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An Economic Parallel between Animals and Humans

Rositsa Keranova is currently a BSc Economics student in her second year.

It’s been established that when it comes to behavior, animals are not that different from humans. Both have feelings of compassion, empathy, as well as possess the ability to work in teams to consulate each other and even to free-ride. The similarities do not end there, humans and animals have been found to make the same economic decisions. We can trace the same patterns in both species’ behavior and actions when it comes to demand, consumption, and allocation of resources.

Animals, like humans, optimize their energy intake and are motivated by their material self-interest, like the need for food. They are rational and make decision in accordance with their own preferences, just like us always seeking to maximize our utility. For any kind of species gaining food and comfort is connected to incurring costs. Humans as an example need to give up part of their income, even sometimes their savings, in return for the goods and items that they desire. When looking at animals, their costs generally consist of the time and the effort they spend to gather the food needed or to build or find shelter.

To fully understand human behavior and its origins, scientists research animal behavior and decision making, through the use of economic experimentation. This kind of experimentation has proven to be useful, because there are some manipulations that scientists are not permitted to perform on humans. For example, if we were to change the amount of food an animal receives, the equivalent of its income, and we can see whether it will react in accordance to what we expect (or what we expect to happen). That is a way we can predict the overall reactions of the public if there is a change in the economy because such an examination is almost impossible to be conducted with people, since scientist cannot just change someone’s income.

John Kagel and Raymond Battalio designed an experiment which involved rats as subjects and two levers, on each of them a different kind of food, the animal’s income, was allocated. The rats had to press each levers in order to receive a good. There were a few rounds and in each the quantity of food per lever press was changed or the number of lever presses for the amount of food was changed. That way they could trace the animal’s reaction to the change in relative prices of the two goods. In the end of the experiment it was observed that the animals consumed more of the good that was cheaper, required less effort to be gained. This is consistent with human behavior.

Even though monitoring animal behavior doesn’t give us a full explanation of human decision making, it still provides a good starting point at which we can build our observations and make conclusions.

 

Image source: Frans de Waal

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