It's Estonia, Basically. Or Maybe Cote D'Ivoire. OK, Malta.
Last August, our intrepid econometer Dr. Ted gave us a back-of-the-envelope GDP for the virtual world economy that pegged it at about $4.74 billion, or roughly level with Namibia. It’s time for an update.
I bring new numbers to the task, and a new methodology. Where Ted took his early finding of a $2000 GDP per capita for EverQuest and generalized from there, I start with a different piece of his data: the ratio between real-money trades, or RMT (an excellent bit of jargon just introduced by commenter FantasyMeiser) and total GDP. For EverQuest, Ted gave an eBay market total of $5 million, but for total RMT it’s probably best, as a rule, to double that, for $10 million. The GDP was $135 million, and the RMT:GDP ratio, therefore, was 1:13.5. Assuming that ratio holds constant across all MMOs, we can then extrapolate from any given RMT to a GDP 13.5 times as large.
But what figure to use for total worldwide RMT? Ted has given a “conservative” estimate of $100 million, but again that’s the total for eBay sales (plus ItemBay in Asia), so best to double that to $200 million. On the other hand, Steve Salyer, CEO of IGE (and yes, the score is 5 so far for those of you playing TLA Bingo) (well, 6 now) says it’s $880 million. Ted is probably more objective, Steve is probably better informed, so let’s split the difference and call it $540 million.
Worldwide MMO GDP, therefore, is $540 million times 13.5, or a booming $7.29 billion!
Now for the rankings. But here we run into a bit of a philosophical problem. The traditional method for comparing one gross domestic product to another simply translates the two GDPs into U.S. dollars at current exchange rates and ranks them accordingly. But this turns out to be a poor way to compare relative wealth, since a dollar buys a lot more in Mexico, say, than it does in France. So now your hipper economist prefers to reckon GDP values by indexing the local prices of a fixed basket of goods, thus measuring what’s known as purchasing power parity (or PPP) (do I hear “bingo”?), and this gives strikingly different results from the exchange-rate method.
Great, well, we’re nothing if not hip here at TN, so we’ll go with PPP, right? Not so fast. If we were going by a strict role-playerish or magic-circularist conceit here, in which players live exclusively in their virtual worlds while they are playing, then yes, PPP might make a certain sense, since players would value virtual goods exclusively in terms of what they could be traded for in-game. But the truth (at least to a ludological “realist” like myself) is that players only ever live liminally in their worlds, always half in and half out, and always semi-conscious, therefore, of the opportunity cost of their virtual goods – i.e., the real-world purchasing power that they forgo by not selling them off for dollars. Obviously, for a Chinese player that cost is much greater than for a French player, so in that sense, PPP for a virtual world is literally all over the map, and therefore essentially incalculable.
Obviously too, of course, that cost fluctuates according to the player’s mindset. A farmer, for instance, will only value his goods in terms of their real-world price, while a hardcore role-player might be so unlikely ever to eBay her stuff that its effective opportunity cost must be discounted almost to zero.
So let’s be agnostic about this, and go with a smorgasbord of rankings, according to player type:
Role players and other valiant defenders of the magic circle may go with the PPP rankings, which place the virtual world economy 134th among the planet’s 185 national economies, right between Benin ($7.49 billion) and Malta ($7.04 billion).
Farmers, powergamers, and other dedicated breakers of immersion should use the exchange-rate rankings, which move things up to 101st place, between Jamaica ($7.88 billion) and Estonia ($7.28 billion).
And finally, IGE fanbois, whoever you are, should feel free to plug Steve Salyer’s numbers into the formula, for a total GDP of $11.88 billion and an exchange-rate ranking of 86th place – not quite as good as Panama ($12.127 billion) but better than Côte d’Ivoire ($11.12 billion) and, for that matter, over half of the world’s sovereign nations. You go!