Jun 03 2007

Gambling, prostitution and theft rampant among Yale monkeys

Freakonomics: Monkey Business: Keith Chen’s Monkey Research

No I’m not talking about the latest freshman class at an Ivy League school… rather a group of monkeys at Yale that have been taught how to use money:

The essential idea was to give a monkey a dollar and see what it did with it. The currency Chen settled on was a silver disc, one inch in diameter, with a hole in the middle — ”kind of like Chinese money,” he says. It took several months of rudimentary repetition to teach the monkeys that these tokens were valuable as a means of exchange for a treat and would be similarly valuable the next day. Having gained that understanding, a capuchin would then be presented with 12 tokens on aMonkey Vice tray and have to decide how many to surrender for, say, Jell-O cubes versus grapes. This first step allowed each capuchin to reveal its preferences and to grasp the concept of budgeting.

Turns out the law of Demand is not only true for humans but for monkeys too. When Chen “lowered the price of grapes”, monkeys would buy more grapes and less Jell-O, following the basic rule of utility maximization. Interestingly, the introduction of money led to more than just the simple exchanges of currency for candy and cucumber; the monkeys were also taught to gamble. Through their observations of several gambling scenarios, the researchers found monkeys tended to display “loss averse” behavior in games of chance, leading to an amusing conclusion:

The data generated by the capuchin monkeys, Chen says, ”make them statistically indistinguishable from most stock-market investors.”

Sadly, gambling was not the only vice that accompanied the introduction of money in to monkey society:

Then there is the stealing. Santos has observed that the monkeys never deliberately save any money, but they do sometimes purloin a token or two during an experiment.

But the debauchery does not stop with gambling and theft:

Perhaps the most distinguishing characteristic of money, after all, is its fungibility, the fact that it can be used to buy not just food but anything. During the chaos in the monkey cage, Chen saw something out of the corner of his eye that he would later try to play down but in his heart of hearts he knew to be true. What he witnessed was probably the first observed exchange of money for sex in the history of monkeykind. (Further proof that the monkeys truly understood money: the monkey who was paid for sex immediately traded the token in for a grape.)

As if we needed any proof beyond the widespread immorality and loss of values that distinguish many rich human societies, the steep decline of monkey morality observed at Yale can only be attributed to the introduction of currency! The implications of the Yale study on economics are clear: humans are not necessarily unique in our understanding of currency as a means of exchange. As long as money has imbued human societies, the wont to enrich ourselves through immoral means such as gambling, theft and prostitution has stained civilizations from ancient Mesopotamia to modern America.

When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentives; responded irrationally to risky gambles; failed to save; stole when they could; used money for food and, on occasion, sex. In other words, they behaved a good bit like the creature that most of Chen’s more traditional colleagues study: Homo sapiens.

To make a more poignant observation, one thing is clear and disturbing, among the human societies today, Americans are most like monkeys when it comes to saving.

Discussion Questions:

  1. Of the various functions of money, which role does money play for monkeys?
  2. What gives the money used by the monkeys its value?
  3. Discuss the evidence from this article suggesting that monkeys follow the law of demand.
  4. What is the utility maximization rule and what evidence from this article supports the suggestion that monkeys follow this rule?
  5. How are monkeys more similar to American consumers than to, say, Japanese or Chinese consumers?

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About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

11 responses so far

11 Responses to “Gambling, prostitution and theft rampant among Yale monkeys”

  1. david granon 04 Jun 2007 at 2:13 pm

    Wow, Jason, that's an amazing(..ly disturbing) article. The oldest profession in the world is now the newest profession among primates, eh?

    Thanks for posting another great article, i wish the content of my HS economics class was this interesting!

  2. Caleb Liaoon 01 Jul 2007 at 9:30 pm

    1) Money for monkey's represents a means to obtain luxury goods.

    2) The goods that can be obtained by trading the money given to the monkeys give the money its value.

    3) In the third paragraph, the article suggests that monkeys follow the law of demand. The evidence used to support this is through the example of showing how the monkey's would purchase more grapes than Jell-O cubes when the scientists lowered the price of the grapes. This example shows that monkeys follow the law of demand because in the basic law of demand, when all other factors are equal, the price is polar to the demand. When there is a high demand, the price is low; when there is a low demand, the price is high which is an example that monkeys follow the basic law of demand.

    4) The utility maximization rule states that a consumer will attempt to obtain the greatest value for the least cost. The example of the monkeys trying to maximize the amount of grapes they could get when the price was low suggests that monkeys follow the rule of utility maximization.

