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May 03, 2004

Comments

1.

"First, the economy has credits flowing out more rapidly than flowing in."

Perhaps Raph has patched the message, but he does comment that that is a result of cleaning up the remanents of a dupe bug...

Kudos to Raph for posting this data! I'm quite excited by the hints that we may see the person-to-person transaction rates posted.

Interesting to see the Tip Surcharge take a noticeable chunk. I thought most people did what I do and launder my money payments through vendors to avoid surcharges :>

- Brask Mumei

2.

Being an active player in SWG, I can definitely say that the effects of the money leaving the economy can clearly be felt. The economy is clearly in a depression, the duping hangover if you will and we are now taking our medicine. Even though only a small percentage of the players did any duping, it of course made a lot more money available to everyone. Over the past couple months, prices on nearly everything have dropped significantly. Crafters have a much harder time making money now and are having to compete harder to make less money. In contrast, this makes the missions more lucrative for fighters - the economy is shrinking overall while mission payouts and loot drops remain unchanged. This is slowly shifting more economic power to the 'adventurer' side whereas before good crafters and merchants could amass large amounts of credits far more easily than adventurers.

The interesting thing to see is how this imbalance will be fixed. Will the devs create another money supply, or will people be forced back to doing missions (which is pretty boring).

I loved Raph's comments on the post too... he specifically mentions that Ebay is a good way to track the changes that have occured in the game's economy and that since the peak in money supply this winter the $ value of credits has tripled. Thats not something I ever expected to see the SOE brass admit on their official forums :)

3.

We continue to track money in cancelled and inactive accounts. Many billions of credits "in the system" aren't really.

The pooling of mass amounts of credits on a relatively few people shouldn't be a surprise. As described in previous comments here...

The typical cycle is for people to start the game, and then either adventure (creating lots of credits in their careers), or to craft (pooling most of the credits the adventurers make onto one account), then at some point, to quit (which removes the credits from circulation, but doesn't remove credits from the graphs).

Gifting excess credits upon exit happens pretty often too, but then they just sit in someone else's account (or more gradually migrate back to a crafter's account) until that person quits.

Adventuring types find it easy to make money (just run another mission or two if you want to buy something) and so they tend not to hoard cash, but to spend it. Crafters tend to hoard cash because a) It's their "score" and b) What else is there to do with it?

Overall, I think having a strong minority of players hold all the excess cash is probably better for the game: It means that even though there are trillions more credits "in the economy" now than there were on launch day, the value of a credit to the average player remains fairly consistent. And the more "average players" there are, the better. 95% of them is probably better than, say, 50%.

4.


Crafters tend to hoard cash because a) It's their "score" and b) What else is there to do with it?

It may be just wishful thinking on my part, but this comment would seem to support this theory


I think having a strong minority of players hold all the excess cash is probably better for the game: It means that even though there are trillions more credits "in the economy" now than there were on launch day, the value of a credit to the average player remains fairly consistent.

Reading between the lines, are you saying that "trilions of more credits" in the economy is good for game play but bad for "the economy"... so if a few players are willing to act as "currency sinks" the economy, this is good, 'cause it allows the rest to continue as they were?

My question then would be, how long can this contine?

5.

Very interesting!! I also have to say Kudos to the SWG team for releasing this data.

On the topic of wealth distribution, I think many of the RL studies about unequal wealth distribution have focused on the system of initial wealth distribution. However, this data would suggest that the majority of currency in this economy is being distributed in a very controlled way, mainly through missions and NPC loot. And while I understand that there are varying degrees of currency rates that are earned on these missions, I would highly doubt that it is the same scale as the wealth distribution curve, as that would mean the top 6% of missions pay out 95% of the currency. As such, I am inclined to assume that the top 6% got their wealth either by industry or mischievousness. In either case, I think this data suggests that that the wealth distributions in this economy either have little to do with the initial currency distribution method, or worse, the more equal the original distribution the more likely this economy is to end up with high levels of variance.

In a way, this distribution looks like what I would expect at a tournament poker game where they decided to continue to re-issue more chips every 30 mins, so that all players can 'stay in the game'. You end up with one guy that should have won a long time ago, and a bunch of people that are betting what they have against the top few players hoping to get lucky on some long odds gamble.

I would also venture a guess that the 5% of wealth that the 94% currently do hold, is closely related to the rate at which currency is being created. Taken in a short-term view, this might encourage developers of some MMORPGs to try and increase that creation rate, thus encouraging the rate of inflation. I would also assume that the more 'loose' a game is with its original currency creation policies, the more likely players are to take 'high odds' gambles against the top players.

