Why you cannot calculate the “richest person who ever lived”

In the article “The 25 Richest People Who Ever Lived – Inflation Adjusted“, Brian Warner concludes that Mansa Musa I was the richest person of all time. But, his calculations are incorrect. The fact is, there is no way to directly compare numerical wealth in the Middle Ages to numerical wealth today.

Mansa Musa IAt the top of his article, Brian says that he has calculated the net worth of historical figures based on inflation rates and “the most recent price for an ounce of gold which is roughly $1750 as of October 17, 2012.” But the current dollar value of gold has absolutely nothing to do with the purchasing power of gold when you look back 700 years ago.  Mansa Musa I was alive in the early 14th Century (c. 1280 – c. 1337). Even if we could accurately count exactly the amount of gold (or anything else of value) that he had, there is absolutely no way to come up with a numerical value for what that was worth at that time that he lived.

Understanding what gold (or any currency) was worth at the time that a person has it is, after all, the idea behind adjusting for inflation.  A dollar in the year 1800 is not the same amount of wealth as a dollar in the year 2000.  But using that same reasoning, a gram of gold in the year 1300 is not the same amount of wealth as a gram of gold in the year 2000. What matters is the value of that gold in the structure of the economy, and how much that gold can actually buy. That will fluctuate based on the supply or scarcity of gold, just as much as it will fluctuate with the supply and scarcity of labor and other goods.

That leaves us with the question: Is there any systematic way of calculating what gold or coinage was worth back in 1300, in terms of today’s dollars?

The answer is “no”, there is no reliable way to answer that question.

Wages and prices in the 14th century were highly influenced by changes in the value of money due to a high instability of the supply of money. If the silver from which pennies was made happened to be in short supply one year, then the value of the coins increased, and a penny would buy more. If the next year there happened to be an increase in the supply of silver, then the value of the penny fell, and prices fell as well. You have to remember that we’re not talking about a modern industrialized economy here: everything from mining to coin manufacture to coin distribution was much more haphazard than it is today.

Prices were also severely affected in the short term by harvest fluctuations and the outbreak of disease in cattle and sheep. In England at this time, for example, wheat might cost 2 shillings a quarter (a “quarter” was a unit of measure equal to about 291 liters) one year, and 8 shillings a quarter the next year. This means that the relative “wealth” of a person with X amount of gold or land or  coins (no matter how large a number X is) would fluctuate wildly in a very short period of time.

Also remember that the world was not as interconnected at that time. So wages and prices and the values of everything from gold to wheat to currency varied a great deal from place to place–much more so than we see today.  Even today we see that the “cost of living” is greater in some locales than others. But in a world where goods were not transported as readily across distant lands, there was almost no global answer to the question “how much is gold worth?” much less the question “how much is a quarter of wheat worth?”

Given all of these variables, calculating a single number that represents the value in “today’s dollars” of a person who lived 700 years ago is actually impossible. Moreover, it’s important to understand why. The calculation isn’t impossible because there could be errors or unknowns; the calculation is impossible because there actually does not exist one single answer to the question. They simply had a different type of economy back then, so the entire endeavor to calculate Medieval wealth in “today’s dollars” is literally meaningless.

(Hat-tip: I was made aware of this story because I heard about it on the David Pakman Show.)

 



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