Pindyck, Rubinfeld. Microeconomics (2017 9 ed). pp. 314-315.

enter image description here

  1. Etymonline substantiates that 'rent' originally didn't mean the microeconomics meaning overhead: no surprise, as microeconomics is a recent discipline. So please see the titled question. Why worsen the ambiguity and polysemy of 'rent', rather than using some other word?

  2. Is Economic Rent related to the mainstream meaning of "payment for use of property"?

  • 1
    $\begingroup$ Unfortunately it's even worse than that. Even within economics, there isn't a single widely-accept definition of the word rent. The one you quote by Pindyck is merely one possible definition that might be useful in the context of his textbook, but not used by other economists in other contexts. $\endgroup$ – Kenny LJ Sep 7 '18 at 7:45
  • 1
    $\begingroup$ There is for example the term rent-seeking, a term that is perhaps most closely connected to Gordon Tullock. And Tullock himself had a very broad definition of what this meant: "My suggestion is that we use the term "rent seeking" (and I always have) solely for cases in which whatever is proposed has a negative social impact" (1989). $\endgroup$ – Kenny LJ Sep 7 '18 at 7:52

Note that the Etymoline page you link traces the origin of the word rent as meaning, more generally, "income revenue". Here's their definition (my emphasis):

rent (n.1) "payment for use of property," mid-12c., a legal sense, originally "income, revenue" (late Old English), from Old French rente "payment due; profit, income," from Vulgar Latin *rendita, noun use of fem. past participle of *rendere "to render" (see render (v.)).

This meaning (income revenue) is quite close to the use of the term rent by economists—i.e., an income arising from private control of some scarce factor of production.

Indeed, if we consult the Oxford English Dictionary (which I usually take as the definitive reference on the language), here's what we find in the first entry:

1. b. Revenue, income. Also fig. Obsolete.

The OED has examples of the word being used in this sense as late as 1783. Meanwhile, the first recorded usage of "rent" in the sense meant by economists is 1662. So economists didn't simply invent a new meaning for the word rent; they adopted the word because, at the time early economists were writing, it meant exactly what they wanted to say.

The more modern meaning of "payment for use of property" is essentially a special case of the older, more general meaning of the word rent. Indeed, such a payment is an expense for the payer but an income for the recipient.

If a recipient owns an apartment and earns an income ("rent") from letting it out to a tenant then s/he is earning rent both in the common modern sense of the word, and in the sense described by Pindyck and Rubinfeld. So the usage is clearly related. It's just that this situation (someone earning an income because they own a scarce factor of production) is somewhat more general than the simple contexts in which the word rent finds every day usage.


Your Answer

By clicking "Post Your Answer", you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.