In this light, it is also interesting to think that maybe the invisible hand has decided to use 'outside markets' to redistribute in-world wealth as a means of increasing the efficiency of capital.

-bruce

6.

Riley> Description of price deflation effects.

Yep, that's exactly what one would predict.

Jeff / Nathan > Economy tends to push credits to crafters.

Maybe that's a good hook to hang a policy critique on. See, from my point of view, an economy isn't about money, it's about trade. Trade means, people specialize in different activities and as a result, they each tend to have an overhang of items that the other person needs. So they trade. This does not seem to be what's happening in SWG (or most other of these VWs). Here it looks like you've got crafters who have an overhang of goods, and adventurers who want the goods but have nothing to offer in return. So there really should not be any trade. At least, according to theory.

In practice, the crafters accept the fantasy that the money is worth collecting - it's a 'score', or, they are going to sell it on eBay - so that does give the adventurers something to offer: through their labor, they basically mint this coin. If eBay broke down, or if crafters decided they had nothing to buy with their money and didn't think of it as their score, then there might not be any trade. But that doesn't happen, so it works. It's not a perfect system, but it functions.

7.

> My question then would be, how long can this
> contine?

Probably forever*, because players don't play forever. The credits eventually really do leave when a player does.

*Forever = "The life of the game".

How long does it take a really unstable economy to collapse when there's some degree of monitoring and moderation (say, Constant additions of new things to do with your money)?

MMO economies only have to last about 10 years, and that's if you're lucky. I think you could babysit just about any economic situation through a 10-year period.

8.

A couple comments:

"I'm more convinced than ever that virtual world economies are such strange beasts that we (meaning academic economists) don't even know what 'health' would be. "

I think that the main differences that you need to account for in adjusting your analysis are the following:

1) In VWs, unemployment is nonexistent. In all systems I've played every avatar has a method for making cash, usually at least vaguely tied to the level of that avatar.

2) Raphs numbers account only for cash movement, and do not account for barter, DIY gather and craft, or player/guild socialism (items being passed on or given to an avatar for the "common good").

3) Similarly, Raphs numbers of cash accumulation by players again account only for cash and not for total wealth of a character. Value of houses, weapons, armor, clothes, powerups, droids, pets, vehicles and other items held account for most of the actual "wealth" in the game, but are not reflected in the statistics.

4) No VWs to my knowledge have any systems in place for an "estate tax" or inheritance system. In other words when characters are deleted (the only true death in a VW, as usually even an account reactivation counts as a resurrection) their accumulated wealth disappears unless they specifically give it away. Again, with the exception of the credits, these transfers can not be tracked.

Example: I've been playing for 1 month (true). My character, Opo'lo Lix of the Corbantis Server had approximately 30,000 credits (2 hours of play max) when he logged out. He also had a suit of armor worth approximately 60k, a vibro knuckler and pistol work a total of 30k, a house worth 6k (another VW oddity... a gun is worth more than a house?), a Swoop Bike worth 26k, a bantha mount worth uhh... 15k? Three Droids worth a total of maybe 35k (one is worth 25k, the others are harder to know), and a datapad worth of Creature Handler pets that have a total worth of between 40 and 60k. This doesn't count the looted/quested schematics, artwork and furniture in my house, nor does it count the 30-50 stacks of resources I have in the bank and in my house.

Ok, this is getting long. Sorry, I can go a bit overboard with the examples...but maybe this makes everything just a bit more obvious.

Opo'lo Lux's total wealth is (roughly and a bit conservatively) estimated at over 250,000 credits, but using the tool the developers use, he would be listed as having 27,000 credits, in other words his actual wealth is reported at approximately 10% of its true value.

Extrapolating based on the people I've met, my guess is that for most players there is a similar theme to their finances, but that as their character matures the total percentage of their wealth expressed by the amount of credits they currently posess will actually dwindle, i.e. a character that's been playing for a year will own a number of credits that accounts for less than 1% of their actual wealth.

My feeling is that a small percentage of players simply packrat money. Some are probably working for the infamous Yantis (who sells credits for cash at playerauctions.com), some are probably saving up for a big ticket item (single rare loots can sell for well over a million credits) or a project (the soon to be obsoleted holo-grind which unlocks the jedi slot)., and some just powergame and accumulate cash because they don't care about a house, decorating, etc.

So I think that the "richest" 6% are probably not really participating in the economy much (or at all) and given that there is not a fixed amount of money, it doesn't really matter if a few people hoard even billions of credits (unless they suddenly unload them quickly, which could cause inflation spikes I guess), because the money hoarded is not being kept away from others and is not accumulating interest. It just gathers dust.

