Differential Asset Valuation in the Medieval Post-Talmudic Legal Literature

The Talmud’s analysis of asset valuation comprises deep insights often mixed with abstruse logic. This amalgam is likely due to religious stric-tures. Consider the issues of interest and capitalization. Biblical law pro-hibits the payment of interest on loans. According to the Talmud, even nominal interest rates are usurious and strictly forbidden by religious sanction.1 It is hardly surprising, therefore, that Talmudic scholars do not always value assets from a purely economic perspective. This is not because the Talmud does not understand interest. On the contrary, “interest is the time value of money, ” declares Rabbi Nachman.2 Nor is the concept of capitalization a problem. Indeed, when valuation involves human capital, the Talmud correctly values these assets by reference to slave markets (see Kleiman 1987). Thus, if A accidentally destroys B’s arm, A must pay B the difference between the value of a slave (in the same profession as B