The Surprising Similarities Between Humans and Monkeys When It Comes to Money
Have you ever stopped to think about why we’re so prone to making poor financial decisions? A recent segment on the NPR TED Radio Hour, titled “Are We Wired To Be Bad With Money,” sheds some light on this fascinating topic.
The Research Behind Our Financial Fiascos
Laurie Santos, a psychologist from Yale University, set out to uncover the root of our financial flaws. Her research led her to investigate how other animals think about the world, with a particular focus on our primate cousins, monkeys. By studying how monkeys behave when introduced to currency, Santos aimed to determine whether our environments or our brains are to blame for our financial mishaps.
Monkeying Around with Money
In a groundbreaking experiment, Santos and her team injected small metal tokens into a monkey habitat, allowing the primates to trade them for food. The results were striking: over time, the monkeys’ behavior with money mirrored that of humans, with a strong emphasis on maintaining the status quo. When the monkeys received less than expected, they perceived it as a bad deal, even if the overall amount was still substantial.
The Power of Prospect Theory
To better understand why humans and monkeys behave similarly when it comes to money, Santos applied Prospect theory, also known as loss-aversion theory. This concept suggests that humans are wired to avoid risks, particularly losses, as the pain of losing outweighs the joy of gaining. The results showed that monkeys, too, are averse to losses, highlighting a fundamental flaw in our financial decision-making processes.
What Can We Learn from Our Primate Cousins?
Santos’ research reveals that our financial strategies are not uniquely tailored to money, but rather adaptations of ancient primate brain patterns. This means that these strategies can often lead us astray. The good news is that, despite these limitations, humans possess exceptional intelligence and the ability to overcome our biological constraints through technology and design.
Overcoming Our Financial Flaws
To improve our financial literacy, we must first acknowledge our limitations and work to accept them. By leveraging the power of design, we can create systems that help us navigate our financial lives more effectively. The key takeaway is that we must confront our own biases and work to overcome them, rather than relying solely on our instincts.
Further Reading and Listening
For a deeper dive into the world of financial psychology, be sure to check out the full TED Radio Hour segment, “The Money Paradox,” or read the transcript online.
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