Freakonomics and the Power of Incentives

I love Zoey's talk so if you're still here that was awesome but I think we should clap for her again I thought it's just great I like it because that's the kind of stuff that I try to figure out and try to follow and um and I also love you know what I want to talk to you all about today primarily is incentives and how they work and how they fail that's really what I do with freakonomics is try to understand incentives but I also love storytelling which I thought Zoey did incredibly well and so I had planned to start with one thing but I thought of something that might be a little bit different I won't tell you which I plan in which I might change to so let me just we'll take a hand boat would you rather I start by talking about the 10 commandments or turkey sex so Ten Commandments raise a hand pen commit Wow very unbiblical crowd turkey sex oh my god you pervert okay so so this so just so you know this is what I was going to start with so just so you know we do we do share the same prayer and interest all I want to say about turkey sex is this turkeys don't really get to have sex very much and I discovered this in my reading so this is what I do I don't have a job I'm unemployable I can't I'm not good at meetings I'm not good at hierarchies I'm not good at following directions that's why I became a writer and so I don't have a job and all I do every day just so you can know what to expect here for the next 40 minutes this is how I spend my day I live in New York City I got a wife couple kids a dog I go to my office which is a block and a half away except not only unemployable but I'm lazy and I sit in my office all day and I just kind of read and think and then if the reading and thinking go well then I might find something to write about it that's really all I do for about 10 11 hours and I like to read academic journals I like to hang out with economist and I particularly like to read journals about agricultural economics which I know you do too because I grew up on a farm and I just find it really interesting that we deliver food for seven billion people every day it's really a remarkable accomplishment I was reading this journal one day I think it was the Journal of agricultural economics because they give really sexy titles and I'm and and the the the paper was about the rise in consumption in America of poultry versus red meat and pork so it used to be pork was the number-one meat for a long long time then red meat caught up and took it over and poultry had always lagged behind but now poultry turkey and chicken combined are about the same as as red meat which is a big change and in reading this like I came across one tiny little fact with half a sentence that just caught my eye and if you're like me this will happen to you'll you'll see one fact or number or idea and it will just for whatever reason capture your attention and you want to find out more about it and the CENTAC caught my attention was it said that in this huge boom in turkey consumption one result of that was that almost all turkeys bred for consumption in the United States are the product of artificial insemination so turkeys are not having sex at all and I thought well weird I'd never thought once in my life about turkeys having sex maybe maybe you had I had not and I and I decided that it might be interesting to find out why so what do you do when you find one number or statistic or fact that you know seems out of context you try to put it in context so you go to the chicken data right you go to chicken breeding data and it turns out that chickens who are bred for consumption do have sex they procreate that record naturally so I thought what is you poor turkeys what what so first of all it's a justice issue right forget about the agriculture so here's the story make a very long story short it turns out that you know as far as our appetite for Turkey has risen so much in particularly we like the white meat of Turkey which comes from the breast so what's happened in the for the years the turkey producers ranchers people who sell and distribute had bred the birds to have larger and larger breath so it used to be that you would go into a supermarket like 50 years ago and there'd be a turkey with a kind of scrawny breast and then they change birds a different kind of breed and then they began to breed them like I said to have larger and larger and larger breasts so the point that now you go to like a turkey farm and there's like Tom turkey the big breasts sticking out like this and Jane whatever her name is and they come up and whereas they used to you know kiss whatever the turkeys do they literally because their breasts are so large now they literally cannot get close enough to physically procreate thus the need for Turkey artificial insemination no turkey sex I know it's a tragedy but this this is how I spend my day people okay I wanted to UM I just wanted to properly lower the expectations so you know what you're dealing with here so I want to tell you what I can tell you and I dearly hope it's of some help to you but I'm not expecting it to be okay unless you plan to quit your marketing jobs and go into turkey ranching um but what I like about this story and the reason that this kind of story appeals to me is that it reflects the two things that I really care about which are one incentives which is again in this case it was the motivation the appetite for consumers they wanted more breast meat what happened the ranchers responded to those incentives that's the way the world works people respond to incentives to change the story that's happening and the