Financial theory and the Fremont People

In a paper that is being published later this year, Dr. Barlow and I showed that with reasonable level aversion to risk — similar to those of subsistence farmers in other parts of the world today — granaries high on the cliffs would have made economic sense even if the probability of an incursion were only as high as five percent. Construction of these granaries can be rationalized by similar levels of threat.

Hence it seems perfectly reasonable that some sort of outside threat could have motivated the Fremont in Range Creek to store maize in granaries on the cliffs. Of course there may have been other reasons as well and it may be that outsiders were not the primary reason for building the granaries. But we now know that it is possible.

I find it quite interesting that something so esoteric as portfolio theory can inform us about the lifestyles of a people who lived almost a thousand years ago and left no written record. This is one of the reasons I enjoy studying and teaching economics.

Kerk Phillips is an associate professor of economics at BYU.