    5. Monkeys and American consumers are alike in the sense that neither tend to save much money at all. They see the goods they want and use all their coins. Chinese or Japanese consumers however show greater saving characteristics.

  3. Nicole Wongon 12 Jul 2007 at 8:30 pm

    1. According to the article, money is used by monkeys for trade. They use their currency to obtain things they would rather have and make use of, such as food and sex.

    2. After repeatedly showing the monkeys that their money could be traded for treats, the researchers showed the monkeys how money allowed them to gain food, therefore determining its value.

    3. The law of demand was exemplified when the price of grapes was lowered and the monkeys began to buy more grapes and less jell-o cubes. With all other external factors held constant, the only thing affecting the demand for the grapes was its price, which had been lowered. This decrease in price initiated a higher demand for grapes.

    4. The utility maximization rule confers that customers want to make the most of their money spent. This was evident when the Yale monkeys decided to buy more grapes than jell-o cubes when the price of grapes decreased. By purchasing more grapes, they would obtain a better value for their money than if they had bought more jell-o cubes.

    5. In the article, the monkeys "failed to save", but spent all their currency whenever it was received. According to common beliefs, or perhaps somewhat stereotypical perceptions, Americans tend to spend their money more lavishly and quickly than the Chinese and Japanese, who have a stronger inclination to save this money for future use. As the monkeys did not hesitate in spending their money, they are said to be more similar to American consumers.

  4. manonon 22 Jul 2007 at 7:55 pm

    HI MR. WELKER :). I can't believe i'm BLOGGING during my summer vacation, but here goes.

    1.Money is traditionally said to have four main functions: it is a medium of exchange, a unit of account, a standard of deferred payment, and a store of value. Seeing as the monkeys in this study bought grapes and sex, money plays the role of a medium of exchange; a way for the monkeys to obtain what they want by giving away what they have.

    2.The money is given its value by the goods the monkeys can gain by exchanging their money for it. For example, a certain amount of money was able to gain the monkeys a certain amount of food, giving the money a particular value.

    3.The law of demand states that as the price of a good decreases, the quantity of that particular good increases. In this article, it is made evident that monkeys, like humans, follow the law of demand:

    "When Chen 'lowered the price of grapes', monkeys would buy more grapes and less Jell-O, following the basic rule of utility maximization."

    4. The utility maximization rule states that given a set amount of money, a rational consumer will buy the amount of each available good which will bring him or her the most utility. When the monkeys were given a particular amount of money, they bought, say, A amount of grapes and B amount of jello. When the price of grapes dropped (and given that the utility they gained from grapes remained the same), they bought more grapes and less jello. Thus, they obviously followed the utility maximizing rule, as the smart monkey-consumers realized that they could gain more utility by buying more grapes since they could now buy, say, 2 grapes for the original 1 grape they could buy with a monkey-dollar.

    5.Monkeys are more similar to American consumers rather than Japanese or Chinese consumers because they failed to use money as a "store of value". In other words, they spent all their money rather than saving money. Japnese or Chinese consumers are known to save money, whereas Americans tend to spend their money spontaneously and impulsively, paralleling them to the monkey-consumers in this study.

    Tada. My first summer blogging :). I hope you're having fun biking and such!

    Manon

  5. Elaine Lungon 30 Jul 2007 at 6:00 pm

    1. Monkeys use money much like we do; they exchange coins for material goods or..er, pleasure and other things they might want. Speaking of wanted things, I would love a debauched monkey, but maybe that's just me…

    2. The monkeys learned, by some sort of conditioning, that their coins could be exchanged for food and treats, depending on the amount they surrendered, and later on, for sex.

    3. The monkeys followed the law of demand when, upon being presented with lower prices for grapes, they "bought" more grapes than jell-o. The law of demand basically states that demand is inversely proportional to price; as prices go down, demand goes up, and vice versa.

    What is the utility maximization rule and what evidence from this article supports the suggestion that monkeys follow this rule?

    4. According to the utility maximization rule, consumers – in this case, the monkeys – would want to buy however much would give them the most satisfaction and spend accordingly – more bang for their buck, so to speak. This was illustrated when the monkeys bought more grapes in response to lowered grape prices rather than buying the same amount of grapes and jell-o (for which the price wasn't lowered) as the former option would give them greater utility. Now we're talking debauched and smart monkeys, which is very awesome.

    5. As the article pointed out, the monkeys didn't seem to save their money at all, and while I'm far from suggesting that Americans don't know how to store their money, it seems that they're less likely to do so (and even then, with much less fervor) than their Asian counterparts. I should know; the majority of my money is sitting in a bank account that I've never seen the insides of.

