Risk and return in Roman Egypt
: were markets in Roman Egypt driven by financial rationality?

Student thesis: Doctoral ThesisDoctor of Philosophy


This thesis seeks to answer the question: were markets in Roman Egypt driven by financial rationality? 4,367 financial transactions - leases, sales and loans - recorded on papyri from Roman Egypt in the period AD 1 to 350, form the data set analysed. Before conclusions as to market behaviour were drawn it was necessary to understand the underlying financial conditions in the period and a review of the available evidence for general price trends was completed and an index based on a basket of goods established. The data for the agricultural land, housing and credit markets were then analysed on a statistical basis so as to identify patterns as to the status of participants, e.g. ages, genders and locations, the terms involved, and the diachronic changes in the type and nature of the transactions undertaken. Based on the information collated, typical rates of return and the risks associated with different types of investment were calculated. This hierarchy of returns and risks was used, along with the information as to the motivations of market participants and market mechanics, to enable conclusions to be drawn. These conclusions fell into three areas which were identified as being of particular interest within academic debates on the Roman economy: the quantification of its size, its impact on society including the quality of life, and the nature of the markets it contained. The key macroeconomic conclusion related to the quantification of the economy concerned prices. The analysis revealed that prices for most goods, after a period of stability from the middle of the first century, grew from around the middle of the second century until around AD 274 at an annual average rate of close to 1%, which means that prices more than trebled over this period. This contradicts the accepted view that a doubling of prices between AD 160 and 190 was the only significant change between AD 45 and 274. The implications of economic conditions, notably real rates of investment return, on society were then considered. It was concluded that, following the theoretical framework established by Piketty, it was probable that over the Roman period wealth concentrated in the landed class, and thus that social inequality grew. Finally, the nature of the markets was dealt with and it was concluded that for most financial sectors, the pre-conditions for the exercise of financial rationality existed. However, because the nature of the markets varied, we must think, not of a single market but, of a series of sectors and sub-sectors. The unsecured loan market, of generally small, village-based, cash loans cannot be considered as a sub-sector driven by financial rationality given the financially sub-optimal outcomes for a lender. Similarly, lending of commodities had such a wide variability in outcomes, that it could only be considered financially rational for a professional gambler. The rural housing market, with its poor liquidity, conventional pricing patterns and the importance of intra-family transactions, was also not likely to have been driven by financial rationality. However, the secured cash loan and the agricultural land markets showed all the features of market sectors driven by financial rationality. The answer to the question posed is thus that it is highly probable that the agricultural land and the secured credit markets were driven by financial rationality, whilst the housing and unsecured credit markets were driven by reciprocity and redistribution. This conclusion is of relevance to the wider debate on the nature of the Roman economy.
Date of Award1 Mar 2020
Original languageEnglish
Awarding Institution
  • King's College London
SupervisorDominic Rathbone (Supervisor)

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