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blankseplocked Discussing "inflation in EVE" misconceptions... and, do we have any ?
 
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Akita T
Caldari Navy Volunteer Task Force
Posted - 2009.01.24 13:35:00 - [1]
 

On one hand, we have the "concerned citizen" viewpoint, which seems to ignore just about any market pricing and simply state that "we have an inflation problem in EVE".
On the other hand, we have the CCP economist claiming that (at least for a while, if not still) "we are experiencing deflation in EVE".
And on the last, non-human third hand, we have the nasty reality... that any real-life definition of "inflation" simply doesn't apply to EVE all that well in the first place... so, in fact, in certain areas we are experiencing effects similar to those you see in a period with inflation, while in other areas you see things consistent with deflation.
___

Quite a long time ago, I had another thread discussing the "flow of ISK" in the economy of EVE... granted, it was not the best of my works, but then again, it's approaching its second birthday soon, and for its age its relevance (if you can be bothered to read past the first couple of posts until the end) is quite surprising even for me now.
Out of that thread, the main issue that's most relevant to this particular issue (of inflation/deflation) in EVE is the mechanism of price "tampering" (or "regulation", or even "stabilisation" if you prefer) enforced by CCP in the form of insurance (and afterwards also invention), and how most of the EVE economy right now is experiencing a similar regulatory effect which makes most claims of inflation/deflation based on pure "basket of items" prices quite pointless.

Now, some of you might say that "inflation is inflation is inflation", and that there's no way you can claim definitions don't apply... but then again, WHAT definition of inflation ARE you using ?


Seriously, that's my first question to you :
HOW EXACTLY would you define inflation (and/or deflation) in terms of the EVE economy ?

Feel free to discuss how any real-world definitions of inflation/deflation MIGHT apply in EVE, in the context of game mechanics imposed regulatory action.


And my second set of questions to you is this :
DO YOU THINK we are experiencing inflation or deflation in EVE right now ? And where/why/how exactly ?

Obviously, before you answer the first question, the second part is kind of pointless.
Of course, feel free to discuss them combined if you like.

LaVista Vista
Conservative Shenanigans Party
Posted - 2009.01.24 13:42:00 - [2]
 

Originally by: Akita T

HOW EXACTLY would you define inflation (and/or deflation) in terms of the EVE economy ?


In/Deflation is simply measured by indicies. It's a given that there is economic growth in EVE's economy. Thus it's an useless variable to even consider.


Quote:
DO YOU THINK we are experiencing inflation or deflation in EVE right now ? And where/why/how exactly ?


We have probably been experiencing inflation in the T2 market lately due to the POS exploit. The rest of the market is probably a bit more stable, but there might be both inflation and deflation at any given time.

Cor Aidan
Shore Leave
Posted - 2009.01.24 14:17:00 - [3]
 

Edited by: Cor Aidan on 24/01/2009 15:32:03
Edited by: Cor Aidan on 24/01/2009 15:28:25
Edit: Clarified definition in first paragraph.

I have to agree with LaVista here: inflation only makes sense when applied to a specific set of goods and/or services. Once that set of goods and services is defined, inflation is simple and is just purely "higher nominal prices for the same goods at the same level of supply and demand."

So if you look only at Tritanium (a pretty small basket to be sure) you have inflation and deflation all the time when the prices change. This works oddly enough because there is no substitute for Trit.

The way I look at it in terms of the broad category of EvE isn't some specific bit of goods though, I prefer this question: Does it take more or less time now to obtain some set of goods? Granted, this doesn't just include monetary effects but also "quality of life". Essentially, does a pilot have to work more or less for a given set of goods?

Given that, the EvE universe is large enough that some regions can inflate while others deflate. So you can't say "there is inflation in all of EvE" but you may be able to say that there is in certain regions.