    …Why am I doing summer homework at 2 AM after coming back from the Boardwalk and playing World of Warcraft for several hours? I don't know, but I'm sure glad I'm done with it! ._.

  6. Rebecca Sungon 31 Jul 2007 at 12:08 pm

    1.Since the monkeys were taught that their coins held value and can be exchanged “for a treat,” the monkeys use their coins as a way to obtain food and even sex.

    2.Along with the researchers repeatedly showing the monkeys that the coins can be exchanged for treats, the monkeys were also able to exercise this trade, when they were able to “buy” x amount of grapes (or Jell-O cubes or sex…) for x amount of coins.

    3.The evidence in the article that shows that the monkeys followed the law of demand is when the researchers lowered the cost of grapes, the monkeys bought more grapes than Jell-O cubes.

    4.The utility maximization rule is where consumers try to get the greatest value out of the money they spend. This was shown when the monkeys bought more grapes when the researchers lowered the cost of grapes; the monkeys are getting the most out of what they spent.

    5.Researchers saw that the monkeys spent their money immediately after earning or receiving their tokens. This is more similar to American consumers because, stereotypically speaking, American consumers tend to not save their money unlike Chinese and Japanese consumers.

  7. Lucas Tophamon 05 Aug 2007 at 4:06 am

    1. The monkeys were using money as a medium of exchange because they were able to trade the tokens that they had for other more desireable goods.

    2. The value of the tokens was determined by what the monkeys could exchange for them: grapes, jello, sex etc.

    3. The law of demand says that when the price of a good decreases, the quantity demanded of that good will increase. The monkeys follow the law of demand because when the researchers lowered the price of grapes, then the monkeys bought more grapes.

    4. The utility maximisation rule says that the rational consumer will buy the combination of goods that will give them the most utility for a certain sum of money. The monkeys follow this rule because when the researchers lowered the price of grapes they bought more grapes and less jello cubes and probably less sex too…

    5. The monkeys are like Americans because Americans are supposed to be frivolous spenders and don't save a lot which is like the behaviour of the monkeys, while the Japanese and Chinese are supposed to be more conservative spenders.

  8. Tim Chuon 07 Aug 2007 at 1:19 pm

    1.Money allows the monkeys to purchase better items than what they are normally given.

    2.The value of the monkey chips is determined by the number of grapes, or jello cubes they can buy with it.

    3. When researchers lowered the prices of the grapes, the monkeys bought grapes instead of jello.

    4. The utility maximization rule states that the monkeys will buy the item that will allow them to have more items for less prices. In this case, when the price of the grapes was lowered, the monkeys bought the grapes because they could obtain more for a lower cost.

    5. The monkeys are more like americans because they used all their money on food and sex.

  9. Karen Chenon 11 Aug 2007 at 6:25 pm

    1. The money is used as a mean of exchange for the monkeys. Like humans, they are able to use the money to buy things that they want or require.

    2. The chips that the researchers gave the monkeys held value because of the things that they could get from spending the money.

    3. It was shown that the monkeys follow the law of demand when they purchased more grapes after the grapes became cheaper than the jello. Since the grapes were cheaper, there would be a higher demand for them.

    4. The unitility maximization rule states that the buyers will try to gain the most value in the things that they buy and the amount they spend. This is shown with the monkeys when they bought more grapes since the jello was more expensive.

    5. As believed by most people, Americans are more prone to spend their money than the Chinese or Japanese (in other words, Asians). The monkeys engaged themselves in stealing and prostituting – activities that are mostly stereotyped towards the Westerners.

  10. kajon 14 Aug 2007 at 5:39 pm

    1. Money was used as a medium of exchange by the monkeys because they traded their coins for more desirable goods such as food.

    2. The money became valuable to the monkeys when they realised they could trade it for food or other desirable things.

    3. The law of demand says that when the price of a good decreases, the quantity demanded of that good will increase. The monkeys follow the law of demand because when the researchers lowered the price of grapes, then the monkeys bought more grapes.

    4. The utility maximisation rule says that the rational consumer will buy the combination of goods that will give them the most utility for a certain sum of money. As the monkeys buy more grapes when the price is lowered and less of the more expensive stuff such as jello cubes, they follow the maximisation rule.

    5. The monkeys are like more like American consumers because Americans statistically spend more and save less than Chinese or Japanese consumers. They tend to save more money and not spend as much. The monkeys do not save any money, instead they spend it therefore they are more like the American spenders.

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