other part of the story that I like is that it's got data in it I'm a big believer that we all have ideas for how to fix a problem for how to you know help the world growl to make ourselves happy etc etc etc and that's good ideas are great ideas are all almost always the starting point but without good data and I mean good data and I'm going to talk in a moment about the difference between good data and crap data without good data you're really just guessing and I know that we're in a funny point right now in the world where we or being overwhelmed with data many of us love it many of us don't like it and I think it's very natural if you don't like it to push back and say you know what the data can't tell me how I feel the data can't tell me how I should behave and so on and I would largely agree with you but it can be a great tool if you learn how to really use it and understand what it actually represents so that's what I wanted to start by talking about so let me ask you this question a little poll raise your hand if you after you use a public restroom after you go to the bathroom in a public restroom raise your hand if you do not afterwards wash your hands if you don't wash your hands okay place them high let's see what we got Wow unbelievably hygienic group of people here so here's the thing I know you're a pretty honest group of people I don't know you personally but I know you're honest kind of by proxy you're here at a conference which means you do pretty well in your professional life in America you know our our system both our democracy and our capitalism they punish dishonesty pretty pretty intensely which is one thing we really like about our system there are things we don't like but um by dint of your being here I know you're relatively honest person even if I don't know you so I know you're pretty honest you do look to be pretty hygienic from what I can tell but I know that a bunch of you particularly the men are lying to me right now okay and I know you're lying because we actually have data on this topic the topic is called the the data this falls under the purview of what's called public restroom hand hygiene compliance rate okay and so you think well how do you get those data you can't just go put cameras in public bathrooms so what do you do well okay if you want to get good data real data sometimes you have to be a little bit crafty you have to be a little bit clever so I'll tell you what I do I travel a lot I'm guessing many of you do as well I always carry a handy-dandy notebook okay I need to use the if I get off a flight I need to use the bathroom and the airport I do then at the sink I go wash my hands and at the sink I'll just kind of linger for a while with my notebook simple as this all you gotta do I'm writing down the number of men who are coming out of a stall or a urinal I haven't done it in a lady's room yet but the number of men I see the number of them that are washing their hats data right okay now if you find this data collection exciting I encourage you to give it a try do not try it in the Minneapolis st. Paul Airport where you may remember certain US senator was doing a whole different kind of data collections in a stall that will get you arrested this won't what I do but here's what I find I find that on average about seven out of ten men who get off a plane and use the bathroom in the US Airport wash your hands and the other thirty percent go right by without washing now what what does this say about the non washers maybe we don't care about them maybe that's that's not my point at the moment my point is this if you brought the non washers into this room and sat them with their friends maybe clients colleagues bosses whatever they're not going to raise their hands either right the circumstances under which a question is asked we're more broadly more importantly for the work that you do and for the work that I do the circumstances under which the data are gathered have a great deal to do with how reliable those data are now we know that intellectually but we're also very very good at using parts of the brain may be the alligator parts as though he was talking about we're really really good at seeking out evidence that confirms what we want to be true or that confirms a decision we've already made and we're really good at ignoring evidence that contradicts what we want to be true or the decision that we've already made and so it's really important to distinguish between what the data really say and what like you guys told me thirty percent of you men we're probably roughly lying to me right so this is what economists call the difference between declared preferences and revealed preferences and I think there is no more important realm or industry in which this difference matters than yours because you can ask people you can ask customers you can have potential customers can ask former customers or fill in instead of customers clients whatever shinsen hospital whatever you want you can ask them any kind of question and they will give you an answer but there's a ton of good social science research that shows that that kind of self-reported data declared preferences is close to worthless why there's a million reasons why people have a different view of themselves and reality people want to be different than they really are people want to please you you're the authority figure who's asking the questions they know kind of what they what you want them to say and so they like to be pleased plus which you've got a huge you know sample bias in the start which is the kind of people that typically do those kinds of surveys and studies are what