It Turns Out Monkeys Are Better At Handling Money Than People

What makes a Louis Vuitton bag more valuable than an identical leather bag? It’s simply branding, and it’s something people are very susesptible to. Interestingly enough, it turns out monkeys aren’t. In a 2014 study in Frontiers in Psychology, monkeys were introduced to jello and other ice treats in various colors. The monkeys in the experiment had previously been trained to trade tokens for food. While the monkeys showed an understanding that the treats were each worth a different amount of tokens, they didn’t ultimately value the more expensive food items more. The same certainly can’t be said for humans, who time and time again in studies demonstrate that they think more expensive items are better, even when their no evidence but price. Interestingly, monkeys and people do share some other preconceived notions about money. Similar to people, monkeys are risk averse. When monkeys start with a certain amount of food, they don’t like to make big bets to increase their stash. But, when they start with a certain amount of food, they are much more risk tolerant when it comes the possibility of losing their stash. A 2011 study in the Journal of Experimental Psychology examined these two scenarios. In the first scenario, monkeys were given one grape, and the chance to either receive another grape or to place a bet that they could receive two grapes (if they lost the bet they would receive no grapes). In this case, the monkeys went with the safe bet. In the second scenario, monkeys started off with three grapes. They were given two choices: either have one be removed, or to place a bet between having two removed or none removed. In that scenario, they by in large went with the riskier choice. People make similar choices: they tend to be risk averse when growing their money, but risk tolerant when it comes to the money they already have (which explains why people hold onto a bad stock when the price is dropping). Apparently, even being aware that you are pre-wired to this kind of decision making makes it difficult to change your behavior, which is why letting an expert take control of your investment portfolio can so often be a big win. We are a big fan of Betterment, a robo-advisor with a low .25% fee structure, which will help you invest for things like retirement, a dream vacation or a down payment on a house. Consider it a way to avoid monkey-ing around with your money. Image: Unsplash