In all, I think the point is generally moot anyway, because at the end of the day the real damage from inflation or deflation due to lending effects is not present in EvE. That is, the monetary cycles in eve are not strongly coupled with wealth production in EvE. That is: even if people stop spending isk (causing prices to drop) it probably does not result in a lack of availability of goods (due to job losses, etc.). This is where the correlation to the real world breaks down, because in EvE you can always keep making more stuff even if the price of everything were zero or infinite.

So unless you're wholly focused on isk and assets, talking about inflation doesn't really have any bearing on what activities are available to the larger EvE community.

Shirley Serious
Amarr
The Khanid Sisters of Athra
Posted - 2009.01.24 14:20:00 - [4]
 

Originally by: Akita T
And on the last, non-human third hand, we have the nasty reality...


The Gripping Hand.

Loaby
Amarr
Imperial Forces
Posted - 2009.01.24 14:51:00 - [5]
 

Edited by: Loaby on 24/01/2009 14:55:49
Edited by: Loaby on 24/01/2009 14:54:18
Edited by: Loaby on 24/01/2009 14:53:57
Edited by: Loaby on 24/01/2009 14:52:22
is isk really a currency/valuta?

can there be more money than goods in eve?

can a significant number of people in eve get into debt?

whats the reserve bank in eve? mission running?

Vaal Erit
Science and Trade Institute
Posted - 2009.01.24 15:14:00 - [6]
 

I guess you can define inflation as the rise of goods in correspondence with the change in supply/demand that CCP imposes via game balancing changes. But that is really supply and demand, inflation just does not exist in EVE and if you use that term under a different definition then you are just confusing everyone who actually knows what inflation is.

I do hope you troll some poor soul that took 1/2 of an economy class into trying to explain why inflation exists as it is defined in the real world, those people are hilarious.

Originally by: Loaby
Edited by: Loaby on 24/01/2009 14:55:49
is isk really a currency/valuta?

can there be more money than goods in eve?

can a significant number of people in eve get into debt?

whats the reserve bank in eve? mission running?


Sure it is a currency.
Sure there could be more money than goods (insurance ftw)
Significant to destroy the "economy"? No.
Reserve bank? Lols, no such thing in EVE for the general population. Bounties from missions are like a fountain of unending cash though.

SCAM CEO
Minmatar
S.C.A.M.
Posted - 2009.01.24 15:28:00 - [7]
 

The only thing I see going up in price is the GTC almost everything else has gone down in price over the last few years or was just drunk alot back then ?

Astarte Nosferatu
Sebiestor Tribe
Posted - 2009.01.24 15:34:00 - [8]
 

Edited by: Astarte Nosferatu on 24/01/2009 15:45:06
Another way to determinate inflation is by looking at the price of rare and unique items available. Take the Guardian-Vexor for example, when they first appeared in 2004 (I think it was 2004), they sold for like 50mil isk. Now, they sell for 20bil+. The main reason for this huge price rise is simple, there is a lot more liquid isk available now then four years ago, ergo people are able and willing to pay more isk for the same item. Correct me if I am wrong, but isn't the simplest way of determinating inflation looking at how much the price of a certain item has fallen or risen over a set amount of time? If the amount of liquid money that is injected in the economy rises faster than the amount of produced goods, you get inflation as more money is required to purchase the same good which in turn reduces the purchasing power of the currency?

Anyways, I'm not an expert on this matter, so please correct me if my view is to simplistic or flat out wrong.

Akita T
Caldari Navy Volunteer Task Force
Posted - 2009.01.24 15:38:00 - [9]
 

Originally by: Loaby
is isk really a currency/valuta?

Obviously yes.
Quote:
can there be more money than goods in eve?

Well, first you have to assign some value to goods existing, which is at best difficult.
But theoretically, there's no reason why the current supply of liquid ISK couldn't be higher than the "market value" of all assets. Realistically, I believe liquid ISK is far lower than total asset value, especially after you consider the price of "luxury" items like officer modules and T2 BPOs.

Quote:
can a significant number of people in eve get into debt?

