TED Talks :: Monkeynomics


Advisors,

I’m deeply inspired.
In early 2011 the most amazing online forum of inspiration, action-taking visionaries and leaders in the world was introduced to me via www.ted.com. Hopefully you’re already familiar with this incredible movement, but if not – welcome.

Every minute you spend exploring their website, speeches and conferences will be time well spent. In the foreseeable future I plan on taking a number of my favorite speeches from TED and applying those ideas to the financial advisory world and your practice. Today is another summary for you, featuring TED (“Ideas Worth Spreading”). My challenge to you on each TED post sent: Give me 18 minutes of attention (and some shared thought on bettering your financial practice) and I’ll open your eyes to growth forever…

TED is a nonprofit devoted to “Ideas Worth Spreading”. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design. TED’s YouTube channel is the #1 subscribed to non-profit channel on the site. Topics include an increasingly wide range of topics within the research and practice of science and culture. The speakers are given a maximum of 18 minutes to present their ideas in the most innovative and engaging ways they can. Past presenters include Bill Clinton, Jane Goodall, Malcolm Gladwell, Al Gore, Gordon Brown, Richard Dawkins, Bill Gates, educator Salman Khan, Google founders Larry Page and Sergey Brin, and many Nobel Prize winners (http://en.wikipedia.org/wiki/TED_(conference)).


TODAY’S TOPIC:
  A Monkey Economy as Irrational as Ours

ABOUT THIS TALK:  Laurie Santos looks for the roots of human irrationality by watching the way our primate relatives make decisions. A clever series of experiments in “monkeynomics” shows that some of the silly choices we make, monkeys make too.

ABOUT LAURIE SANTOS: Laurie Santos runs the Comparative Cognition Laboratory (CapLab) at Yale, where she and collaborators across departments (from psychology to primatology to neurobiology) explore the evolutionary origins of the human mind by studying lemurs, capuchin monkeys and other primates. The twist: Santos looks not only for positive humanlike traits, like tool-using and altruism, but irrational ones, like biased decision-making. In one experiment, Santos and her team taught monkeys to use a form of money, tradeable for food. When certain foods became cheaper, monkeys would, like humans, overbuy. As we humans search for clues to our own irrational behaviors, Santos’ research suggests that the source of our genius for bad decisions might be our monkey brains.

KEY POINTS:

  1. Social scientists are learning that most of us, when put in certain context, will make very specific mistakes. The errors we make are predictable, we make them repeatedly and they’re immune to evidence that says otherwise.
  2. Do mistakes originate from our environment or our mind being designed badly?
  3. Can we study monkey’s economic decisions to see if they do the same dumb things that humans do (thereby determining design flaw in environment or mind)?
  4. A monkey economy was created, including the first known non-human currency.
  5. Monkeys get proficient at trading tokens for food & purchasing items in an artificial marketplace.
  6. Collaborating with economists, they determined monkeys qualitatively and quantitatively act as humans do in a real market.
  7. People’s intuitions about how much risk to take greatly varies depending on how much (or what) they started with.
  8. Humans have a very difficult time thinking in absolute terms and a much easier time thinking in relative terms (more or less).
  9. Subjects get risky because they want the chance there won’t be any loss.
  10. In a “loss mindset” we become more risky; a worrying trait.
  11. Humans must recognize our own biological limitations in financial decision-making to overcome them and succeed.

VIDEO:

For a complete transcript of the talk click the “Interactive Transcription” button just below the video here.

ACTION ITEMS (for the Financial Professional):

  1. Rebrand, study & and give the “Coin Flip Experiment” (11 minute mark) at your seminar. Then explain what retiree intuition is, why it’s there and what that intuition means to retirement planning.
  2. Add seminar invitation point such as “Learn the 35 Million Year Old Investing Strategy” “Learn Why Evolution has Hampered Your Financial Decision-Making”
  3. For better comprehension during appointments, frame decisions prospects are making in relative terms (more or less than…) rather than absolutes (dollar amounts).
  4. If your goal is for prospects to move away from market risk-based investments that are currently at a loss, it’s advantageous for you to speak in absolutes; not relative terms to where they started.
  5. Can you use this video in its’ entirety for a client event? Then use my speaking notes to recap and begin a discussion session?

I hope you enjoy these thoughts as much as I enjoyed studying Laurie’s work. Implement just one or two and become even more successful in counseling today’s retirees. Advise with passion.
MJN

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