Deriving price from a framework of production in a medieval economy (ie "Can I have a 1,500 gold meat pie, please!")

Question

It bothers me in games when the price of something is seemingly arbitrarily set.

Shop owner: How much gold do you have?

Player: Er, 10,000?

Shop owner: Then that meat pie is 1,500 gold, please!

Pig Farmer in line faints

I have been working for the past few weeks developing a framework for calculating output for a medieval city/region. I want the number of cows, chickens, men, women, rich, poor etc to actually make sense. The ratios to one another should be as close as possible to actual medieval ratios.

This means I have been pouring over publicly available peer reviewed papers on this subject. I will include a list of the ones I found most valuable at the end.

I will lay out my framework and thought process so you can understand my question.

Assumptions as they come out in the comments (Thank you in advance!)

• There is enough precious metals available to have an all cash economy

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I used this article to get the size of my town. I choose 10,000 people.

Another article helped me get an average number of calories consumed from vegetables/grains and animal products.

Another article showed me how to calculate land usage and output per farm acre.

A quick example of me using the table linked in the paper above:

All of this allowed me to calculate the following:

• Land use (arable, meadow, pasture, common) in acres
• Output from farmland (wheat, rye, barley, oats, potatoes, pulses, clover)
• % of each consumed, brewed or used as feed
• Ale/beer output from brewed grain in gallons
• Count of animals (milk cattle, beef, calves, sheep, swine, chicken, horse, ox)
• Output from animals (milk, cheese, butter, beef, mutton, pork, wool, eggs)
• Many numbers came from here

With all of this, from other articles, I also have consumer baskets. Scholars have written detailed accounts of the % of a person's income spent on a basket of goods.

So I know a peasant might spend his income like so:

• Food & Drink: 59.7%
• Fuel & Light: 6.29%
• Clothing: 15.92%
• etc

I found tables like this for people of different socioeconomic classes, so I have a set of consumer spending by class as a percent of yearly income.

I have a table showing a days wages for a farm laborer in bushels of wheat that seems promising. But I don't known what my wheat should be priced at.

I also have tables and tables of price information. Again, I didn't want to arbitrarily choose a price, so these are used as reference. I have also tried using an index derived from a known, easily calculated price.

My Problem

Ok, so with all that out of the way, I feel like I am close. I feel like I have the right pieces but I am not looking at them exactly right.

Just last night, I saw that I have the number of kilograms of cheese a peasant ate in a year as well as what percent of their income was spent on cheese. Choosing a random wage, I nailed a price to that. I then went to the prices table and created an index which opened up some prices, but not enough. Often times a basket of goods just says 'Bread and flour' or 'meat' without giving me granular detail like 'beef' vs 'pork'.

I need to set a realistic wage for a day's work for a common laborer, and then I can derive the rest from there.

How do I set a wage I can be confident in to then extrapolate the rest of the wages and prices?

Some Sources

Many are linked in the text above already

• The Price History of English Agriculture, 1209-1914
• Changes in Diet in the Late Middle Ages: the Case of Harvest Workers
• The Great Divergence in European Wages and Prices - from the Middle Ages to the First World War
• International Institute of Social History - List of datafiles
• Benchmarking medieval economic development: England, Wales, Scotland, and Ireland, circa 1290
• THE LONG MARCH OF HISTORY: FARM LABORERS’ WAGES IN ENGLAND 1208-1850
• Wages, prices, and living standards in China, 1738–1925: in comparison with Europe, Japan, and India
• ‘Grain output and population: a conundrum’, Chapter 8 (pp. 386-410) in, English seigniorial agriculture 1250-1450
• Precocious Albion: a new interpretation of the British industrial revolution
• And much much more

Answer 1

The weird thing is that prices can be arbitrary, or wages can be arbitrary, but they must be highly correlated.

Say the minimum wage is \$8/hour, for argument's sake. If I make it \$800/hour, commerce does not change if I also multiply all prices by 100x, so the minimum wage buys exactly the same thing.

The people really damaged by that are the people that hold wealth. Say a loaf of white bread costs \$2.50 (as it does at my local grocery). If I have \$1M dollars in the bank, I could use that to buy 400,000 loaves of white bread. However, if prices suddenly are multiplied by 100, I can only buy 4000 loaves of white bread! I can't build a bread fort with that!

But the minimum wage worker with zero money in the bank is not affected at all, in 8 hours on Monday he is paid \$64, and can buy 26.6 loaves. Tuesday all prices are multiplied by 100, he gets \$6400, and can still only buy 26.6 loaves. He might as well be paid in loaves (as people once were).

