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blankseplocked Insurance, a faucet or a sink?
 
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Ishtanchuk Fazmarai
Amarr
Posted - 2011.02.07 14:43:00 - [1]
 

This discussion has been ongoing for a while in another thread so let's move it here for greater fun. Laughing

My point, Insurance is a net SINK: the only source of ISK in game are NPCs, who give up ISK for blowing stuff, performing tasks, supplying minerals or being blown out (insurance). That is, PvE and harvesting print money out of thin air as players play the game.

Yet, as insurance is limited by resource harvesting -unlike missions- and as it consumes minerals and provides a payout smaller than supplyig them to a NPC agent, I consider insurance a net sink, as more wealth is destroyed than the actual ISK being injected into economy.

My (many) contenders' point, Insurance is a net FAUCET: all trade ingame is between players and nobody prints money out of thin air, which is fair and dandy until eevil insurance spoils it by giving money to a guy without removing it from another guy. Thus insurance adds money to the economy from thin air, acting as a money faucet and thus it devaluates ISK and causes inflation.

So what you think: is insurance a net faucet or a net sink?

Grimpak
Gallente
Midnight Elites
Echelon Rising
Posted - 2011.02.07 15:15:00 - [2]
 

faucet.


isk used to buy the ship remains in the economy.
ship going boom means isk is created out of nothing.

Akita T
Caldari Navy Volunteer Task Force
Posted - 2011.02.07 15:16:00 - [3]
 

The problem with your position however seems to stem from the fact you're NOT talking PURELY about ISK sinks/faucets, when everybody else is.
Insurance is a RESOURCE sink and almost always an ISK faucet.
Nobody is disputing that.

Side-note, insurance can also be an ISK sink for those that let the insurance expire without having the ship blow up at all several times in a row. Obviously, this happens so seldom as to not be statistically relevant.

stoicfaux
Gallente
Posted - 2011.02.07 15:20:00 - [4]
 

Edited by: stoicfaux on 07/02/2011 15:22:43
Originally by: Ishtanchuk Fazmarai

My point, Insurance is a net SINK:


Alice buys a ship from Charlie for 20 million ISK.
Alice loses 20 million ISK
Charlie gains 20 million ISK.
Alice pays 1 million ISK for insurance.
Bob blows up Alice.
Alice gets 15 million ISK from insurance.

20 million ISK changed hands, so the 20 million stayed in the economy.
1 million ISK was removed from the economy.
15 million ISK was added to the economy.

20 million - 20 million + 15 million - 1 million = 14 million net ISK added to the economy.

edit: included ship price

Shandir
Minmatar
Brutor Tribe
Posted - 2011.02.07 15:27:00 - [5]
 

Edited by: Shandir on 07/02/2011 15:26:58
Faucet.

There are two seperate, unrelated economies: Mineral and ISK.
Ship destruction is a Mineral Sink.
Insurance is an ISK Faucet.

Pookie McPook
Posted - 2011.02.07 15:28:00 - [6]
 

Insurance for those who just mission is an utter waste of ISK.

stoicfaux
Gallente
Posted - 2011.02.07 15:31:00 - [7]
 

Originally by: Ishtanchuk Fazmarai


Yet, as insurance is limited by resource harvesting -unlike missions- and as it consumes minerals and provides a payout smaller than supplyig them to a NPC agent, I consider insurance a net sink, as more wealth is destroyed than the actual ISK being injected into economy.



If you phrase it that way...

Minerals are infinite. The resources respawn. The only limiting factor is people's time and will to gather the resources. (Time and Will values are complicated by bots.)

If a ship is destroyed without any insurance payout, then you would still have your 'resource sink', so insurance isn't a resource sink at all.

Since insurance pays ISK and ISK allows you to purchase a new ship (aka people's Time and Will to manufacture the ship) then wouldn't that make insurance a resource faucet?

Meaning, more isk == ability to buy more Time and Will == resource faucet.