you call co-operators to start with they're the co-operative people so their answers just don't reflect the way the real world will work and if you want to fix something or improve something or win something or sell something in the real world you need to know not what people are telling you they will do or even what they have done but what but you need to get data that shows what they actually do so that's why I go hang out in airport restrooms now there are people who care about the topic of hand hygiene who do it a little bit more scientifically than me fortunately and there is a lot of data on this so I'll give you ears here's a another for instance with real data there was a study done in an Australian Children's Hospital some years back and they asked a bunch of doctors to report to the researchers researchers would sit there with clipboards they asked the doctors to come and report at the end of every day their hand hygiene compliance rate which is basically essentially you're supposed to wash your hands before and after every patient contact okay so over the course of I think it was 11 weeks the doctors self-reported hand hygiene rate with 73 percent okay so there's one piece of data that's just like seeing turkeys artificial insemination we don't really know what it means it's just one piece of data so what does it mean well let's try to put it in context you could say well it's not very good it should be a hundred percent or you could say well you know considering that okay considering that you all told me that you were a hundred percent hand hygiene compliant right I could say look maybe the doctors aren't washing 100% of the times but at least they're honest right maybe that's another way to interpret the data how do we know well how you know is by using that self-reported data as one point of data to look up but then let's get some other data how do you do that again crafty clever the researchers who ran this study did a super super simple but super smart thing which is a deputized nurses in the hospital to spy on the doctors so literally every time a doctor would walk into a patient's room to see the patient the nurse would kind of come in behind or maybe they were there ahead of time and they would watch or if they were outside they'd listen for the sink or the anti for the disinfectant pump and they would simply record like me whether the doc is actually washing or disinfecting hands so it turns out that over the same exact period of time that these same exact doctors reported a 73% hand hygiene rate the real rate discovered by the nurses was actually 9 percent okay so forget about how bad it is I mean really bad and scary and you could argue immoral right forget about all that here's the thing from your perspective if you are the one who's trying to solve the problem well the difference between when three out of four people say they do something or will do something and when one out of 10 actually does it's now it's not just a magnitude problem now it's a different kind of problem entirely so if you want to solve the real problem the first step is to get the real data not only see how bad it is or how good it is but to see you know exactly what the problem is which is that people aren't washing their hands ok so what do you do if that's the behavior you're trying to change how do you influence that so this is a problem that weirdly enough hospitals have been struggling with for like 150 years since the discovery that hand hygiene was actually a really good idea some of the best hospitals in the world struggle with it cedars-sinai Medical Center one of the best hospitals in the world on any dimension you can think of they discovered by deputizing they're nurses spy on their doctors that the hand hygiene rated cedars-sinai twas about sixty percent pathetic and these are some of the best most highly paid doctors in the world so Cedars thought all right what what can we do to engage the doctors you know let them know we're on the same team we don't want to you know scold them what can we do so I get get the rate to one hundred so they did what what people do often in in the Western world particularly in in America particularly in corporate America you have a problem that you're really really serious about and you want to send a signal that you're really serious they form the committee all right they formed a committee which would tell everybody hey this is really serious this is called the cedars-sinai Medical Center chief of staff hand hygiene Advisory Committee like switches to hang for short okay labeling okay Zoe's labeling this is bad labeling first of all the task for its name is too long for anybody to actually pronounce it but they want to indicate that they took it seriously enough to form a committee and a task force they got together and this was like thirty of the top officials in the hospital most of whom were medical doctors themselves they know the science they know the behavior they get together and they think okay we need to communicate this is not a problem of Education the doctors know the science is the problem of communication so what do we do how do we communicate clearly our intention and our you know desire for them to comply they thought let's issue a memo because we know how everyone reads every memo for ever and does exactly what every memo ever says right as anybody ever actually I mean I've written memos I just assumed they'll be ignored so but anyways they decided we're going to issue a memo and they thought about it and they thought again we want to make them on our team we don't want to antagonize them they said you know