Now we can answer the question.

You have to decide what the lifestyle is for the common laborer. Much of your research should inform this already. How many hours does he work? How much bread does he eat? How much meat? Does his shelter cost him anything? Does he pay for healthcare? Taxes? Transportation?

Try to put these expenses in terms of an item; like bread. (As I did above). At $8/hour, my minimum wage worker needs to earn about 25 loaves a day to stay reasonably healthy, sheltered, and able to continue working. You can even go beyond that, and say it is basic calories: A loaf of plain white bread generally has about 2000 calories. 25 loaves is 50,000 calories a day.

So he isn't going to EAT 25 loaves a day, he is going to trade them for meat, eggs, shelter, medical help, clothes, beer, and so on.

Now all you do is set a completely arbitrary price for a loaf of plain white bread. Call it a copper, or a penny, or a shilling or a filium. It makes no difference, all that matters is a common laborer gets 25 of them for a full day's work (which you can vary, too, up to about 12 hours, 7 days a week).

All other prices, for luxury goods or servants, and all other wages, can be computed from there. Even using modern ratios. Unskilled labor makes minimum, slightly skilled (e.g. cooks) earn 25% more, etc. You can look at national labor charts to see what various professions make; cast those in multiples of the minimum wage, and presto; you can compute their salaries in filiums per hour.

Which is the track I think you are already on.

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Afterthought: I should note the above, talking about 25 loaves, was a continuation of discussing a modern American Laborer. Such a person has many living expenses a medieval peasant would not: The modern laborer must pay for shelter, water, food, taxes galore, electricity, waste removal, transportation, much more clothing and healthcare and hygiene products than a peasant.

Many peasants lived in "housing" they built themselves; paid no taxes, paid nothing for water or waste removal, and wore one set of clothing their entire life. They paid nothing for insurance or health care or retirement. Many lived with no income at all for years at a time; they learned to sling or throw rocks and hunted for birds, squirrels, small games and edible fruit, plants, roots and nuts, they learned to sharpen sticks with rocks and spear fish.

Prices and wages DO need to be scaled to the living expenses of the common laborer in whatever time period or culture they reside.

Answer 2

Before I answer your question let me explain that this kind of analysis, when done thoroughly and completely, tends to win Mathematicians and Economists the Nobel Prize (see John Nash and the movie A Beautiful Mind). You're not going to get that quality of analysis from me and you might be over-engineering your world just a bit. But...

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I'm a Noble with a reasonably complex economy to worry about. There are roads to maintain, my troops to worry about, people to bribe, not to mention my mistresses (ahem) wife to spend money on. I have a coffer under my wife's side of the bed (woe to the bandit who tries to get at THAT coffer!) with my land's budget and it currently has 1,200 gold pieces. I'm considered wealthy and the envy of my peers.

But, I have a castle to build. It just honks my horn that Lord Jones over there has a castle and I'm not coming in second place to him. Have you seen his daughters? He'd better gold-plate that castle as their dowery. And just wait until you see MY daughters. anyway, I need 1,504 gold pieces in my coffer after a year's passed so I can keep up with the Jonses.

That means I need 42 gold in extra tax each month. I'm declaring my expenses to be 10 gold pieces each month and I need 100 gold pieces each month just to keep the coffer where it is. That's 152 gold each month.

I tax by families, and I have 2,500 families in my lands. 500 of them are peers. The rest are serfs. I collect twice from my peers as I do my serfs and I'm not allowing them to collect taxes. They can get rent, but not tax. So, I need 3,000 shares of 152 gold each month or 0.05067 gold per serf family and twice that for those mooching peers. At 10 silver per gold and 10 copper per silver that's 5.067 copper per month from my serfs and 10.13 copper per month from my good-for-nothing peers.

Using a standard told me by a Seer who claims he can see into the future (what exactly is "tie-dye" anyway?), rent is 24% of each family's average income, food/clothing/medical another 24%, savings (better known as my when-I-decide-to-give-that-Jones-guy-the-beat-down-of-his-life fund) is 10%, booze money is 5%, farm animals and tools are 14%, and my taxes are 15%. That means the average family income is 33.78 copper for serfs and 6 silver 7.56 copper for those hangabout peers.

Sometimes I need to bring a heavy hand against my merchants because they get a little greedy (that's my job, afterall) and try to gouge people. But when everything's running smoothly, the value of a cow (and therefore the straw that feeds it) is easily calculated from the available money my people have to spend.

When I need to improve the economy a bit, I'll co-opt some of my serfs to hit the mines and dig out a bit more gold. Not too much! Copper is good for serfs, silver for my honking peers — and gold for me!