That's enough thoughts for now I think. Maybe more later.

9.

Bruce>
>On the topic of wealth distribution, I think
>many of the RL studies about unequal wealth
>distribution have focused on the system of
>initial wealth distribution.

In the real world, old money magically creates new money. Economists make up words to describe this, because it's such a mysterious process that human words just won't do.

In the VW, 'labor' (or 'fun' if the game doesn't suck) makes new money. Old money just sits around griping about how much better things were in the olden times, and how rotten kids these days are.

So an economic disaster in the real world isn't necessary an economic disaster in the virtually-real world...

10.

When a company lets out data like this, I think they deserve a round of applause. It's sort of like when an oil company releases a well-log. Normally, they're too secretive to do that, but when they do, it's a big help to geologists.

In The Sims Online, there was a massive cheat that went on for months, and EA would not even allow any mention of its existence on the message boards, much less a discussion of how it affected the economy. They've loosened up a little bit, but their basic strategy is still to keep as much as possible secret. Getting any info from EA is like pulling cats' teeth.

11.

In practice, the crafters accept the fantasy that the money is worth collecting - it's a 'score'
This is the basis for how currency works in all economies though :) Why is a $100 bill valuable... only because someone else will take it in exchange for durable goods - the paper itself has no value and as soon as people drop the 'fantasy' that a small peice of paper is worth durable goods, the economy would fall apart real quick!


Extrapolating based on the people I've met, my guess is that for most players there is a similar theme to their finances, but that as their character matures the total percentage of their wealth expressed by the amount of credits they currently posess will actually dwindle, i.e. a character that's been playing for a year will own a number of credits that accounts for less than 1% of their actual wealth.

The feature really was about cash flow. While the barter side of the economy is important and there has to be other goods exchanging hands and retaining value - the actual value of the currency is vital to a complex market like SWG and can be a valuable indicator to how the economy is going to hold up over the long term. Most MMORPGs do not seem to get this and allow mudflation to run rampant... devaluing their own currency and causing a lot of balance issues. Of course, for an effecient market economy to work, the currency needs to be more stable than it has been in SWG, but the fact that they are at least deflating the economy and not letting it spiral out of control is a big step forward. As well as the fact that they are making that sort of information public... imagine if they made the daily money in/out flow stats public on a regular basis...

12.

"The feature really was about cash flow. While the barter side of the economy is important and there has to be other goods exchanging hands and retaining value - the actual value of the currency is vital to a complex market like SWG and can be a valuable indicator to how the economy is going to hold up over the long term. "

I agree, my comments were added in order to provide another side to Edward's fear that a negative cash flow to the economy is a bad thing. I guess I got a bit rambly, but my point was essentially this:

In a VW as in RL, cash is a temporary abstract of real value. In real economies there is an actual limit to the amount of wealth that exists, and this wealth must move around in order for economic health to ensue.

In a VW wealth is truly limitless (although it does lead to mudflation), and thus it seems more important to have a negative cash flow in the economy, because in most cases the game (i.e the fun) is based on constant acquisition driven by the need for constant upgrades of virtual tools.

This is why I brought up the need to analyze not only the amount of credits an avatar possesses, but the sum total of their accumulated wealth, and how often that grows and shrinks. I believe that without that part of the puzzle it will be almost impossible to see exactly how healthy a MMORPG economy is, because the rate of change (improvement) of individual characters equipment and possessions is probably a better indicator of players having "fun."

Which brings us back to the logic of late capitalism, but that's another story =)

13.

Edward:
..if crafters decided they had nothing to buy with their money and didn't think of it as their score, then there might not be any trade.
---

Except that, unlike a real economy, we do this for fun, not to feed our families. I'm a crafter because it's fun, and now that I've got a few 10s of millions (more than I am ever likely to spend) I continue to craft & sell stuff, because it's fun. Were I this rich in RL I'd retire, because RL work is, well, work!

14.

greg:

since you have more than you need can you spare me some credits? a few mil will do

if yes... lets meet in game.

if no...why?

do you have some percieved value attached to those credits you don't really need and gained thru "fun"? (sentimental or RL$...or you think you'll need them later for 'retirement') if so that what makes them valueable to others who do not have either the time nor the patience to go out and earn but still want credits.

just a thought!

15.

> can you spare me some credits?

Wait in line. I got a guild and a player city to support!

Which is of course the point - the value of credits is how I can use them to enjoy other, less mercantile, aspects of the game. And how I can use them to help others (which is yet another way to enjoy the game, and not unimportant in an MMOG).

