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Norrath Economic Report Now Available
Edward Castronova writes "Some months ago, Slashdot posted a note about on a survey I was doing for a report on the economy of EverQuest. The report is done and can be downloaded (Scroll down for the Document Download button). Tidbits: Norrath's GDP per capita is higher than that of China and India; its currency sells for about a penny per platinum piece, which makes it more valuable in $US than the yen; a typical person can make about US$3.50 an hour working there by farming the bots and selling the loot; the deflation rate is almost 30 percent annually. There's also some microeconomic analysis and an overview of the MMORPG market. Comments and reactions appreciated. Thanks, Edward Castronova, Associate Professor of Economics, Cal State Fullerton."
I don't know how one could be on slashdot and miss EverQuest, or not know what an MMORPG is. So definition time.
First, MMORPG - Massively Multiplayer Online Role Playing Game.
Everquest - Although I've never played, Everquest is a huge fantasy role-playing game which has monsters, characters, a running economy, etc. I've avoided it primarily because I used to blow enough money on Magic: The Gathering cards and know and addictive game when I see one.
Everquest characters at least used to be auctioned on EBay for quite a lot of money.
The power of accurate observation is commonly called cynicism by those who have not got it. - G.B. Shaw
So when are we going to be able to exchange platinum pieces in bureaux de change? And has anyone got a page showing the currency against the dollar/Euro?
But the idea of these virtual economies is quite interesting. How about using them to experiment with possible economic models? Why not set up a modern-day game with different shards representing economic models and see which one works best? The US government or the EU could fund it. Players could play for free and the government could see how they'd react to e.g. different interest rates.
OK, it's a bit stupid, but it would be a cool experiment.
Let's see an analysis of the Diablo II (+ expansion) realms economy, starting from 1.01 till the latest duping craze.
Perhaps its because I dont play Everyquest regularly, but I really *dont get* how the EverQuest universe has a deflation rate of like 30% annually...
I mean, theoretically, as more people play and level up characters, wouldnt that increase the general money supply, thereby causing *inflation*?
Plus, from the macroeconomics courses I have taken it seems like deflationis really hard to pull off, and requires people not to be buying stuff and a *loss* of overall money as compared to overall goods/items.
Maybe deflation is possible if less and less people are playing everquest (less *active* money available, therefore prices go down) but from talking to my evercrack addicted friends it sure doesnt seem this way...
typo? or more explanation?
Not that I mind... not at all.
But I must say this is the geekiest thing I have ever read on slashdot over the past 6 years...
You guys can still surprise me.
-da5id
I can play around 16-18 hours a day, and i need a base monthly fee of $60 dollars for the Internet and EverQuest accounts, then after that you can pay me for the number of hours i have worked(played) and everything in the game i gathered will be yours ofcourse, too sell or to keep as thee likes.
Quazion.
But usually in a (MMO)RPG, money has a very much more "come in - disappear out" existance than in real life. Money usually "appears" into society through finding treasure, monsters dropping gold (or items tradeable to gold) or value added (crafters making items) or rewards for quests/tasks, and disappears through every non-player, like healer services, merchants (buy cheap, sell expensive), leveling/training etc. Inter-player trades don't change the total amount around.
It's very possible that more money is spent than what is brought into the society. This would lead to deflation. Just like in real life I'd think this was bad for a game-world economy, but unlike real life Everquest has every opportunity to change it if they feel the need, so if it works for them, fine.
Kjella
Live today, because you never know what tomorrow brings
You get money when you kill things, yes.
But the main reason for *deflation* is that fact that items that were rare, and therefore people would pay a premium for become more common over time, and therefore lose their value.
Prices become cheaper over time, not more expensive. Money needs taking out of the system to make prices stay *up* not to reduce them. This works because if people need money more, they are more likely to sell their stuff. Otherwise people don't bother.
Sig is taking a break!
What I'm wondering is whether a "real world" economy and a virtual economy are strongly coupled. So, if the virtual economy collapsed, would it affect GDP of real countries? In this case, no, because the amounts we're talking about are tiny. But if the "Entropia" project mentioned towards the end of the report were to succeed in its aims, perhaps it would.
:)
Would economic trends in the real world influence the virtual one? In this case yes, to some degree; if people can't pay their subscriptions, they can't exist in the virtual world and production will fall. Consider this quote:
> It is important to stress that the external
> market for Norrathian goods is
> underground. Sony has stated that Norrathian
> items are its intellectual property
> (Sandoval, 2001). Trading these items for US
> currency is considered theft. Nonetheless,
> trade goes on.
