Read the full economic report here.
EVE Online’s economist, Dr. Eyjólfur Guðmundsson, has issued a second macroeconomic report of the game, this time for Q4 2007. After reading through the report, it seems like there are some neat things being researched at CCP regarding various indicators of economic performance and growth. Much of the report’s analysis focuses on the impact of the introduction of the latest EVE expansion, Trinity.
The most notable addition in this second economic report is the introduction and explanation of a macroeconomic indicator for player production within the online economy. Called GUP (Gross User Product), this indicator measures the value of all goods and services produced in a period of time, minus the goods and services consumed by that production. Analyzing GUP, much like its GDP (Gross Domestic Product) counterpart in the “real” world, may give us some insights into the amount of growth an entire economy is undergoing. The explanation of where that growth is coming from and the means by which it may be maintained, however, are not necessarily illuminated by such a number. Hopefully future reports will illuminate more component-based (rather than aggregate) data on capital supply and depreciation rates so that some of the more popular growth models may be applied to the growing EVE market. The more detailed charts near the end of the report are great starts, but it would be nice to have even finer detail. Considering that this gentleman has access to everything, the marginal cost of producing such data should be low after the initial investment of researching the proper formulae.
One of the things I find most silly about this economic report is the fact that there is “a practical difficulty of not being able to reliably discern between a newly produced good sold on the market, and an old good re-sold on the market”. This is definitely a problem in real world economics; in online games, however, I have trouble rationalizing why this would be a problem. Presumably, every good possesses some form of unique identification (if for nothing else than to easily recover from a duping scheme). Well, if it possesses unique identification, why shouldn’t it also possess a relative timestamp or sale counter? Surely there is room in the database for at least one of these fields. That seems like a relatively simple solution to so great a problem. Regardless of whether such a feature was originally implemented in the game world, I doubt that it would be hard to add such a feature to all goods in the future.
In the introduction to the report, there is extensive commentary on what effect the struggling global markets will have on virtual world markets:
Will an economic recession cause decreased participation in the online world, or will the reduction in work hours (voluntarily or not) encourage people to spend more time producing virtual items in their online environment?
Excellent questions, but the following contains assertions that I do not completely agree with.
In the case of fixed monthly subscriptions, the marginal cost of spending another minute in an online environment is zero when measured in monetary terms. Hence, people with more time on their hands might contribute more towards their online environment, stimulating growth in virtual economies.
It is indisputably true that when a fixed monthly charge is incurred, the marginal cost of another minute is zero. It is also indisputably true that when marginal cost is zero, rational agents will consume until their marginal benefit is equal to their marginal cost. What’s not so clear, however, is that the opportunity cost that this agent faces for one unit of his time is zero.
Put another way: the monetary cost of an additional unit of play is zero, but the true cost may be far greater than that. A rational agent will play until his marginal benefit of additional unit is equal to his marginal cost. Thus, if we agree with the implicit assumption that struggling global markets lead to a recession, which in turn reduces the opportunity cost of everyone’s time, which in turn causes people to substitute toward the now relatively cheaper additional unit of play, we might agree that a struggling global economy will necessarily lead to a booming virtual economy.
In some respects, if recession is characterized by higher unemployment, then this might well be true. It’s still too early, however, to conclude anything.
Read the full economic report here.
Kranus said,
2-21-2008 in 15:04:45“…which in turn reduces the opportunity cost of everyone’s time, which in turn causes people to substitute toward the now relatively cheaper additional unit of play, we might agree that a struggling global economy will necessarily lead to a booming virtual economy.”
QTF