Norrath Economic Report Now Available 175
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."
Not a Nerd? (Score:3, Informative)
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.
Re:Deflation rate? (Score:5, Informative)
Tradeable items do not decay, and their appearance rate is either constant, or increasing as avatars gain in average level, therefore the offering grows while the market is roughly constant.
Secondly, new items are being discovered as avatars gain in level or as the world is expanded, reducing the value of older items.
Re:Deflation rate? (Score:2, Informative)
Since the same amount is avalible to a greater number , (Supply and demand are eaqual) and more money is in the economy (like a drop in the interest rate) inflation goes down.
Different servers are different (Score:3, Informative)
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.
UO & EQ are done, is D2 next? :-) (Score:4, Informative)
We have an analysis of the (broken) economy in Ultima Online @ The In-game Economics of Ultima Online [totempole.net]
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.)
Inflation vs Deflation (Score:4, Informative)
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.
Re:Deflation rate? (Score:3, Informative)
You missed one thing though -- The lack of items wearing out, is part of the problem, but it's not the cause -- an INFINITE supply of items, is. This is the *REAL* reason we have deflation in MMPRPGS. Once the market "saturates" -- enough people acquire enough extra items to trade, and the item becomes common -- the price will start dropping.
UO, and D2 have the exact same problem of deflation. (D2 has a completely USELESS gold economy, but that's another rant.)
Now resource gathering in UO has sort of "stablized" because
a) it still takes a relatively lot of time to gather a huge amount of them
b) not too many people find mining, Lumberjacking, gather of hides, etc, fun.
Ironically in UO, you pay more for a bigger order, because it takes the supplier longer to get the raw goods.
Last year in UO, ignot prices doubled because the miners realized they could get away with it.
A working virtual economy on a large scale is very difficult to do -- I haven't seen anyone do it right (yet).
Re:Need for interest rates like ECB (Score:4, Informative)
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.
Re:Not a Nerd? (Score:2, Informative)
Individual items sold for upwards of £500 on Ebay.
I knew a few people who sold their accounts (sometimes even single *characters*) for upwards of £10,000 ($14,000). Eventually there were people who only built up accounts, then sold them... They could get an account to ~$10,000 in value in around a year.
~$10,000/year, for a kid who's in college, it's not a bad salary at all.
Re:Interest rates are pointless in deflation (Score:2, Informative)
Re:What have horses done to this? (Score:2, Informative)
I don't believe horse have taken much plat out of circulation... at least not as much as Sony hoped.
you are incorrect. Horses have a
"So what," you say? I haven't mentioned the best part. You see, you just picked up 1,000 stones of weight with your little enchanter, and he has a 75 strength. How the hell do you move? You summon your horse, and ride it all the way to a vendor.
Horses are very useful. They take care of being overburdened. They also keep you from losing stamina while running. Speaking as a player of a high-level high elf cleric with a base str of 60, this is a HUGE benefit. I'm hoping to afford even one of the cheapest horses soon, as it will allow me to carry stuff.
Which, btw...is going to backfire on Verant. There are LOTS of things that are left to decay simply because the person who could loot them can't carry the item. Now though, they don't have that issue. This, of course, increases item and money circulation, as there is no longer a need to destroy all copper, silver, and even sometimes gold due to being weighed down, and one can loot everything once they have a horse, instead of leaving it to decay on a corpse.
I'm sorry, but that's incorrect (Score:3, Informative)
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.