Scary, no? Enforcing such a law would be equivalent to forcing the devaluation of the virtual currency. So, the virtual world economy would continue to function, but with its ties to the real world (partially) severed.
Does that bode well for Entropia? If the virtual items and currencies are the (intellectual) property of one individual, or corporation, or government, then can virtual economies be any use at all?
Or, to turn that on its head, can EverQuest be used as a model for the distribution of intellectual assets in the real world?
Having read that last sentence, I'm sure I've had too much coffee.
These sigs are more interesting tha
Given that dragons do exist on Norrath, you really have to openly wonder how that would effect the economy of that place.
Their greed and the threat of extortion ("Give me all your town's treasury or you will all be eaten") could have some very interesting effects on the economy of any population center in that world. Dragonslayers will be paid handsomely, that's to be sure. ^_^ The closest Earth equivalent is a protection against what amounts to piracy.
An interesting question would be how has the introduction of horses affected the economy.
For those that don't know, the latest upgrade (Shadows of Luclin) introduced horses to the game. You can buy a horse which lets you travel fasters. (And look cool).
The thing is, they are *very* expensive. The cheapest one is about 10000 platium for a slow horse going up to well over 100,000platinum for a fast one.
Even the cheapest one is more than the vast majority of players can afford and the expensive ones only a few people can affort at the moment.
I'd be interested to see how this affects the economy.
Obviously it's a huge money sink, which should reduce the prices of things. (If people have spent all their money, they won't pay so much when they want to buy things)
But also, it means that many people have got all the old junk they had in the bank and started selling it. So does this reduce prices as there are more for sale, and people want whatever they can get, or does it increase prices because people want the money to buy a horse and so are unwilling to part with items for a bargain price.
It's interesting. But I have no answers.
Sig is taking a break!
There are about 40 servers now, and prices vary between them. It would be interesting to see an analysis of this - to see if things end up differently although the game is the same. Of course the ecomony is so differnt from a real one that it probably isn't very useful, but it might be interesting to see.
For example, I play on "Antoinus Bayle". Which is the only server outside of the USA (it's in the UK) and people transferred to it from all of the existing servers. The economy on there is now weird with prices fluctuating dramatically from day to day. I suspect because people have different ideas of what things are worth brought with them from their old server.
Sig is taking a break!
Excellent!
We have an analysis of the (broken) economy in Ultima Online @ The In-game Economics of Ultima Online
And this story describes EQ. We just need a paper discribing the history of D2's economy (i.e. the ramifications of the massive dupes this last weekend will have, the SOJ gamble trick in the early versions, etc.)
Okay, this seems to be a point of confusion from the comments I have read.
30% deflation means that the currency of EverQuest can buy more EverQuest stuff every year.
30% inflation would imply that your same amount of EverQuest money would buy you less EverQuest stuff.
Thus, the value of items in EverQuest depreciate drastically over time, in opposition to the real world. As many people have pointed it, this is because items in EverQuest that were once scarce become phased out by new items that are better and replace the old high value items.
Thus, if you hold large quanitities of money in EverQuest, its better to hang onto it for awhile before making a purchase, because you will be able to buy more later. However, if you hold large quantities of valuable items, you'd better sell them fast, because they are only going to lose value over time.
This is exactly correct. A great example is the Wurmslayer. This is a weapon that used to be one of the very best in the game. Ignoring the fact that that is no longer the case, let's look at how it came to be valuable in the first place:
It requires a quest which involves killing a fairly tough dragon. So, only people who are high level and can call on a few other high-level folks to help will have the item. Also, the dragon only shows up ("spawns", in the lingo) infrequently, so this further restricts supply.
Ok, so you have very few of these, and they're hotly contested. This jacks up the price and people who do the quest get well rewarded.
After a few months, however you start to get secondary sales. People get better weapons (their "epics") or they decide to stop playing a class that can use such a weapon, so they decide to sell it. This creates a second wave of availability from folks who expect to take a little bit of a loss from what they paid (sellers rarely expect to make more money than what they paid in EQ).
So, now the price bumps down a notch, but it's still fairly high, and rewards those who do the quest well. However, as time goes by and more people do the quest, you begin to reach an equilibrium where there are more folks selling Wurmslayers second-hand than there are doing the quest. Now, the price can drop BELOW the level where it's worth doing the quest at all!
