Human sacrifice, the original negative interest rate The abstract from the latest paper by Peter T. Leeson entitled "Human Sacrifice" (H/T Tyler Cowen at Marginal Revolution): This paper develops a theory of rational human sacri fice: the purchase and ritual slaughter of innocent persons to appease divinities. I argue that human sacri fice is a technology for protecting property rights. It improves property protection by destroying part of sacrifi cing communities" wealth, which depresses the expected payoff of plundering them. Human sacri fice is a highly effective vehicle for destroying wealth to protect property rights because it"s an excellent public meter of wealth destruction. Human sacri fice is spectacular, publicly communicating a sacri ficer"s destruction far and wide. And immolating a live person is nearly impossible to fake, verifying the amount of wealth a sacri ficer has destroyed. To incentivize community members to contribute wealth for destruction, human sacri fice is presented as a religious obligation. To test my theory I investigate human sacri fice as practiced by the most significant and well-known society of ritual immolators in the modern era: the Konds of Orissa, India. Evidence from the Konds supports my theory"s predictions. We guess the message is that economies become self-sacrificing when it suits their end objective of protecting property rights. So, better to give up a little now than to run the risk of losing everything in a major war, revolution or social upheaval. You could also describe it as the earliest manifestation of the negative interest phenomenon. After all, a negative interest rate is all about voluntary capital destruction - sacrificing a little bit of principal today for the opportunity to protect the rest of your wealth in the haven of safe assets. Giving up a little to ensure the rest of what you've got remains yours. A poignant thought from the conclusion: Destruction depresses destroyers" expected wealth, undermining would-be plunderers incentive to aggress against their property rights. Human sacri fice is a method of such destruction. By trading valuable property for human victims and then slaughtering them, sacri ficing communities destroy part of their wealth. Human sacri fice isn"t only rational in this context. It"s socially productive. When conflict is sufficiently costly, the wealth lost in violent clashes without human sacrifi ce exceeds that which is destroyed via human sacri fice. Related links: The end of artificial scarcity - FT Alphaville Pariah profits in an age of "negative carry" - FT Alphaville Outing the aluminium squeeze, Deripaska style - FT Alphaville Risk premium or deflation charge? - FT Alphaville