we we fully appreciate and anticipate your participation in getting to 100% hand hygiene compliance to make cedars-sinai world-class in hand high compliance just as it is on other other dimensions so basically was kind of like a nice nice smart form of flattery and they distributed the memo and they had the nurses watching the doctors and they sat back and now they just waited for the needle to move up to 100% and the needle did not move at all right zero zero the memo was totally totally ignored then they thought all right we need to come up with something else what if they thought what if we take our message to the wards to the patient's rooms where the doctors are actually doing their medicine that's where this happens right and they came up with this idea where they'd break the big committee into smaller groups that was now called um the posse patrol program subcommittee of the cedars-sinai Medical Center chief of staff hand hygiene Advisory Committee so this is like just hang triple P the posse Patrol program and here's the way this would work the posse patrol program would take one or two or three of the committee members at a time breaking up in little posses and they'd go into different wings of the hospital when the patients were when the doctors were expected to make their rounds and they would go in patient's rooms and hide and wait for the doctors to come in so here is their original plan the original plan is we're going to hide and wait and when a doctor comes in and fails to wash we're going to come out jump out and like scold them and take their name and publicly post it and make them feel like crap and that'll be great that was their original plan then they thought about that for like five minutes they said maybe you know they're not going to like that they're not going to like they're not going to like the public shaming and again the dynamic of this wait let me let me say let me back up let me say one thing any incentive that I talked about today any incentive that anybody ever talks about is extremely context specific okay it's really important to know that if something works perfectly even in one hospital there's no guarantee it will work perfectly in another hospital because cultures are different people are different light is different our physical surroundings our cognitive reaction to those surroundings there are a lot of variables so that's an important caveat to know but they decided that in this case cedars-sinai the administration they're the bosses but the doctors are really the stars of the system and they are freelancers essentially so if they felt antagonized they could just go to another hospital and see your sign I did not want to take that chance I thought okay whoa rather than the public shaming let's try the posse patrol program but instead of the negative incentive of scolding and shaming let's try a positive incentive right so again whenever you're trying to come up with an incentive you got to realize there are many flavors there financial incentives of course there are you know social incentives and moral incentives one incentive that people care about a lot these days are public or social media reputations people really care I mean half the world now broadcasts maybe in a small way maybe it's narrowcasting but half the world puts out to the world like what they're doing why do they do that they put it out for some kind of approval we all want to be light we all want to be approved right and so it can be very harsh to get spanked publicly you know privately as well and so we spent a lot of time worrying about our reputations and so the incentives to be seen as a good person are really really strong and things like that there are all different kinds of incentives that you can create additionally like I said there they're negative and positive incentives right carrot and sticks they thought about the stick they thought about the shaming now instead they're going to go for the carrot here's what they came up with here is the plan posse Patrol program they go in the wings when the patience when the excuse me doctors are getting ready to come around on their rounds they hide in the room they would hide behind like a wall or curtain or maybe a big piece of equipment sometimes I have to crouch down and when they'd hear the doc walk in and if they'd hear the water turn on they'd jump out and then they clap for the doctor okay and then they give them a ten dollar Starbucks card as a reward for washing their hands all right so when the chief of staff of the hospital told me this story I said you know I mean no offense by this you are way smarter than I'll ever be this guy was a great surgeon a great doctor great administrator I said your waist smart and Oliver be but that idea just sounds so stupid that you that you are trying to change the behavior you're trying to incentivize the highest earners in your Hospital these Doc's are earning between four and six hundred thousand dollars a year you're trying to change the behavior of those people with ten dollars worth of free coffee come on that's just idiotic so I learned a really great lesson that day I was wrong and the lesson that I learned is never underestimate the power of free okay because it does not matter how much of anything someone's got how much they're worth if you offer them some free stuff the alligator part of our brain to quote Zoe will just zap at it like not like the alligators who are too lazy need a hot dog but you ever see a lizard sitting in the Sun and like the fly comes by they don't even have to think about it they just zap it with their tongue that's the way we are