In the end, an item that started selling around 5-10k is now down to about 2k after just 2 years since the expansion's release.
More dramatic drops happen when items first come out in an expansion though. The recent release of Shadow of Luclin created a flood of neat new items people were willing to pay a great deal for until they realized that they were relatively common.
The world of norrath has alot if inflation in fact, because the money supply is infinite. However, the individual items depreciate faster than inflation is going up.
The way to tell that there is inflation : Compare the tier-1 item prices at any given time.
For example, a year ago, what was the best one handed weapon, and what price did it go for. Today, what is the best one handed weapon, and what is it going for. The price is more correct? Thats inflation.
There is no deflation. There is depreciation, coupled with inflation.
EQ is not a PvP game. There are servers that are PvP, with different rules (the original, Rallos Zek, is wide open PvP within x levels of your own. Later came team based PvP, and most recently alignment based PvP).
The fact of the matter, however, is that EQ is not designed for PvP and so PvP sucks.
Scarcity of resources is a nifty concept. It'd work great for my guild - since every other guild on our server is 9 months behind us. But that's rather unfair to others.
Currently items are removed from the economy by making them NO DROP - that is, once you loot the item off the monster's corpse, you can't trade it, sell it, give it away, drop it, etc. You either wear it, keep it in your inventory/bank, or destroy it. It's not a perfect solution, since it just means that all the droppable items of lower quality get sold more often, but it does keep the highest end items restricted to those who have earned them and reduces twinking.
Oh, and interest would be bad. Deflation is GOOD for the EQ economy. It's the ONLY way things fall out of the game really. I currently have over 600,000 platinum in my bank, and have another million or so worth in items to sell (I'm the guild treasurer). At one point my guild controlled 40% of all the platinum on the server. You really want us earning interest on that?
How do we spend all that cash? Well, burning 10-20k per day in peridots and other reagents is one way. On the rare occasions that a total wipe out demands necro's doing corpse summons that costs another 5k or so. And there's the odd items, quests, etc. that can suck up plat. I expect for there to be many large money sinks in Luclin still.
Not exactly.
First, recognize that the original article is wrong. The game does not have deflation.
It has inflation, coupled with fast item depreciation. The depreciation occurs faster than inflation. Thus, you do not have the ideal situation in which to bank money... you have the WORST situation in which to bank money. Any goods you buy will be worth 30% less in a year... you did not gain money, you lost it.
Your best investment, as an EQ player, would be to sell your character, then buy it back in a year for 30% less than you sold it for.
Raven
"I will trust Google to 'do no evil' until the founders no longer run it." Hello Alphabet.
What you've suggested is that there is depreciation of the value of items coupled with inflation (meaning depreciation in the value of money). These are opposite trends, and are mutually exclusive. Why? Because item values are defined in terms of the value of money, and the value of money is defined in terms of what items it can buy. A change in one means an opposite change in the other. (Note, once you start stating the value of items in other terms, like how quickly an item helps a given character kill a monster, that's another matter entirely.)
This is like the well-known equivalence of mass and energy. They are the same thing, just different forms. In the same way, items and money are the same "thing" in terms of fungible value, just different forms. And, just as in physics, you must pay a price to change from one form to another. However, the shoe is on the other foot here--the seller pays the price instead of the buyer (by selling at a lower cost than the item cost initially).
What the author suggested was that items become cheaper over time because there is an influx of items of increasingly greater value over time. There is no similar influx of money into the world (AFAIK)--you must sell items to make money. If you could mine platinum to make money, then things would be different. What this all boils down to is that making money is predicated on finding items. Since the influx of value based on money into the world is small compared to the influx of value into the world based on items, there is a pressure on players to only spend within an absolute range of money for any item. In other words, you have a range of money valuation that ranges from 0 to X, and you have to fit increasingly more items within that range in a marketplace.
I believe all of this was exactly what the author described--if you keep a given amount of money, it increases in value in terms of items over time. Meaning, over time, you can buy more stuff for the same amount of money.
Again, it's another matter entirely if you start stating that a given amount of money buys an increasingly smaller amount of "badass-ness" for your character. This is thinking of item values in terms of their utility. And this is exactly how most characters think of items--that's where the fun of the game is to begin with. But, it's the switching between the two valuation models that confuses everyone I think.
The only certainty is entropy.