The Hidden Economics Of Pirates

by Patrick Appel

Caleb Crain pens a short history of pirates and reviews The Invisible Hook by Peter T. Leeson, an economist:

Merchant sailors quietly gave in to pirate attacks because of a principal-agent problemit wasn’t their cargoand because doing so enabled them to adopt a way of life that was a hundred to a thousand times more lucrative. Snelgrave may have been under the impression that pirates forced men to join, but this was for the most part a myth, devised for the sake of a legal defense if caught. Until their final, desperate days, pirates took few conscripts, because so many sailors begged to enlist and because conscripts had the unpleasant habit of absconding and testifying against pirates in court. As for the death-defying attitude“a merry Life and a short one” was Bartholomew Roberts’s mottopirates cultivated it to convince people that they had what economists call a high discount rate. If future punishments meant so little, their wildest threats were credible.

Crain adds a few final words about pirate treasure at his blog.