with free stuff so listen I don't mean to insult anyone all I'm about - I shouldn't say I don't mean to let me insult someone here at a conference like this I'd be shocked if they're not giving out a bunch of free stuff there are go bags goodie bags I know there's a trade floor there's all kinds of free stuff so let me say this most of it is total garbage and yet you're going to love getting it and you can't wait to line up for it for one simple reason which is it's free now you can look at that a number of ways you could say you know the moralist and you could say oh it's terrible people or such consumers that uh that makes us bad we shouldn't want as much stuff as we do or you can say if that's the way the human brain works let's find a way to take advantage of that and exploit it for the good okay to exploit it to get doctors to wash your hand for instance so as it turns out it's cedars-sinai the doctors love getting the free Starbucks card they loved it so much it not a single doctor ever said Oh chief of staff of hospital thank you so much but why don't you take the ten dollars and use it for something else or someone else now single one ever turned down a card furthermore they began to game the system so when they would hear that the posse was on their floor they'd run up and start washing their hands like in all rooms trying to get the card okay that was great it took literally a life and death problem and turned it into a game that people wanted to play which was awesome just one problem which is it didn't work the card didn't overall raise the rate of hand hygiene at the hospital why so here's the tricky part when you use data to try to understand incentives you can get at the what pretty easily the what is it didn't work the what is they wanted it they took it but it didn't produce the behavior you wanted the why the why is complicated the why gets into psychology might get into religion who knows it gets into a lot of things one answer may be that if I get the card when I see my patient in room 504 and I ran into the posse there and then I have a patient 501 I know the toss is not there and I'm not getting another card and I probably fell behind in my routine from chatting with the posse and 504 so maybe I skipped the hand-washing in 501 maybe unconsciously maybe subconsciously even but for whatever reason the card as much as they loved it didn't work so now the poor committee is stuck with you know they've spent all this money on Starbucks cards they issued the memo that nobody read and they still haven't solved the problem and this is when someone in the room came up with an idea interestingly she was the one of the quiet people on the committee who rarely spoke up publicly and whenever I think about her she was the staff epidemiologist whenever I think about her I think about how often we give our ears to the noisy people I mean I mean you're hearing me talk now obviously I've become a noisy person but for many years I was the person who just sat back and was kind of too shy or timid to voice an idea but you realize that the way that our corporate culture works especially especially meeting culture if you're noisy you get a lot of attention a lot of your ideas considered and maybe praised and often the quiet people don't even get a literally get a voice at the meeting so I think about that I think it'd be nice if we could try to change that I think whoever's running the meeting can really help change that by literally doing something as simple as you know halfway through the meeting if there's someone you haven't heard from yet say you know you know whoever I haven't you know I'm wondering if you have any thoughts on that or I haven't heard from yet I'm curious what your thoughts are because it's really important to get the best ideas not just the ideas from the noisy people so anyway it took until they were pretty desperate for this quiet person to speak up and she said I have an idea that won't it's not really a solution to the problem we're talking about but it might help us think about a little bit differently she said I hope it doesn't upset anyone but and she pulled out this bag with a bunch of petri dishes in it with agar plates the kind of thing used in high school biology to take it to cult to take a sample of something in culture in the lab and she said you know here we are the bosses of the hospital telling everyone else how badly they're failing but what about us are our hands clean literally are our hands free of the bacteria that we need to be getting rid of to keep our patients safe and she asked everybody at the in the committee to lay their palms in the petri dishes and she wrapped him up and she sent him to lab for culturing and she anonymized them she wasn't trying to embarrass anyone by identity and when she had him cultured she found that the vast majority of the hands that belonged to the committee were covered with the very bacteria that they've been yelling at everybody else about for not getting rid of and this was a really sobering moment for them they realize you know here we are not only not fixing the problem but we're contributing to it and they thought you know is there some way that we could take this idea is it data if you want to call it data it's kind of data and turn it into a different kind of motivation or incentive to get people to behave how we want and that's when the chief of staff came up with this idea that finally turned out to be a brilliant winning idea which is he said what if we take a photograph of one of these petri dishes if you look at it if you're a doctor or nurse and you look at it it's a scary sight