Tarron Sarek
Gallente
Biotronics Inc.
Initiative Mercenaries
Posted - 2011.02.07 15:35:00 - [8]
 

Basically what Akita T wrote.

It's not about opportunity costs or wealth. It's not about your wallet.
Talking about sinks and faucets is talking about total ISK in game.

If you 'sell' your minerals instead of building a ship and blowing it up, you don't create ISK. You get ISK from another player (and lose some ISK to transaction tax, actually destroying some ISK in total).

If you build and blow up a ship, you don't get ISK from another player, you get it from the system, thus creating new ISK.
Of course you are left with fewer ISK than in the above mentioned scenario. Therefore it's the worse choice, for you, personally. But that doesn't change the fact that you just inflated the economy, a bit.

Myra2007
Millstone Industries
Posted - 2011.02.07 15:36:00 - [9]
 

Originally by: Akita T

Side-note, insurance can also be an ISK sink for those that let the insurance expire without having the ship blow up at all several times in a row. Obviously, this happens so seldom as to not be statistically relevant.


This has happened to me so often that I just stopped insuring ships at all. And those were ships that were both used in pvp and pve alike. I don't necessarily think your assessment is wrong but I would like to know if this more than your gut feeling?

KaarBaak
Minmatar
Seatec Astronomy
Posted - 2011.02.07 15:40:00 - [10]
 

Originally by: Ishtanchuk Fazmarai
... more wealth is destroyed than the actual ISK being injected into economy.


I believe this sentence in your OP is where your logic breaks down. You're mixing the terms "wealth" with "liquid isk" when they are completely different things.

I believe others in the thread have pointed this out with much more detail.

KB

Ascuris Wurm
Posted - 2011.02.07 15:54:00 - [11]
 

Really, there are going to be several variables because it depends on how that individual ship was built. Minerals are created by the game and harvested. Was the ship built using a BPO or a BPC? How was the blueprint acquired? Created by a mission drop? Copied from a BPO? Copying costs isk and time. Was the ship mfg in a station or a POS? These have costs as well. What were the skills of the manufacturer? This affects how many minerals were needed to mfg it. All the factors for each ship's creation, destruction and insurance cycle need to be tallied in the faucet or sink side and compared to see what the bottom line is.

Tarron Sarek
Gallente
Biotronics Inc.
Initiative Mercenaries
Posted - 2011.02.07 16:05:00 - [12]
 

Supercaps can't be insured (don't forget basic insurance, though).
'Nuff said.

Ayieka
Caldari
Posted - 2011.02.07 16:11:00 - [13]
 

Its sad how all of the crap i learned in econ has only helped me when it comes to eve.
Interesting fact though.

Matalino
Posted - 2011.02.07 16:15:00 - [14]
 

Originally by: Ascuris Wurm
Really, there are going to be several variables because it depends on how that individual ship was built.
None of those variables are relevant to insurance.

As has been stated already in this thread, insurance that does not expire is an isk faucet; insurance that expires is an isk sink. There is no need to look at other factors to establish that as being true.

There are lots of mineral and isk faucets and sinks. Looking at all of them can be complexes. However, it is obvious that there are more faucets than sinks.

Akita T
Caldari Navy Volunteer Task Force
Posted - 2011.02.07 16:34:00 - [15]
 

Originally by: Myra2007
This has happened to me so often that I just stopped insuring ships at all. And those were ships that were both used in pvp and pve alike. I don't necessarily think your assessment is wrong but I would like to know if this more than your gut feeling?

Since I'm not a CCP employee and much less in Doc.EG's staff, it's little more than educated guesswork.
I mean, your experience is hardly similar, people learn soon enough that it's kinda' pointless to insure ships that have a low risk of destruction, and they end up only insuring ships they are almost certain they will lose soon enough.

Gdemami
Posted - 2011.02.07 16:39:00 - [16]
 

Originally by: Ishtanchuk Fazmarai


So what you think: is insurance a net faucet or a net sink?


I am not following you...