There is no ENFORCED debt in EVE. And quite frankly I like it that way.
Everybody can break the promise to pay ISK in the future with negligible consequences.
On the other hand, you can't give out ISK that doesn't exist.
For all intents and purposes, ISK is a highly fungible token of a barter-based fiscal system.

Quote:
whats the reserve bank in eve? mission running?

Screw banks that give out credits (no offense to those trying to run legitimate EVE banks and asking for collaterals).
We're much better off without a "real" central bank in EVE anyway.
The OVERALL system of ISK sinks and faucets can be LIKENED to a "central bank".
The big difference from a "real central bank" would be that you can't get a credit line from it Twisted Evil

Caleb Ayrania
Gallente
TarNec
Posted - 2009.01.24 15:38:00 - [10]
 

Well as some already pointed out EVE is not easy to directly relate to RL economies. Even though yu could say its developing closer and closer towards it, due to RL zero growth and non-scarcety product develpments.

What your most likely interested in is price developments ingame and the actual buying power of your isk. How the specific items develop pricewise is more an indicator of where isk turnover is better taking time into the calculation.

Also with a great influx of new players a lot of the pricing shifts due to their demands. There could be a drop in TRT value due to more basic ore mining, and an increase in demand of non T2 items, because there is a lack of skill in the new playerbase. All in all talking about inflation overall is most likely going to confuse more than educate. EVE economy is a new type of beast, in every way.


Akita T
Caldari Navy Volunteer Task Force
Posted - 2009.01.24 15:44:00 - [11]
 

Originally by: SCAM CEO
The only thing I see going up in price is the GTC almost everything else has gone down in price over the last few years or was just drunk alot back then ?

At first sight, PLEX appears to be a half-decent indicator of inflation/deflation in EVE.
The problem here however is that it's tightly linked to the real-world economy (namely the value of the USD) and other factors influencing RL spending, so it's not the best thing to use.
And let's not even start arguing about how some people that "run on PLEX/GTC" can simply decide to go back to cash payments instead, so it's even more complicated.
Nah, GTC/PLEX is not really a good thing to watch, sadly... it would have been nice if it was, though.

Originally by: Astarte Nosferatu
Another way to determinate inflation is by looking at the price of rare and unique items available. Take the Guardian-Vexor for example, when they first appeared in 2004 (I think it was 2004), they sold for like 50mil isk. Now, they sell for 20bil+. The main reason for this huge price rise is simple, there is a lot more liquid isk available now then four years ago, ergo people are able and willing to pay more isk for the same item.

Well... it's much more complicated than that.
SOME people got a lot of ISK, while the vast majority is hovering at "borderline broke".
Those extremely high-ticket items are only going to be coveted by the very few people at the top of the "food chain", and therefore they're not the best indicator of any inflation/deflation going on either - they're simply an indicator of "how much ISK the richest of us can afford to waste on a hobby".

Robacz
Essence Enterprises
Posted - 2009.01.24 15:45:00 - [12]
 

Edited by: Robacz on 24/01/2009 15:46:51
Originally by: Astarte Nosferatu
Another way to determinate inflation is by looking at the price of rare and unique items available. Take the Guardian-Vexor for example, when they first appeared in 2004 (I think it was 2004), they sold for like 50mil isk. Now, they sell for 20bil+. The main reason for this huge price rise is simple, there is a lot more liquid isk available now then four years ago, ergo people are able and willing to pay more isk for the same item.


What about number of potential buyers vs. number of Guardian Vexors? Eve has many times more users than it had in 50M Guardian age, but same or lower number of Guardian Vexors.

Anyways, inflation can not be measured on luxury or limited supply items, it should always be measured on the most basic items. Like in real world - you are not going to measure inflation by price of Mercedes 300SL, you are going to use price of butter for example.

IMHO inflation is not measurable in Eve, there is too many differences to real world economy, for which the term inflation was invented. However if I had to say if there is any inflation, then I would say there is none. More likely deflation. When I look on prices of my products (many different kinds), they are either lower than they were 1/2/3 years ago or +/- same. The only exception is stuff directly affected by POS exploit, but that is more like correction than inflation.