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What I just did was create an arbitrary starting point. You must do that, because no economy (even really simple economies) can be "balanced" without an arbitrary starting point. My starting point was (a) the money I have to spend when everything turns bad (my coffer), (b) the money I think I'll need for next year, and (c) my own expenses. If you don't do something like this, it's almost impossible to balance out the numbers (take this from a non-accountant who once created his own corporate balance sheets...).

By starting the way I did, I discovered how much money my people had, which makes it trivial to create item prices based on how common and/or rare they are. Believe me, toothbrushes are really expensive!

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Edit: By the way. Once you've worked this out, you might want to remember that video game companies actually offer jobs to people who can do exactly this. Especially the MMORPG people. Monetization and in-game economy is no small thing... and employers will pay for the skill.

Answer 3

The classical peasant won't participate in the generate & spend relationship with currency. For the most part the income they generate is natural produce and most of the needed food, clothing and the like are subtracted from the income before entering any cycle based on currency in whatever form.

Thus, the average amount of bread, dairy products, eggs, meat and the like a peasant consumes has no correlation to the amount of income (in currency) the peasant has available. The bread is made from grain not used when seeding last. Whatever was on a peasants table is largely dictated by what they couldn't sell or when stuff would go bad. In a medieval setting before refrigeration, pasteurization and homogenization you've got about three to four days for most dairy & eggs to be consumed.

Especially milk and eggs scale really bad in a medieval setting. There's only so many people in reach of your farm that can consume non-durable food within the necessary time span. Of course, farmers know that so the twentieth chicken is actually a burden since they can't sell more eggs and the bird still eats stuff, so you gotta eat the chicken.

Essentially you can have quite well fed farmers (who mostly don't own the farm) whose production of goods they can afford to sell (after feeding themselves and paying whatever form of tax there is (likely in natural produce as well) to lord and church) is so minuscule that they never get to have much money.

Not to mention the non-currency trades going on in a medieval village. E.g. the blacksmith gets two eggs each day and fixes the plow in return when it breaks. Same goes for wages. The farmer will pay the usual harvest hands very little in actual coin but likely provide them with a cozy, dry place to sleep in the barn and food while he's working there. Medieval apprentices didn't get any wages to my knowledge either, just a place to stay and food to eat while learning a trade.

So, what I'm basically saying is, don't forget the non-currency part of an economy set in a medieval setting. It's quite a big part.

Answer 4

I'd like to agree with the answers from JBH and Amadeus but point out a couple of historical notes that might interest you. One have a look at the Domesday Book, the first land survey and census conducted by the Norman kings of England finished in 1086 if you want an idea of real medieval productivity and taxes. As an idea about where to set your prices from, grain and salt are the prime historical examples of a goods based price standards. Once you've set a basic price for a bushel of wheat, or a pound of salt, everything else is relative (based loosely on the labour involved in the material in question), the more processed the item the more leeway you have to fudge your numbers too because skilled (as opposed to grunt) labour is the most flexible of price multipliers.

Answer 5

I am answering late, but hopefully someone else sees my answer.

Like others said, prices are relative in economies. A beer may cost 1.25 bread loaves, and if a bread loaf costs 100 gold, a beer will cost 125 gold. However, there are other considerations you might think about.

For pre-coinage economies, or economies when the coins left the kingdom, this would be reasonable. The Icelandic free state traded in square yards of cloth. There was an island where the people carved on big unmovable rocks, and they traded rock shares as a currency. Grain was often used as a currency. Just look up proto-currencies to find more examples.

Let's say my economy produces 10 loaves or 12.5 beers every year. Every year all the goods are consumed. This would make it such that 1 loaf = 1.25 beers in a simple economic model. This means that if a loaf is 100 gold, and a beer is worth 125 gold, then there is a ratio of gold in circulation to the bread and beer. For every loaf, there is 100 gold. For this to happen, you need the quantity_bread * ratio = 10 * 100 = 1000 gold in circulation. Hypothetically, you could look at the production of gold coinage and the rate that people save the coinage away to get a ratio, but in reality few people saved in medieval times unless they buried their horde from tax collectors and invaders. So, sticking with a static coinage in circulation is accurate.

There is the effect where more coinage causes more efficient trade to a point. If there is only enough coinage for the cities, then the cities will trade at the efficiency and vigor of a currency economy, while the countryside will suffer the less vigorous barter economy. If everyone has coinage, more coinage won't do much. There is an equation for this, but I am on my phone now. I would guess a sigmoid curve would simulate it.

I hope that gives you insight.