Valuing Medieval Annuities: Were Corrodies Underpriced?

Abstract

Medieval bishops condemned and restricted the sale of corrodies (a type of annuity), partly on the grounds of their perceived unprofitability. The available data on the profitability of corrodies is limited and little analysed, and the episcopal condemnation of corrodies has been adopted by modern researchers. After recognising the difficulties, this paper applies an annuity pricing model to study corrody pricing. Given various assumptions, contrary to the established view, it is shown that the sale of corrodies was profitable for institutions. Finally, some reasons are considered for the negative attitude of medieval bishops towards the sale of corrodies.

Keywords: corrodies, monasteries, annuities, pensions, medieval bishops

JEL Classification: G23, N00