Loaby
Amarr
Imperial Forces
Posted - 2009.01.24 15:52:00 - [13]
 

what are the goods EVERYBODY needs in eve? are there any that hold this definition?

can these goods become unachievable for the "normal" (non-isk-billionaires/trillionaires) eve-population?

Astarte Nosferatu
Sebiestor Tribe
Posted - 2009.01.24 15:54:00 - [14]
 

Originally by: Robacz

What about number of potential buyers vs. number of Guardian Vexors? Eve has many times more users than it had in 50M Guardian age, but same or lower number of Guardian Vexors.


Still, the amount of liquid money has risen exponentially compared to the number of players that have joined. Thus potential buyers have more isk to spend on items that have the same base value for the last four years.

Originally by: Robacz

Anyways, inflation can not be measured on luxury or limited supply items, it should always be measured on the most basic items. Like in real world - you are not going to measure inflation by price of Mercedes SLK, you are going to use price of butter for example.



The problem in EvE is that the most basic items, minerals, have an artificial price cap whereas items like the Guardian-Vexor has not. Also, the Guardian-Vexor has no real use ingame other then being a collector item. It's value is entirely based on how much money there is available, and how much people are willing to spend on it. The amount of Guardian-Vexors has been static for years, there might have been quite a few destroyed in the first two years of existance, but I sincerely doubt many get destroyed in the last two years as they are simply to valuable to get into potential ship-destroying situations. So the price of a static item as the GV has risen dramatically over the years, which in my humble opinion is a good indicator of inflation as a lot more isk is required to purchase the same good.

Block Ukx
Forge Laboratories
Posted - 2009.01.24 15:54:00 - [15]
 



The mineral market has experienced deflation the past three months.

Dani SP
Posted - 2009.01.24 16:33:00 - [16]
 

insurances, mission rewards, trading goods from-to NPC...

nether void
Caldari
Brotherhood of Suicidal Priests
R.A.G.E
Posted - 2009.01.24 23:30:00 - [17]
 

Originally by: Astarte Nosferatu
Edited by: Astarte Nosferatu on 24/01/2009 15:45:06
Another way to determinate inflation is by looking at the price of rare and unique items available. Take the Guardian-Vexor for example, when they first appeared in 2004 (I think it was 2004), they sold for like 50mil isk. Now, they sell for 20bil+. The main reason for this huge price rise is simple, there is a lot more liquid isk available now then four years ago, ergo people are able and willing to pay more isk for the same item. Correct me if I am wrong, but isn't the simplest way of determinating inflation looking at how much the price of a certain item has fallen or risen over a set amount of time? If the amount of liquid money that is injected in the economy rises faster than the amount of produced goods, you get inflation as more money is required to purchase the same good which in turn reduces the purchasing power of the currency?

Anyways, I'm not an expert on this matter, so please correct me if my view is to simplistic or flat out wrong.


This is the definition of inflation, regardless of the context or medium, EVE or RL. The same thing is going on right now in the US, as we print money from nothing, and pump it into our system with wanton abandon. It's dumb, and it's hurting our economy.

Loney
CyberDyne R-D
Posted - 2009.01.25 02:38:00 - [18]
 

Edited by: Loney on 25/01/2009 02:39:06
-edit typos
Originally by: Akita T
Seriously, that's my first question to you :
HOW EXACTLY would you define inflation (and/or deflation) in terms of the EVE economy ?

Real World: a general and progressive increase in prices; "in inflation everything gets more valuable except money"

Eve: The rate at which ISK is created vs destoryed.

In eve there is no REAL inflation... lets look at some simple examples!

1. It has always cost (~aproximate values) 60m to make a Teir 1 BS and 90m to make a Teir 2 BS. Same with All Frigates, Crusiers, and hell even Capitals, or ANYTHING Tech Level-1.