it's basically a hand shape conglomeration of scary bacteria right and you just look at it and you can sense what it is he said what if we take a picture of one of these let it be known that it belonged to one of us the bosses who are trying and failing to fix this problem and make it the screen saver and every computer in the hospital and they did it and virtually overnight the hand hygiene compliance at cedars-sinai shot up to a hundred percent why did it work it's a little bit hard to say why it worked it may have just been something as simple as you know if you're a doctor and you're walking down the hall and you see image after image after image and you go in the patient's room and you see the image you can't help but reflexively wash your hands maybe that's why it worked whatever the reason was it did work after all that trial and error it worked so well that other hospitals began to write and call cedars-sinai and say hey can you send us a picture of those bacteria because like we don't have those bacteria in our hospital of course right the great delusion of it right so this would seem to be you know a happy ending story about using data and understanding incentives to produce behavior that we want and it is but it's also a story about failure look how long it took to get motivated educated people to do the behavior that they have known since medical schools they should be doing you know behavior behavior is heavily influenced by incentives but incentives are tricky to figure out an incentives as I said before our context-dependent and incentive shift over time you have to constantly be vigilant and the way you're vigilant is by constantly monitoring data to see how you're doing incentives work great unless they don't incentives work great until they wear out incentives work great unless maybe even they backfire so governments in particular are really good at coming up with incentives on paper look brilliant you know if we like if we have this new law or this new you know motivation for people to do something and we just set it free everybody's just going to do it the we would but here's the problem with that the people who create the incentive schemes in their business whether internally or externally people like you you think that everybody will respond to the incentives the way you would meaning you're a disciplined person you follow instructions you're a cooperator not everybody's like that the population is heterogenous so people sometimes especially the government incentives respond exactly the opposite of the way that it was intended my favorite example of this comes from South Africa in Johannesburg there's a Township called Alexandra and Alexandra had this problem very typical problem a lot of cities throughout history they had a lot of rats running around and they thought well how can we enlist the citizenry to help us get rid of the rats they thought well what if we come up with like you know some incentives to help them help themselves free extermination they offered and that was a pain in the neck nobody signed up for you had to be home nobody wanted that then they said well how about three new trash cans with really tight-fitting lids that the rats can't get into and again people weren't very enthusiastic about that then they came up with an idea that an economist would love because it involved a financial incentive and it was basically it was a bounty it basically said to people if you catch a rat and kill it and bring it to City Hall we'll give you money so it's literally a bounty on rodent carcasses so what could possibly go wrong with that idea right it was the equivalent about four US dollars so they put this plan into place and immediately the people of Alexandria just rushed to take advantage of this new incentive but not exactly as the city planners had intended instead it gave rise to a whole new industry which was rat farming so people began to buy breed grow and slaughter rats to turn them in the city hall to get their there their new money so the next time that your design is an incentive plan that you're sure is like so brilliant on paper it might be but you should really try it out lot and experiment a lot because instead you may end up with a pile of dead rats on your doorstep it's not so easy to get the behavior you want for all the reasons I've been saying not everybody thinks like you people respond to one incentive you know people have private incentives and public incentives what you got to do is try to get data and sometimes you got to get really small data and sometimes small weird data from which you can generalize to learn more about the bigger problem you're going to solve so I've just a few minutes left I want to tell you one more story about a hero of mine I mean not a hero that's maybe overstating a little bit but now maybe hero and I'm I love him because she had he has a kind of courage that I wouldn't don't have that I wouldn't have had in his case a kind of curiosity that I really aspire to and a kind of follow-through stick-to-itiveness to actually get this project done and the project was a research project and the guys I'm talking about the filming piece Chen who was a young untenured professor at Yale the Yale School of Management when our story begins and he showed up and what you do you're young untenured econ professor your goal is to get tenure how do you get tenure you basically you come up with a research question that you're gonna answer so well and write a bunch of papers in great journals that your peers and elders will read and say we need to keep this guy around he's really valuable so here with Keith