A slightly freakish take on micro-economic experimentation…
By Irisha Adhikari
Something that most economic researchers adore, time and again, is to test the waters – the waters of the premise of the questions they aim to answer in their own qualitative/econometric terms. Since answering mundane, age-old questions is no interesting task, researchers have been taking up increasingly ‘wacky’, ‘freakish’ even, questions and trying to put their tools to use to reach conclusive answers.
The following serves as a notable testament:
Classical economist, Adam Smith once said, “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 yours; I am willing to give this for that." In other words, Smith claimed that man alone is capable of transaction and tactical exchange, without actually providing substantial proof for the same.
Is that really the case, though?
One of the main reasons why modern researchers are bedazzled by the field of micro-economics is because, it allows absolute liberty to ask questions (however cynical or unfathomable they may be). One such behavioural-economist – Keith Chen (an academic at UCLA, USA), decided that he had had enough of mainstream studies and asked a simple question, “What would happen if I could teach a bunch of monkeys to use money?”; and that is exactly what he set out to do…
During the summer of 2005, Chen set up a laboratory at Yale – New Haven Hospital where he proceeded to perform an experiment on 7 monkeys (capuchins, to be exact) to prove that transaction is a process that can be adopted and normalised by any species that has been trained to use the all mighty resource of money/capital.
A series of events that spanned over approximately 4-5 years, involving the said capuchins included teaching them that coins had value, that they could acquire commodities (mainly food) in exchange of those coins and that the coins were a scarce resource. As an example, say a capuchin was given a coin, a treat (marshmallows) and a choice between the two. Whenever the capuchin opted for the coin, the treat was taken away and vice-versa. This is how they were taught that the coins were as valuable as the treats and that gain of one led to loss of the other.
Once this had been accomplished, Chen introduced a number of everyday market-place rituals to those monkeys. He taught them how to bargain, how to gamble (quite an intricate process) and in a while also made way for price and income shocks. The fashion in which the capuchins reacted to these changes turned out to be astonishingly similar to how we – humans – react to market prices. Say, when the price of a commodity rose, the capuchins ‘bought’ less of it; while in the contrary situation, they ‘bought’ considerably more of it.
The experiment inferred similar conclusions to several other economic exchange scenarios as well and in a nutshell, what was inferred is that monkeys (or any other species) are just as capable of transaction and money exchanges as we are, simply if they are as accustomed as us, to do so.
If I ask you, dear reader, to establish a relation between monkeys and humans, you’d say they’re both primates, or they’re both mammals, or they can both be uncannily sly and so on; but would you ever arrive at the fact that both these species love marshmallows? I think not…
The above experiment is just an instance of the vast array of mind-boggling discoveries that micro economists have made (and still continue to make) with regard to just about all aspects of life.
When most individuals are asked to dwell over Economics as a subject, they ignorantly visualise Nifty and Nasdaq Charts or assets and liabilities instead of monkeys and marshmallows; but Economics is increasingly being recognised as more of an analytical and interpretative science, the demographic tools of which, can be utilised in every aspect of modern-day life. It is effectively proving to be a study of just about every kind of data, how we analyse the data at hand and what conclusions we draw from it. A quick overview of recent economic literature proves that top economists are studying subjects like cheating students, mixed-race adolescents, air-bag and seat-belt effectiveness and other such incredulously random motifs.
At the days end, one might ask why economists decide to probe into such questions. Does there exist some ulterior motive or is it merely a means to humour their otherwise dull and dreary lives? While understanding the exact thought process behind the fixation of any research question is difficult, I believe economists largely choose questions that help them observe occurrences that incentivise human actions and model ways in which they behave because, after all, we play the main part on the world’s socio-economic stage; our actions influence the trajectory of Price & Earning (PE) charts, volatility of interest rates, the formation of bubbles in stock markets, and so much more. Studying questions that centre human responses to stimuli, financial or otherwise, helps economists make predictions about the prices of shares, potatoes, Dyson Airwraps and everything else under the Sun! Such findings, in turn, help professionals offer strategic advice to firms and individuals, mitigate risk, regulate global business tax and so on.
By all means, I’ll leave you to ponder over another seemingly baseless question; so, what do you think some sumo-wrestlers and a few schoolteachers in Japan have in common?