September 3, 2010

What happens when you teach monkeys to use money?

Capuchin Monkey by Michael RansburgFreakonomics and its successor Superfreakonomics are two books by the economist Steven Levitt and his partner in crime Stephen Dubner that have a common theme running through them (quote):

“People respond to incentives, although not necessarily in ways that are predictable and manifest. Therefore, one of the most powerful laws in the universe is the law of unintended consequences.”

Both books give numerous and often amusing examples of the ways that various incentives often result in unexpected outcomes. They choose a wide variety of animals including teachers, sumo wrestlers, estate agents, bible salesmen and yes, monkeys, to illustrate this point. The second book, Superfreakonomics, finishes with a fascinating epilogue about the consequences of training monkeys to use money, aka “monkeynomics”. When capuchin monkeys (Cebus apella) are trained to exchange money for food, they don’t always behave very rationally [1]. The TED talk about how monkeys mirror human irrationality by the primate psychologist Laurie Santos has more details, see below:

In short, financially trained monkeys make many of the same mistakes (like loss aversionlarceny and endowment effects) that humans do. This research suggests that millions of years of evolution have configured our brains to help us make stupid irrational mistakes, at least when it comes to money. Which provides a great excuse for financial incompetence, whatever kind of animal you are.

If you haven’t already seen the books, they are worth reading and if you’re interested in how investment bankers, capuchin monkeys and other animals make irrational mistakes watch the TED video above.


  1. Lakshminaryanan, V., Chen, M., & Santos, L. (2008). Endowment effect in capuchin monkeys Philosophical Transactions of the Royal Society B: Biological Sciences, 363 (1511), 3837-3844 DOI: 10.1098/rstb.2008.0149

[Creative Commons licensed picture of a Capuchin monkey by Michael Ransburg]


  1. […] What happens when you teach monkeys to use money? […]

    Pingback by Quick Links | A Blog Around The Clock — September 4, 2010 @ 3:44 am | Reply

  2. […] Is Rent Seeking and Risk Shifting Strengthening the financial system: comparing costs and benefits What happens when you teach monkeys to use money? Why Women Are Fleeing Wall Street No defence left against double-dip recession, says Nouriel […]

    Pingback by Links | Alea — September 5, 2010 @ 1:13 pm | Reply

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: