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 argued that the sale of corrodies was financially profitable for institutions. Finally, some reasons are considered for the negative attitude of contemporary and historical opinion towards the sale of corrodies.