2. The changes in prices of Tech Level 2 items were not because of inflation or deflation but because the Supply and Demand of items changed.

So if you look at it like that the Battleship has cost the same in EVE (give or take minor mineral value fluxations) for 5 years! IE NO inflation or deflation.

Originally by: Akita T
And my second set of questions to you is this :
DO YOU THINK we are experiencing inflation or deflation in EVE right now ? And where/why/how exactly ?

The reason EVERYONE thinks their is Inflation in eve is because there is MORE ISK in the universe now then in the past. Isk is CREATED in eve though various inputs, yet it does not LEAVE fast enough though others.

That is why Everyone today flying around have a billion isk in there pockets. when EVE stated 5 years ago you were a GOD if you have 1 billion isk.

However, the un-proportaion input/output of ISK makes me angry, I understand the necesity of it in the EVE universe.

Kazzac Elentria
Posted - 2009.01.25 02:59:00 - [19]
 

Inflation in EVE would be defined as the decrease in value of isk relative to the amount of work required to earn that isk from the many faucets.

Meaning, as the amount of work stays the same the amount of isk earned from that work increases. And vice versa, deflation would be the decreasing amount of isk for the same amount of effort.

What means in terms of gameplay is that a new player would have to work harder than someone who came a month, 5 months, or a year before them to achieve the same wealth curve they did.

In this regard, EVE is not experiencing game wide inflation. It is in some aspects of the game. More specifically in places where the faucets have either dried up (T2 BPOs) or have been turned down (Moon Poo)

As a resultant shift in the amount of isk flowing to the various aspect of eve, the remaining market items (because they are held in regulatory checks) experience shifts in price, often wild swings which we sometimes call inflation.

But by and by the large, it takes the same amount of time for a nub to get into a cruiser than it did a year ago, or two years ago.

There is however an obvious disproportion in the end game when it comes to the flow of isk. Meaning that as a player accumulates wealth because prices for the most part remain stagnant, there because little that they can spend it on. Up and to the point where we have players that can literally outfit an entire alliance in a capital fleet and still have room to spare.

This can be seen most dramatically in the price of T2 BPOs, and more recently in the wild swings of speculation in the market as huge sums of isk are thrown into single items.

Because of this, the only problem with EVE in terms of the industrialist and trader is the lack of end game. The lack and ability to flaunt the wealth with opulence in game.

cpt Mark
Posted - 2009.01.25 15:42:00 - [20]
 

I quit 6 months ago, and returned yesterday... I'll be able to tell you soon if there is indeed any inflation (based upon ship prices). Other things will most likely vary.

cpt Mark
Posted - 2009.01.25 21:27:00 - [21]
 

I can confirm an inflation of (-6%) over 6 months.

~ 1%/ month.

Shame I gave all my 400 mill away when I quit.. it would be worth alot more now ;)

Jason Edwards
Internet Tough Guy
Spreadsheets Online
Posted - 2009.01.26 03:46:00 - [22]
 

Perfect ME on a megathron bpo is around 150,000 which is equivalent to about 650 years of research.

Which means... for the most part... due to the market being pvp. Every little bit helps. So there no doubt are manufacturers who have me 100 on their megathron bpo(s)

In other words. The longer you go. The more likely it is that people will have researched their bpo to nuts levels. 100 or 150 or whatever. Giving the valued drop in price simply due to efficiency.

Now you then have the mineral values which change. IF you compare the slope of the graphs at points vs each other. You then should show if there has been deflation or inflation.

Complexity is that there are different minerals going in and they generally flux themselves differently.

Now.

1 year ago. How much does the megathron cost? lets say 100mil; cant be bothered to look it up. Now it takes 80mil to buy one.

One might say deflation... but I'd rather say it's just efficiency. There's 20mil less waste. Obviously my #s are bs... but whatever.

There's truly no way to measure it and it really doesn't matter 99.9% of the time because of how ME works. Even the tier 3 bs wont be showing a great deal of deflation anymore. Orca's 1me is pretty much all over also. 2me is only jumping from 96.8% to 98.9%

Sure it is inevitable.