Chen's research question he thought you know we're economists we should know everything about how people think about money right isn't that like the one thing we should know how they think about spending and saving and buying and stealing and giving charity all stuff we should do all that and yet we know very very very little why because if you ask people about it they tell you one thing but we know that they often do something different and because of privacy being what it is it's hard to get the data to really answer the question so Keith Chen thought what if I could set up an experimental economy where I could watch and record every dollar spent we're it used for buying stealing spending saving whatever then you guys are thinking about a little bit more you thought well you know a little bit about social science you know that when you create an experiment like that that people start to respond artificially because it's an experiment they want to please the experimenter they don't want to be seen as greedy all this so we thought what if instead then in this experimental economy I lead out the people and instead I use monkeys who are kind of like people right we thought what if this is Keith Chen's deep research question at Yale what if I set up an experimental monkey economy and then write down how they spend and save their every dollar wouldn't that be awesome he thought that was Keith Chen's motivating questions so like I said more courageous than I would be more curious and now he's got to get it done and he does get it done he sets up this lab at Yale New Haven Hospital and the way it works is this he recruited I don't know how you recruit me I guess he bought monkeys is what happens actually he got a bunch of monkeys and there would be seven monkeys living in a big cage so let's see I'd say the whole thing was about maybe from like about here down to the end of this rise that I'm standing on was this this cage where seven monkeys would live and then down here there'd be a little door where one monkey at a time could come through into the smaller cage much smaller cage and do some experiments with money now that was not what he originally planned what he originally planned was just like one big cage wide open like a store where he's selling stuff in a bank and all this stuff but the veterinarians and the people had to approve this as an academic research project they would not let him give the monkeys money in an uncontrolled setting just on their own because they argued that that would pollute the monkeys natural culture it would change them too much and so he wasn't allowed to do that so the compromise was that he had a little experimental cage here and then the big communal cage where they lived but you know it was a compromise but he took what he could get the monkeys that he chose to use are the capuchin monkey which are these really great little guys they're like they're about the size of like a very strong a one-year-old human with a tail the length of their body okay and I'm the important things to know about the capuchin monkey or a couple things one is they love sweet food any kind of sweet food you have they're going to love it and the other thing to know is that they're not very smart at all they have a really small and very rudimentary brain which by the way is exactly excuse me it's exactly why Keith Chen wants to use these monkeys he doesn't want to see what like a super smart monkey can learn to do with money the way we would and then kind of deceive the researcher he wants to see what the monkey brain is hardwired to do and if there are any parallels then between them and us then he's going to have a whole lot of really good research papers to write okay he had no idea if there would be get no idea if he could even get them to learn to use money but that was that was the dream so the capuchin monkeys they love sweet food and they have a small and rudimentary brain they're not even really thought to think the way we think about thinking they're just thought to react if they did think at all would be just about two things one I mentioned sweet food and two sex so their which doesn't make them all that different for a lot of people that you and I both know right those are their two central obsessions and now we want to give them a third obsession which is money so how do you teach a tiny brained food and sex-crazed capuchin monkey to use money so here's the way Keith Chen would do it seven monkeys living in here you named them by the way after characters and James Bond films that's just something that monkey labs like to do they give them all a certain kind of name so it was like a gold finger monkey and a double-oh-seven and the one that became his favorite was called Felix after it felix leiter the CIA agent so here's the way it worked you'd bring felix from the big cage here into the little cage here and you give him a coin and he'd snip it and try to eat it and when you'd see that it's not edible he'd get rid of it and he'd get really angry if you did that repeatedly so then you give Felix the coin and then offer some sweet food and Felix would take the food and then you would take the coin out of his other hand and if you do this repeatedly they'll learn that the coin has value but like I said the monkeys aren't very smart it took six months on average to teach the seven monkeys that if you give a coin you get food in return but finally after all this repetition they were able to do that so now these got them using money kind of in a way that we recognize he sets up an experiment what he wants to do now very simple very elegant he wants to