The Prudent Village: Risk Pooling
Institutions in Medieval English
The prudent peasant mitigated the risk of crop failures by scattering his arable
land throughout his village, Deirdre McCloskey argued, because alternative risk-
sharing institutions did not exist. But, alternatives did exist, this essay con-
cludes. Medieval English peasants formed two types of farmers’ cooperatives.
Fraternities protected members from the perils of everyday life. Customary poor
laws redistributed resources towards villagers beset by bad luck. In both institu-
tions, the expectation of reciprocation motivated farmers with surpluses to aid
neighbors with shortages.
eirdre McCloskey’s theory of the prudent peasant has three tenets.
Scattering farm fields reduced the variance of crop yields and thus
the risk of starvation. Scattering farm fields reduced average crop yields
and thus peasants’ incomes. Scattering farm fields was the only way in
which medieval English peasants mitigated risk. Translating the tenets
into terms of portfolio theory forms the foundation of McCloskey’s
model. The risk to each farmer as measured by the variance of total out-
put was reduced by diversifying holdings among many small plots fac-
ing different weather, weed, water, rodent, insect, and soil conditions. If
one plot did poorly and another did well, a farmer could still harvest
enough grain to survive from all of his plots put together. However, di-
versification was expensive. Scattered holdings yielded 10 percent less
grain than their consolidated counterparts. So, scattering entailed an ex-
change of return for risk. The prudent peasant chose to scatter his farm
fields to protect himself and his family from idiosyncratic agricultural
shocks because better alternatives did not exist. Peasants had no better
way of protecting themselves from idiosyncratic agricultural shocks.
The Journal of Economic History
, Vol. 65, No. 2 (June 2005). © The Economic History
Association. All rights reserved. ISSN 0022-0507.
Gary Richardson is Assistant Professor, Department of Economics, University of California
at Irvine, 3151 Social Science Plaza, Irvine, CA 92697-5100. E-mail: firstname.lastname@example.org
I thank seminar participants at UCB, UCLA, UCI, and USC, the editors of this JOURNAL, and
several anonymous referees for comments that improved all aspects of this essay. I thank the
All-UC Group in Economic History, the Social Science Research Council, and UC Berkeley’s
Department of Demography for financial support. Doris Sum provided exceptional research as-
For a recent rendition of McCloskey’s theory, see McCloskey, “Prudent Peasant.” The
original version appears in McCloskey, “English Open Fields.”