Posted in Psychology & Medicine


Money is without a doubt a human invention. There are no recorded cases of any animal using an inanimate object to standardise the value of items and establish a non-bartering economy. Since childhood we learn of the value of money and how it can be used to purchase goods and services. In fact, money can be considered one of the fundamental pillars of human society that makes the world go round.

However, scientists have discovered that a currency system may not be such a novel system after all. In an experiment, a group of capuchin monkeys were given silver disks and were shown how they could use the disks as payment for a treat. Within a few months time, the monkeys realised that the disks had inherent value and began acting just like humans with money.

For example, they did not act in the standard way of operant conditioning (i.e. performing an action results in a reward), but responded to market forces in an accurate manner. If the “price” rose, their demand for treats would fall (i.e. buy less) and vice versa – following the law of demand that modern economics is based on. They even learnt to save the “money” to afford treats.
In a similar experiment with chimpanzees, it was found that chimps were even quicker in learning the concept of money and even learnt how to use smaller denominations of currency. 

Things started to get interesting when a certain monkey sneaked into the chamber storing the “coins” and threw it into the communal cage, quickly escaping before the researchers came back. This was the first recorded case of a monkey bank robbery
While this was happening, it was also observed that one male monkey was giving a female monkey a coin. The researchers wondered if this was an act of altruism or wooing, but soon discovered that the female monkey would receive the coin then have sex with the male, then later use the coin to buy food. The introduction of money immediately led to the invention of prostitution.

Posted in History & Literature

Big Mac Index

The Big Mac is McDonald’s poster product, with the key characteristics of two beef patties and three buns. This hamburger has spread to almost every country in the world thanks to globalisation, which allows it to be used in an interesting study in economics.

Although every country’s Big Mac varies in ingredients and nutritional values slightly, they are similar enough to be considered a universal standard. Therefore, the price of a Big Mac in each country can be used to find what is called the Purchasing Power Parity (PPP). The PPP is an index to show how much money in Country A’s currency is required to buy goods that cost $1 of Country B’s currency.

Finding the Big Mac index is quite simple. First, find the prices of Big Macs in two countries. Then, divide the first price by the second price (without converting currencies), and find the ratio. This ratio (i.e. the PPP) is then compared against the actual exchange rate, using percentage. As it is hard to explain in words, here is a mathematical expression of what is said above (using July 2008 figures):

  1. A Big Mac costs $3.57 in the US and £2.29 in the UK on average
  2. $3.57/£2.29 = 1.56 (PPP)
  3. Actual exchange rate: USD$2.00 : GBP£1.00 = 2.00
  4. (2.00 – 1.56)/1.56 = 0.28 = +28%
  5. Therefore, the pound is 28% overvalued

The PPP shows that the exchange rate does not show the actual value of a currency compared to another currency. As in, although the official exchange rate is $2.00=£1.00, using the Big Mac index the actual value ratio between the two currencies is $1.56=£1.00.

Even complicated economic concepts can be explained with everyday objects such as hamburgers, or “burgernomics”.