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Inane Wanderings
A blog about....well about....something. Really.
More Basic Economics: Affordability
Before I get to writing journal entries with my criticisms (intellectual, not derogatory) of the proposed changes to Gaia's economy, I want to talk a bit about affordability - how affordable, or easily obtained, Gaia items are.

I'm going to pick on one of my favorite items to use as an example, the Kiki Kitty Plushie. I do this because it's one of the few items I have readily accessable information on. (If I go back through all my notebooks and look hard, I know I have some data on other items, but you know, that would be work.)

Back in the winter of 2006/2007, Kiki Kitty Plushies (which will be referred to going forward as "Kikis", since I'm already tired of typing that) were selling for 206,000 gg. That sounds pretty good, especially since the current LMP is 100,000,000,000 gg (how convenient for the math!).

But let's look at that price vs. Gaian income without vending. I'm eliminating vending (the speculative buying with the intention of selling for a profit - a/k/a buy low, sell high) because it's wildly variable and involves risk of one's savings. I'm looking only at basic income that is open to anyone - gold given from games, or items given by Gaia which can be sold.

Back in the day, I made roughly 1000 gold a day from doing the hardest level of jigsaw puzzles, selling any bonus items they dropped (oh, I loved it when I got something I could sell for 800 gold!), posting in forums, gathering and selling trash from Towns 1 in large lots. This means that 206,000 gg Kiki would take roughly 206 days of steady work and no spending at all to afford.

Today, I assert that the average person can make 1,000,000,000 (1 billion) gg per day with less effort. Here's how I came by that number:

1. Vote daily in the Runway. At the end of 8 days you get a Chirpette Bundle. Right now, the Chirpette Bundle is selling for roughly 7,000,000,000 gold. Divide that by 8 days and you get 875,000,000 gg per day.

2. Level 5 kin can fight successfully in the Milky Way. The Hell Portal is dropped at all levels, including Stage 1, at a slow but reasonable rate. Hell Portals are currently selling for 700,000,000 in the MP.

Add those two together and you get 1,575,000,000 gg. Yes, that's over what I asserted by quite a bit, so I rounded down so you could sell them at fire sale prices to move them fast.

Add in things like the Daily Crap, daily rewards from Kin, Booty Grab, selling the Daily Log in stamp card rewards, and making that billion per day becomes quite reasonable.

Going back to Kiki: if you're making 1 billion gg per day, and it's selling at 100 billion, it means it now takes only 100 days instead of 206 days to earn what you need to buy a Kiki.

So even though the absolute numbers have a lot more commas and zeroes, Kiki is actually more affordable and easier to obtain today than it was in 2006/2007.

Anecdotally speaking, many people have returned to Gaia who, once they get over the shock of the number of digits in prices and gold awarded these days, are even more astounded as how easily they're able to buy items they never thought would be in reach.

There are lots of reasons for this, but that's part of the economic plan criticism post that'll I'll be writing up eventually.

Back to Basics: Supply and Demand
So, it's been a bit longer than I'd originally anticipated between the last entry and this one. It's, you know, life, not to mention some real life writing that kind of took up my writing time.

Anyway, supply and demand, the other big force affecting the rise and fall of prices on Gaia.

To simplify greatly, since this is an overview and not an in depth examination, supply is the amount of any given item that is available, and demand is how much people want it. When these are in balance, the price stabilizes. When they're not, the prices rise or fall generally as follows:

The higher the supply, the lower the price.
The lower the supply, the higher the price.
The higher the demand, the higher the price.
The lower the demand, the lower the price.

So prices generally move with the demand and the opposite of supply.

These two factors are locked in an continually self-adjusting economic dance. In general, Gaia sets the supply, and users set the demand. But they're constantly interacting and influencing each other and themselves.

For example, Gaia tries to whip up desire for some really awful items by making them ultra-rare, hard to get, a sign of wealth or prestige. But if the users don't go for it, the price won't go up. There are some rather rare event items that can be bought for a relative song on the MP simply because the users don't want them.

Demand self-adjusts as the price rises. As it goes up, people drop out at levels where they either can't pay or won't pay the current price. The price stabilizes where the number of people willing to pay that ridiculously high price matches the number of people selling.

But once those people have bought the item, few are in the market for a second one. So by satisfying the demand, the supplier has lowered the demand. If the supply isn't exhausted by these high price buyers, eventually the price will go down to wherever the next lower tier of buyers dropped out. And the cycle will repeat again for as long as there are buyers and supply.

Gaia manipulates this, too. There's a video out on YouTube somewhere from a presentation the previous regime did at an online gaming conference where they stated they watched the MP prices of rare RIG items, and manipulated the drop rate accordingly. (No, I don't have a link, but a search of the forums or the Gaia User Wiki out there ought to turn it up.) Yes, this means if you buy a RIG and open one the first week and one the second, you may be playing a very different game each time. Frankly, I'd rather play Las Vegas slots. They at least have legal minimum payouts. Gaia has no such constraints.

If you want to see what happens when supply catches up with and outstrips demand, look at the items dropped from the RIGs given out in Lake Kindred. Just one example: the Astra cat spirit and gathering items from the Stirring Spooks RIG. They used to be rare and in the billions. Now you can barely give them away. They're still a fairly uncommon drop, but there have been SO MANY Stirring Spooks RIGs given out that there are more than enough to meet the demand for them.

In fact, because of rerelease RIGs and Lake Kindred and the like, many items that were completely out of reach five years ago have become reasonably affordable and realistically questable. All because there are finally enough of them available for those who want them to have them.

The important fact to note is that all of these price fluctuations are independent of the amount of gold given out. Whether we're all making 1000 gg a day or 100,000,000,000 gg a day, if the supply is less than the demand, the price is going to go up. The only difference is how many zeros we have to look at.

Since this is getting long, I'll get into my criticism of the proposed economic changes and why I don't think they're going to change much other than the previously mentioned number of zeros at another time (which I'll try to make less than this gap, but you know, real life).

purplewiz
Community Member
purplewiz
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