & Perishable Goods: The Death of the Animal Stock Market
Scientists speculate that the answer may lie in the fact that there aren’t clear ways to enforce fair trade or punish the hairy Bernie Madoffs who abuse the system in animal societies. While humans can easily tell one another if someone else is a cheat, animals don’t share such a clear-cut means of communication. Cheaters can easily reoffend. Short of physical violence, cheated monkeys have no recourse but to slink off with their tail between their legs.
When trades happen, it’s usually a service-for-good or service-for-service swap. For animals, only the immediate has value making it difficult to “invest” goods for future exchanges. Food is finite and resources are perishable but services can be provided at any time. Providing a service like grooming costs little if the move is not reciprocated and as such, this is a trade they might see as worth risking. Resulting are vibrant service economies – but nothing like a high-speed banana stock exchange as we might have hoped.
In the end, it appears that the days of entrusting your investment strategy to a chimp won’t be swift in coming. While investment outcomes might sometimes feel like monkeys throwing darts in the dark, you can revel in the fact that thus far we’re the only ones with a decent throwing arm.