Which is probably what I'd do if I had $10m real-life dollars, too. The difference is I have RL responsibilities that I can't avoid. In-game, I can chuck the crafting caper and go become a poor dancer or explorer or whatever with no consequences.

Interesting (but probably unanswerable) question: Are people more generous / philanthropic in an MMO than in RL?

16.

Ted> "See, from my point of view, an economy isn't about money, it's about trade."

So, I'm not sure why you are so quick to discount the role of money in an economy here.

If economies are simply about trade why have any currency at all? Surely it's just as easy to keep score in woolly hides as anything else.

If we are to say that the currency only has sentimental value, why all of the Ebay activity? Are players buying high scores? I am inclined to imagine they are buying utility, or actual value, in which case my first reaction would be to think that the currency is playing a very active role in the economy. If currency has little value, are prices as a method of market communication not being used? I can't imagine an efficient modern market that communicates without prices, or one that is more efficient by not communicating through prices. Are resources not scarce? I guess if resources were not scare, we might be able to discount the need for prices to effectively communicate production and allocation demand. If the design is simply about increasing trade, without increasing the efficiency of the market by means of those same transactions, what is the purpose of that trade?

Jeff / Nathan / Ted> Economy tends to push credits to crafters.

I think we may need to be careful with causality here. While I would agree that there may be a strong correlation between crafters and credits, are we sure that the economy tends to push credits to crafters, without pushing those that want credits into crafting? Simply saying that because there is a correlation, and because there are a few cases of credits being pushed to crafters, I think we need to also be careful not to discount the possibility that credits may have pushed some into crafting.

Even so, maybe I am just missing something here. How are we explaining the billionaires again? They are crafters that love crafting so much, that they just happen to accumulate billions of worthless credits that they sell on eBay to people that are willing to pay real money for them because... why? Are we assuming that the players that buy this currency are neither the currency magnet crafters, nor the currency farming adventures? So, who are they, and why are they buying credits on eBay? Again, I am a bit more inclined to believe that the top 6% got where they are because of their industry and ingenuity, and not by luck or any other random circumstantial means. From what I have seen on eBay and in SWG itself, I am also inclined to believe that prices, thus the currency, are still playing central roles in the market, and in the economy as a whole. As such, I am somewhat disinclined to think that the health of a virtual economy can simply be measured by historical increases in trade transactions, without also evaluating prices, the money supply and wealth distributions.

-bruce

17.

In SWG you have the 'miners' who pay architects (once) for a harvester, and then run that harvester forever collecting and selling the best resources which are pulled out of thin air. So that's a "faucet class player" right there.

Then you have elite crafting classes (Weaponsmith, Armorsmith) who depend on miners for ongoing supplies of good resources - but on nobody else. What they make is so valuable and so necessary for the other classes that they accumulate ridiculous wealth if they stay at it.

The other classes are basically 'enjoyment classes' in the sense that there's no particular reason to become one (other than the hologrind) except for the enjoyment of the game.

The other factor to consider is that many power players run more than one account and create 'microeconomies' of their own. Cash is treated as a player resource, not a toon resource. Many of the top smiths in the game deal solo everything but the final sale.

18.

Vertical integration indeed plays an important part in serious crafting. Unless a crafter has a personal relationship with a supplier of needed resources, it's just too hard to depend on them for what you need. Oh, some do buy from others. I do at times. But it's a subsidiary activity. I will not place myself in a position of depends on others for necessary supplies in an environment where external schedules, play styles, and work/play paradigm variances result in frustration.

To be a good crafter one needs control. That means vertical integration, or very tight coupling to reliable suppliers. The latter are uncommon and require a large investment of time and effort to find, large enough that I, and many, would rather put that time and effort into becoming our own, reliable suppliers.

Oh, does that mirror real life? Hmm, you mean megacorporations buy up suppliers?

They also divest themselves of them, at times. And if I trip over a reliable supplier, I might well divest myself of that part of the process. I have, from time to time, acted as supplier for others, but wholesale is somehow less satisfying than retail.

But this is somewhat OT from the cash flow figures Raph released. I need to go study those. I've only glanced at them.

Then I need to go find some rancors to sample so I can work on making my dream pets...

19.

It's gratuitously off-topic, but I'm a best man for the first time in two weeks and Liz Klastrup just pointed this out: Wedding planning in SWG. I always wondered what Wookies wore to weddings... Crossing to the other Star ___, here's a putative Klingon wedding to boot, though I guess Paramount might have a veto power?

20.

Just wanted to say congrats to TerraNova.

Obviously mainstream media is now reading this Blog.

https://www.wired.com/news/games/0,2101,63363,00.html

-bruce

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