Watch The Following Video: Laurie Santos

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Watch The Following Videohttpswwwtedcomtalkslaurie Santos A Mo Watch The Following Videohttpswwwtedcomtalkslaurie Santos A Mo Watch the following video: (Links to an external site.) In class, we have discussed the "error of omission"; namely, the fact that 2/3 of households end up at age 65, typical retirement age, with little or no money or assets. In the video, Prof. Santos seeks to understand why people are so bad at saving. Her premise is that this is a genetic, inherited trait - she argues that the similar behavior seen in a monkey economy is proof of this - specifically, monkeys don't save and they make irrational decisions about risk versus return (just like humans). However, Santos says that we differ from monkeys in one very important respect - human beings can learn to do better in making financial decisions (whereas monkeys can never learn this). Respond should be 150 Words: Question: (a) Do you believe Santos' argument that the observed behavior in her monkey economy is evidence that the irrational financial behavior of human beings is inherently genetic? (b) Do you think that the Santos experimental monkey economy provides some explanation of why 2/3 of households end up poor at age 65?

Dr. Jack HW Helper · Accepted Answer

Laurie Santos's argument linking the irrational financial behaviors of humans to a genetic basis, as demonstrated through her monkey economy experiments, prompts important considerations about human decision-making and financial literacy. Santos posits that the irrational tendencies observed—such as poor savings habits and risk misjudgment—are inherited traits, based on behaviors seen in monkeys that lack the capacity for learned financial strategies. While evolutionary and genetic factors undoubtedly influence behavior, it is overly deterministic to attribute complex financial behaviors solely to genetics. Human decision-making is shaped by a combination of genetic predispositions, environmental influences, upbringing, education, and social context. Empirical evidence suggests that many irrational behaviors can be mitigated through targeted education and behavioral interventions. Therefore, Santos's monkey economy model may illustrate innate tendencies, but it does not wholly account for the capacity humans possess to improve financial behaviors through learning and structural support. Regarding whether the monkey economy explains why two-thirds of households are destitute at retirement, this analogy has limitations. While it highlights innate behavioral patterns such as impulsivity or poor risk assessment, it overlooks systemic factors contributing to financial insecurity—such as income inequality, lack of access to financial education, and inadequate social safety nets. These societal elements play a crucial role in savings and wealth accumulation, beyond innate behavioral tendencies. Thus, the monkey economy analogy emphasizes the role of inherent behavioral propensities but insufficiently addresses the broader economic and societal influences that determine financial outcomes for most households at retirement. References Ainslie, G. (1975). Picoeconomics: The strategic interaction of successive motivated agents within the person. The American Economic Review, 6

Watch The Following Videohttpswwwtedcomtalkslaurie Santos A Mo

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