Think Green Live Clean

Photo Credit: Tim Waterbook

Humans pride themselves on having superior intelligence and ability to reason in comparison to all other species of this planet. However, in recent years we have witnessed several errors in judgment, which lead us to question our natural propensity to make errors.

Take the collapse of our ‘infallible’ financial markets as a recent example. Are these bad decisions a result of not fully understanding external facilities and systems that we have created, or rather the result of a 35 million year old evolutionary malfunction?

Laurie Santos and a group of researchers have performed a study that placed monkeys in an artificial marketplace after teaching them how to use currency on a very basic level. Obviously, when first given money, our evolutionary relatives had no idea how to use it. Over time, the primates discovered that handing over tokens to a trainer would earn them an extra ration of food. This was not necessarily a breakthrough, as you have seen- even dogs can be taught to perform simple acts for rewards. However, this was only the first step.

A ‘monkey marketplace’ was set up, in which all goods cost one token, but the amount of food was varied. The monkeys always purchased goods from the salesperson that offered more food for one token.  While this is also not very surprising, it showed that monkeys understood the concept of value when dealing with currency. Also similar to humans, monkeys showed no evidence of saving, as they would spend every token they had in return for food. The subjects were also prone to larceny (stealing each others tokens), which we have seen all too much on Wall Street.

The study became more interesting when the reliability of the salesperson became inconsistent. Sometimes a trainer would display three items of food for sale, but only deliver two at the time of purchase. Other trainers would add extra food items after the sale was complete, almost as an added bonus. An interesting trend was recognized. Monkeys made the same economic decision when determining risk/reward.  The subjects would take a larger financial risk when they were faced with a loss, which is the same irrational behavior humans have demonstrated in recent times. Why would monkeys and humans both treat losses differently than gains? It appears that our greedy financial strategies could possibly be the result of an evolutionary malfunction.

As long as we perceive everything in old evolutionary terms we will continue to make unnecessary mistakes with money. However, this does not mean that our financial system is doomed. Another thing we pride ourselves on is our ability to overcome biological limitations. We couldn’t fly, so we invented airplanes. We couldn’t breathe underwater, so we invented SCUBA equipment. However, it is important that we recognize these biological limitations before we can overcome them. Perhaps our ability to make reasonable financial decisions is slightly skewed, but all is not lost. First we must recognize this fact, then we can go about fixing it.

To watch the video click here…