How does that matter what 'You think'? Only what matters is hard data. If Total Insurance Fee is more than Total Insurance Payout, it is a sink. If not, it generates ISK into a system.

z0de
The Bastards
The Bastards.
Posted - 2011.02.07 16:45:00 - [17]
 

Originally by: Ishtanchuk Fazmarai
the only source of ISK in game are NPCs


stopped reading here.

Akita T
Caldari Navy Volunteer Task Force
Posted - 2011.02.07 16:49:00 - [18]
 

Edited by: Akita T on 07/02/2011 16:56:55

Originally by: z0de
Originally by: Ishtanchuk Fazmarai
the only source of ISK in game are NPCs

stopped reading here.

Why ? He's right. Sort of.
The only SOURCE of new ISK are NPCs.
Whatever you get from other players is not "new" ISK.

New ISK only comes into the system through NPC buy orders (tags and such nowadays mostly), NPC CONCORD-granted pirate NPC kill bounties (still the vast majority of new ISK created), NPC agent mission rewards and "Pend Inc." NPC insurance payouts... each of those four sources being a NPC source.
Nothing else generates new ISK (edit: ok, ok, granted, 5k ISK is generated for each new character created, but that doesn't really matter), any other way to obtain ISK relies on ISK acquired by somebody else through one of those four methods.

Ascuris Wurm
Posted - 2011.02.07 17:00:00 - [19]
 

Edited by: Ascuris Wurm on 07/02/2011 17:05:54
Originally by: Matalino
Originally by: Ascuris Wurm
Really, there are going to be several variables because it depends on how that individual ship was built.
None of those variables are relevant to insurance.


I think that they are. Without a ship to insure, there is no insurance. There are costs to the overall economy to produce ships to insure - costs that make ISK disappear and not change hands. Are those costs enough to offset the insurance payout? You and I, and many others don't think so, but to know for sure and to what extent, numbers would need to be run. And I don't care enough to do it... I only care enough to post conjecture about it. Very Happy

edit:
Also, I didn't think the question was whether the insurance payout itself was a faucet... that's obvious that it is. I thought the question was whether the whole insurance cycle had a net offset of being a faucet. That's where I was coming from.

Vincent Athena
Posted - 2011.02.07 17:07:00 - [20]
 

A few months ago a dev posted this data:

"A freebie, last 24hrs transaction stats for a selection of faucets and sinks -
as you can see, Concord is a very generous organization!



Trade Total

* Market Transaction 5,848,221,406,963

Faucets
* Bounty Prizes 876,039,478,466
* Agent Mission Reward 68,923,141,163
* Agent Mission Time Bonus 63,450,447,585
* Insurance Payouts 111,942,877,603

Sinks
* Sales Tax 6,227,911,218
* Brokers fee 6,733,818,276
* PI Construction Costs 7,575,185,000
* PI Import Tax 290,289,843
* PI Export Tax 3,355,153,925
* Insurance Cost 43,021,823,156
* Clone Activation 20,197,210,000
* Sovereignty Bill 59,332,000,000
* LP Store 135,343,150,000 "

Insurance payouts are over twice the insurance cost, so, at least for the 24 hours covered, its a faucet.

Aessoroz
Nohbdy.
Posted - 2011.02.07 17:40:00 - [21]
 

It's a sink to me, I usually never lose my ships :(

Grimpak
Gallente
Midnight Elites
Echelon Rising
Posted - 2011.02.07 18:03:00 - [22]
 

Edited by: Grimpak on 07/02/2011 20:55:56
Originally by: Tarron Sarek
Supercaps can't be insured (don't forget basic insurance, though).
'Nuff said.
even then they are a resource sink at best, unless you bought construction materials out of an npc, then it becomes a isk faucet too.


edit: faucet, not sinkEmbarassed

stoicfaux
Gallente
Posted - 2011.02.07 18:13:00 - [23]
 

Originally by: Vincent Athena
A few months ago a dev posted this data:

