01/15/2014 03:17 pm ET Updated Mar 17, 2014

What Can Monkeys Teach Us About Saving for Retirement?

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It's hard to save money. It's really hard. It's hard for monkeys and it's hard for us humans as well. Laurie Santos, associate professor and director of Yale University's Comparative Cognition Laboratory, and her colleagues conducted some very interesting experiments involving capuchin monkeys and financial decision-making. If you buy into evolution, capuchin monkeys are believed to be closely akin to us in the evolutionary chain making them a good proxy for human behavior.

Santos' research involves empowering monkeys with currency in the form of coin-like tokens (quite possibly the first-ever non-human currency). The monkeys were put through a series of experiments involving risks and rewards related to different food items. Some very simple, but important, observations came out of this research, including:
  • Monkeys look for the best deal to maximize rewards.
  • They want the reward now and they are more likely to spend all of their tokens (money) now rather than save them for later.
  • They hate to lose anything.
  • It is extremely hard for them to be patient and wait for a reward to emerge.
This research, combined with some equally interesting research performed by Jason Mitchell, professor of psychology at Harvard University focused on human brain activity, suggests that our economic behaviors are deeply rooted in our DNA. A key finding of the Mitchell research is that we appear to be strangers to our future self. Some of us think about our future self the same way we think about strangers -- with little to no connection to our current selves and little to no concern about our future selves' welfare.

Taking both bodies of research together, there appears to be something about being human that drives us to make different choices -- illogical choices -- around money and finances than any financial plan or planner might suggest. Put another way, we can be very irrational when it comes to our decisions around money.

If you buy into the research, in order to successfully prepare for retirement, we need to defy our very nature as human beings. In some cases, we need to effectively "trick ourselves" or "be tricked by someone else" like an employer automatically enrolling employees in a 401(k) plan in order to get on track and stay on track for retirement.

Although not focused on money per se, a great example of this dilemma we face in doing the "responsible" or "rational" thing is behavior around organ donation. Schlomo Benartzi of UCLA, a respected expert on behavioral finance talks specifically about the difference in organ donation rates in Austria versus those of Germany. In Germany, like the U.S., potential donors are required to check a box to donate. Twelve percent check the box. That means that 88 percent do not donate. As a result people wait on long lists for life-saving organs. In Austria, right next door to Germany, people are required to check a box if they do not want to donate. One percent check the box. This means 99 percent donate! Pretty interesting.

So how does this help us? Just recognizing that this DNA/wiring issue can get in the way of saving and planning for retirement is a step in the right direction. Focus more on your future self. Picture your future self. Get to know and like your future self. Get excited about retirement and set the stage for adventure and exploration by preparing and saving. Don't just save out of fear and loathing. Whatever you do, save for retirement no matter what your current self is telling you to do.

Monkeys can teach us all a lot about saving for retirement.

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