see can a tiny brained capuchin monkey consistently expressed its preferences for food with money because that's what we humans do we consistently express our preferences for everything with money I may say I love the Opera if I want to impress you if I think you love the Opera but if you can see that I've spent a hundred dollars on the Opera in the last ten years and five thousand dollars on video games you'll know I express my preferences with money so the way this will work for the monkeys is this so bring the monkeys in one at a time and they're going to do these hundreds of experiments or they're offering all different kinds of food every day and and the monkey will have money and they'll see if they buy the same food over and over again all the food is priced the same do they have consistent preferences with food and can they express it with money and he's thinking probably not but he's praying that the answer is yes so what comes what happens is Felix comes in they give them some money he starts to buy food the researchers are holding on either side of the cage and it turns out that Felix loves jello cubes so whenever there's jello for sale feel to always buy it but there's all these other kinds of food there's apple slices and grapes but whenever there's jello feel so always buy it and so the other monkeys too similarly whenever they found a food that they liked most they would consistently buy that food so now Keith Jenna's thinking well this is awesome because they like us consistently express their preferences with money which is great that's going to lead to some some real good work for me but now knowing that that is working he wants to mess with the monkeys a little bit and and he he decides to introduce into the monkey economy price shocks and wealth shocks so what he's going to do now is taking now that he knows every monkeys favorite food he doubles the price of that food and that food only to see what happens so he's thinking well they're tiny brain monkeys they're probably just going to keep on buying that food even though they get way less of it because they're too stupid they wouldn't do what we did what we would do what we would do is we would buy less of it but as it turns out that's exactly what the monkeys did so when the jello doubled in price Felix started to buy much less of that and the other monkey's too with their favorite foods and buy more of the food of the food that was now much cheaper that they liked less so now Keith Jenna's thinking this is awesome I mean I'm going to get tenure somewhere if not Yale I'm going to get tenure because the parallels between the monkeys and us are strong enough and I'm going to be able to keep doing this research to write all these papers and it's going to work out great good for the monkeys really good for me and if you ever needed further evidence of the parallels between the monkeys and us you got it one day in the lab something really strange happened that no one no one would have ever seen coming it was a day just like any other all the monkeys are in here that bringing the monkeys one at a time into the little cage Felix comes down in here and by now they would usually give each monkey a basket with 12 coins and the monkey would gather up the coins and start to buy the food but on this day for whatever reason instead of gathering up the 12 coins and spending them Felix Felix the monkey takes the basket of 12 coins and flings them into the big cage over here then runs in after them so it's like a bank heist over here followed by a jailbreak into the big cage right and now in the big cage imagine the chaos that's in there seven monkeys twelve coins on the floor and the monkeys go for the money because they've learned that the money is worth having so Keith Chen runs in to get the money back because remember he is not allowed to let the monkeys have money in there he's afraid he's going to get shut down so he goes in and the monkeys will give him the money back because they're like well this is worth something now so now he goes out and gets the big buckets of food to bribe them with it and now the monkeys are thinking Oh whenever possible we should steal money from this man because now like they're getting big buckets big handful like the exchange rate for one coin is huge you're getting a big handful right and out of the corner of his eye Keith Chen sees one monkey who still got a coin and hops over to another monkey just gives it to the other monkey and now he's thinking whoa what's that that I'm seeing is it is that monkey altruism you know maybe that's another paper is that the repayment of a monkey loan what's going on here neither of those couple seconds of groomings then ma'am it was monkey sex it was the first recorded instance of monkey prostitution the history of science okay and I mean this is all real not making anything I wish I were okay and and then just to show how thoroughly the monkey is under time een talk about expressing your preferences with money after the sex was over the monkey had gotten the coin for sex hops over to Keith Chen to grab a big handful of grapes or I'm sure if there's been a cigarette machine in the cage it would have gone for that instead so uh that concludes whatever just happened here I thank you for you thank you very much for having me thank you thank you very much you

Channel: All Things Insights

Views: 21,936

Rating: 4.7992277 out of 5

Keywords: market research, MRX, insights, consumer, advertising, marketing, big data, conference, event, TMRE, The Market Research Event

Id: lb-7BB9uITI

Length: 45min 37sec (2737 seconds)

Published: Thu Aug 03 2017