Ki Shodan
Gallente
deep blue
Posted - 2009.01.26 12:22:00 - [23]
 

Originally by: Jason Edwards
In other words. The longer you go. The more likely it is that people will have researched their bpo to nuts levels. 100 or 150 or whatever. Giving the valued drop in price simply due to efficiency.

1 year ago. How much does the megathron cost? lets say 100mil; cant be bothered to look it up. Now it takes 80mil to buy one.

One might say deflation... but I'd rather say it's just efficiency. There's 20mil less waste. Obviously my #s are bs... but whatever.


well, Your efficency theorie is flawed. Material Level does not work that way.

Taken the current Median selling Price from Eve-Central.com:
Tritanium 4.10
Pyerite 4.10
Mexallon 24.90
Isogen 62.00
Nocxium 70.01
Zydrine 2,500.00
Megacyte 3,200.00

The total saving of 150 Material Level over 50 Material Level would be:
107,999.17 ISK

but:
0->150 ML:8,173,589.89 ISK
From ML 0 to:
ML - ISK
1 - 4,111,573.40
2 - 5,482,890.19
3 - 6,166,969.09
4 - 6,579,483.83
5 - 6,854,243.89
6 - 7,049,493.18
7 - 7,199,151.89
8 - 7,312,446.29
9 - 7,403,809.31
10 - 7,478,347.37
20 - 7,832,726.62
30 - 7,959,607.86
40 - 8,024,552.79
50 - 8,065,718.63

It is not reasonable to research a BPO after a certain point, since the profit you could make from production is worth more than the diminished return from research.

Given you might not have the logistics to produce a megathron 24/7, you could place the BPO into research now and then, but after 30 ML research is a waste even in a competitive environment as Jita. You better buy up firesales, that price a Mega at 80 Mil, and resell them. there is more profit in that.

But back to topic, if you look at the 180-day Mineral-Basket at eve-central.com, you can see a rise in price of that basket, although this rise is mainly due to Tritanium. (The basket is not weighted on the minerals it consists of.) So it looks like an inflation.

But is there really?
Prices in Tech I production have been roughly the same. If you check the Tier I Battleship basket, there is no inflation in that.

Do prices of GTC count or is this market manipulated?
There is far less data on GTC trade than on the ingame-market.
My personal theory besides manipulation, is the age-pyramid of eve-accounts and characters.
Given the GTC supply is more ore less constant, characters age and learn and can do tasks, that reward more ISK per hour. So the prices of GTC slowly wind up.
Or maybe CCCP has finally removed enough macro-farmers to bring down the price-cap on GTCs, which the farmers have implicit implemented?

Akita T
Caldari Navy Volunteer Task Force
Posted - 2009.01.26 12:53:00 - [24]
 

With ME:10 you're at around only 1% waste compared to "perfect ME".
A 20% difference in price CAN NOT be explained by a maximal 1% increase in build effectiveness.

Super Whopper
I can Has Cheeseburger
Posted - 2009.01.26 15:26:00 - [25]
 

Originally by: Ki Shodan
Or maybe CCCP has finally removed enough macro-farmers to bring down the price-cap on GTCs, which the farmers have implicit implemented?


In Soviet Russia Macro's farm you.

Joss Sparq
Caldari
Deep Core Mining Inc.
Posted - 2009.01.26 16:10:00 - [26]
 

Originally by: LaVista Vista
In/Deflation is simply measured by indicies.

3 AM so I read that first time over as "Inflation is measured in inches" - I was confused but I did have to agree ...

It'll soon be time for me to go to bed, I think! Mad

Ahro Thariori
Posted - 2009.01.27 11:36:00 - [27]
 

Originally by: Shirley Serious
Originally by: Akita T
And on the last, non-human third hand, we have the nasty reality...


The Gripping Hand.


wow, thanks for that expression. :)


 

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