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* REPOST
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* Original Poster: Freeman, Jeff
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* Mon Apr 19, 2004 6:29 pm
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This is not an essay, so accept apologies ahead of time. This is
more of a stream-of-consciousness sort of thing. Just gonna type in
what's on my mind and click send. And I promise not to quote any
domestic terrorists this time. Ready? Here I go!
There are some key differences in an online game's economy that I
think tend to be overlooked (either by everyone, or maybe just me).
For example, we have a standard faucet, sink, drain model. Money
enters the system, swirls around a bit, and then leaves the system.
But I thought about the tracking we're doing and how we're
overlooking some drains (banned, cancelled and inactive accounts
chief among them), along with 'sponges' which don't have a
real-world parallel, I don't think.
As I understand it, when a person put money in the bank in the real
world, the bank then lends that money to other people, so it never
really 'leaves the system.' But in an online economy money put in
the bank is removed from circulation: It could re-enter the system
later, but it might not do that for a very long time. Or it might
never re-enter the economy. I suspect there is some average amount
of banked currency which is essentially removed from the system, but
not in any way that we track. For that matter, even money which
'leaves the system' due to an inactive account could re-enter the
system some day, should the person ever re-activate their account.
For example, a friend of mine has made over 100 million credits
(more than half of that was made during a period of time where more
money is leaving the system than entering it overall).
What I think would be more useful to us would be to track economic
activity. My thinking here is that money changing hands frequently
is the sign of a healthy economy, whereas a lack of economic
activity is the sign of a weak economy.
I think anything which stymies economic activity is bad, and either
extreme of inflation (too much or too little) would result in fewer
transactions and a 'weak economy'. Not because the high rate of
inflation has made money 'worth less', but because a high rate of
inflation creates a lot of 'inactive money' relative to the amount
of active money in the system. That is, it's not so much that it's
worth less that's the problem, but that it is un-used (could be due
to inflation, I think there are other reasons why money would go
un-used, too).
The tendency, I think, is for us to track money-in, money-out and
maybe even total money in the system, with the assumption that, as
in the real world, all that money is in fact 'in play'. But this
isn't necessarily the case. Probably isn't the case.
In order to properly track their economy, we need to monitor
transactions in both number and amount. I would consider money-in
and money-out as a transaction, but player-to-player transactions
ought to be of primary importance in a player-driven economy. If
it's not a player-driven economy, then tracking money-in and
money-out does cover all the bases: But not for the usual reasons.
Rather, it is because those are the only transactions the game has.
Could the number of transactions be more significant than the total
amount of those transactions?
Now, where I'm stuck here is with the idea of developing a 'healthy
ratio' of available money to active money. i.e. in the real world
there's a 1:1 ration, all the money which is available is actively
being used (or nearly all of it - people do hoard coins, I guess).
In the game world the ratio is much, much lower, particularly when
we consider money attached to inactive accounts to still be "in the
system".
So, we need better tracking mechanisms to separate that out - to say
"this money isn't in the system, so we don't care about it".
Whereas money in a person's bank account ought to be considered
'available'. Perhaps we take the lowest amount of money in their
bank for the month and say "That money was inactive this month".
For example if a person had 100 credits at the start of the month
and their bank never dropped below 50 credits, then we can say that
50 credits was inactive. If next month they start with 1000 credits
and their balance never drops below 900 credits, then we say that
900 credits was inactive. Also, we can see that they converted 850
credits from active to inactive.
For that matter, forget 'banks', because just carrying around the
money on-hand doesn't make it active...
So, the problem I see is determining what impact active/inactive
money has on a) the individual and b) everyone else. My 100 million
credit friend has a huge bank balance, her account is active, but
most of that money is not active. She trades in about 25 million
credits per week (with an average of +10 million to her favor). So
right now there's maybe 90 million 'inactive' credits there, and
next week there'll be 100 million inactive credits. Her balance may
drop to 90 million some time this month, but it'll be back up to
about 140 million by the end of the month... And next month instead
of 90 million inactive credits, there'll be 130 million. She's
unlikely to gift her balance to another player when she quits the
game, but even if she did, it would be inactive money moving from
her to them, and the bulk of it would likely remain inactive.
This is sigficant, I think, because merely tracking money-in,
money-out or even total money in the system would not detect that
there's been a drain of 40 million credits. The money's there, but
if she never spends it, then it's not going to increase the price of
things the way it would otherwise. If she never spends it, it's
essentially gone (at the very least, it is gone for now).
So she's having an impact on the game that works like a 'drain'. By
soaking-up 10 to 20 million credits per week, she is removing
available money from the economy (in the sense that she's converting
it from active money to inactive money). As far as the other
players are concerned, this is just another drain. The money is
removed from the economy never to be seen again (maybe... which is
why I say it's more of a sponge than a drain).
If you have a faucet pouring 50 credits per month into the system, a
drain removing 30 credits, but then another 30 credits are being
converted from active to inactive, doesn't this create as much
deflation as, say, having a +50 faucet and a -60 drain? And
ah... isn't that bad, long term?
Looking at online economies, do you think it important to look at it
from the standpoint of active to inactive cash, or is inflation (or
the ratio of money-in to money-out) the only economic indicator
worth tracking?
Does a decline in the ratio of active to inactive money indicate a
good thing, or a bad thing? What about a rise? Is there a trend
for the ratio to increase or decrease over time, and if so, is that
desirable? Do transactions (in either volume or number) matter at
all? Maybe all that matters (if any of this matters) is the amount
of money being converted from active to inactive and/or the ratio of
active to inactive money.
My assumption is that it's generally a bad thing for money to be
inactive. A healthier economy has a better ratio. We know how to
control inflation in a faucet-sink-drain economy (faucet less money,
drain more), but what do you to get a better ratio of active to
inactive money? I suppose that introducing less money and removing
more money works up to a point, but it's got to be
counter-productive sooner or later. i.e. If money becomes too
scarce, won't players react as they do to all shortages: Hoard it
and thereby convert more available money to inactive money, the
opposite of your intended goal?
My friend has doubled her money during a time when the average
player is spending more than they make. What does that mean to
everyone else?
Discussions of online economies I've seen in the past seem to focus
exclusively on inflation, money-in to money-out ratios. Am I
thinking about something which is just not that important to
consider? Has it been overlooked? Or am I overlooking the
discussions regarding, ah... 'sponges' in the faucet-sink-drain
economy?