Trade Total
* Market Transaction 5,848,221,406,963

Faucets: 1,120,355,944,817 (1,120 billion)

Sinks: 282,076,541,418 (282 billion)



Faucets - Sinks = 838,279,403,399 (838 billion)

That's .8 trillion isk created and ready to be pumped into a 5.8 trillion market in a day? Shocked

That can't be good, if those numbers are anywhere near typical.

mkmin
Posted - 2011.02.07 18:19:00 - [24]
 

OP, you're talking as though the individual matters at all on the economy level. Sink and faucet are terms referring to an economy-wide level. On the individual level there are no sinks or faucets, just income and expenses. On the economy-wide level ISK is introduced to the game through insurance, bounties, NPC buy orders, and a couple other sources. ISK is removed through the game through fines, bills, taxes, etc. When your ship blows up CONCORD does not charge players a "dust cloud removal fee." You get PAID ISK in insurance.

In fact, I'm pretty sure this topic should be in the New Players section, as this isn't really a debatable topic, it's simply somebody not understanding MMO economic principles.

Gdemami
Posted - 2011.02.07 18:24:00 - [25]
 

Edited by: Gdemami on 07/02/2011 18:24:44
Originally by: stoicfaux
Originally by: Vincent Athena
A few months ago a dev posted this data:

Trade Total
* Market Transaction 5,848,221,406,963

Faucets: 1,120,355,944,817 (1,120 billion)

Sinks: 282,076,541,418 (282 billion)




Faucets - Sinks = 838,279,403,399 (838 billion)

That's .8 trillion isk created and ready to be pumped into a 5.8 trillion market in a day? Shocked

That can't be good, if those numbers are anywhere near typical.



There is still one sink missing though - inactive accounts.

Vincent Athena
Posted - 2011.02.07 19:13:00 - [26]
 

The eve economist has commented that there is too much isk in eve, so CCP knows that, yes, its not good. To some extent incursions will help. They give less isk and more LP than ratting, and LP stores are a major isk sink.

In the QEN they actually mentioned the inactive account issue. They said that as the account can be re-activated at any time, its not counted as a sink.

I think they should change that view. An account becoming inactive should be a sink, and a inactive account becoming active should be a faucet.

Also some isk growth is needed. It should grow as new players subscribe. Older players tend to have more isk then newer, so it should grow as the player base ages. In fact it would be interesting if CCP made a plot where the vertical axis is "isk in wallet", the horizontal axis is "player age, months" and there are lines for different years. If each year's line is above the previous year's line, we got an issue.

Tom Gerard
Caldari
Blue Republic
RvB - BLUE Republic
Posted - 2011.02.07 19:21:00 - [27]
 

OP is a networth troll
-12000/10

mkmin
Posted - 2011.02.07 19:24:00 - [28]
 

What I can't figure out is what miners spend their isk on. I mean once you have your hulk purchased and fitted, all you have to spend isk on is crystals. But they are still selling minerals and stockpiling isk. For mission runners there's always the more advanced ship, the multi-billion isk officer mods, the skillpoints that transition well to PVP. Maybe miners spend their isk on PLEXes for alt mining armies?

Jenny Spitfire
Caldari
Posted - 2011.02.07 19:26:00 - [29]
 

Insurance in Eve from my limited (newbie) understanding of the world is, it is mostly a faucet.

Assuming the relationship is between the subscriber and the insurer, ceteris paribus, some 30M is lost from the subscriber upon execution of contract but subscriber gains 100M when the claim is made. Net gain is 70M.

Money is only lost when the subscriber buys insurance and nothing is claim. The argument between faucet or sink depends on the actual statistical significance of insured ships destroyed vs non-destroyed ship in game. Without this number, either camp can be correct.

However, looking at the state and nature of the game, there is a high possibility that more ships are actually being destroyed than insurance fees being burned. Therefore, it is likely to be a faucet.


Mad Hatteras
Posted - 2011.02.07 19:35:00 - [30]
 

Told ya so.


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