Wednesday, August 22, 2012

Keynesian Monkey Pay Theory

Greg Mankiw and Tyler Cowen are promoting this clip as a theory on unequal pay, but what's interesting here to me is that this is a very Keynesian view. That is monkeys like humans, it is thought, won't accept lower pay. However, this is a very short term experiment. If the experiment runs long enough, the monkey who is given cucumbers is going to get hungry and start taking the cucumbers, even if he prefers grapes.

End of theory. End of Keynesian monkey theory.


  1. The context of the experiment isn't useful, either, because it's unequal pay for equal work. And the work is arbitrary and unproductive and there is no competing employers who are attempting to bid-away monkeys for their stone-grabbing projects.

    Doesn't say much.

    1. My thoughts exactly. Its funny how this social scientist really thinks he's on to something when he can't even see the flaw in his own experiment. He seems almost surprised that animals have preferences. I'll also be willing to bet that after doing this experiment each time he gives the cucumber monkey grapes and thus there is also some Pavlovian respondent conditioning going on here too. The cucumber monkey may view the tantrum as a means to get grapes.

  2. I wonder what the reaction would be if they tried, instead of cucumbers and grapes, paper and gold.

  3. yes because life is like being a caged monkey with zero other options. In real life the monkey would be free to not accept the cucumber for work and move on to something else like finding his own grapes or someone who gives grapes for work they are willing to perform. Or be a strict negotiator and throw the cucumber back lol. I felt bad for that little guy. I'm surprised he didn't throw the rock at her.

  4. These guys are just looking looking looking for any excuse to justify their Keynesian myth. Keynesians, monetarists and statists in general are simply never going to accept the obvious Austrian truths of reality that people act with limited knowledge and that the prices of their voluntary exchanges provide the essential information for informed economic calculation. Or that Keynesian policies are going to severely impair that process. It appears to me to be caused by equal doses of “the fatal concept” plus a terrible fear that not only is everything they know wrong, but the cause of all of our problems. I’ve always felt that average people would not take naturally to the Keynesian mythology and this post from Matias Vernengo, Associate Professor of Economics, University of Utah prove my point. Innocently Vernengo writes:

    In my intermediate macroeconomic classes at the University of Utah I always start by asking students what do they think is a more socially relevant problem an increase in inflation of 1% or the same 1% rise in the unemployment rate. Although the answers vary somewhat according to the macroeconomic circumstances, it is almost always true that the vast majority of my students think that inflation is the real problem.

    And, of course, the Keynesian Vernegno then has to set them straight using his powers of intimidation as a “professor”.

    If more people could be inoculated in advance with sound Austrian analysis, few people would buy into the Keynesian Hoax.