10/30/12

Indifference Principle

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Emperors of Ancient Rome knew their citizens would easily mob, and so they would make sure to give the citizens free food and entertainment. Roman citizens would be amused with public baths, chariot races, and of course gladiator fights. In an era when ordinary families spent at least 60% of their income on food, the free oil, grain, and wine was especially appreciated. They would even occassionally give their citizens direct cash, which was referred to as largesse. Emperors were even known to cancel debts, and even destroyed the records of those debts.

Did these free goods and largesse actually make Roman citizens wealthier? Probably, but not as much as one might expect. To receive these benefits one had to live in Rome, and the more free stuff you could obtain in Rome the more you would be willing to pay for a residence in Rome. One must expect that landlords were able to collect higher rents in eras of generous emperors than they would under stingy emperors. In fact, the price of everything was probably higher due to the Emperor's generosity. The price of wheat was four times higher in Rome than Egypt. It is even conceivable that for each denarii (Roman currency) a citizen received the money they paid for food and lodging rose by almost a denarii.(M1)

Video 1—The Generosity of Roman Emperors (from The Fall of the Roman Empire, 1964)
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While it were the Roman citizens who directly received the largesse, it was probably the landlords who benefitted the most, regardless of whether they were citizens.

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Not only did the cost of basic foodstuffs rise, but housing became so dear in Rome that the annual rent of a dingy hole in the city would buy the freehold of a fine house and garden in a town in the countryside...Free games and circuses, free wheat, cheap wine, cheap baths, largesses, sportulae and all the other fringe benefits of life in Rome engendered a consumer surplus that made Rome something of a cornucopia, but also produced steep inflation.

—McLynn, Frank (2009-08-20). Marcus Aurelius: A Life. Perseus Books Group. Kindle Edition.

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References

(M1) McLynn, Frank (2009-08-20). Marcus Aurelius: A Life. Perseus Books Group. Kindle Edition.