As I’ve mentioned before, the online game EVE has hired a professional economist to look after its in-game economy. The EVE game has about 200,000 active (paying) subscribers. I don’t play it myself but it seems to be a sci-fi strategy game based on trading and space warfare. Their economist has recently written his first blog post analysing some of the vast amounts of basic economic data that the game generates. He concentrates on activity in the game’s markets for ‘minerals’ which I presume are used in the production of spaceships and other things in the game.

The analysis proves that, as always, the laws of demand and supply work, even in online fantasy games. For example this graph shows the prices of two of the game’s “minerals” over time:

As their economist explains, the price of zydrine fell over time as greater supply was released into the game environment, while in recent times a steady supply of megacyte combined with increased demand have lead to increased prices.

The EVE economist promises a quarterly economic report where he looks at other macroeconomic indicators like growth and inflation. The game seems to have a natural rate of growth due to new players entering, which is similar to population growth in the real world. Unlike the real world, however, the supply of other resources (eg minerals) seems to be controlled by the people who run the game. I guess it’s necessary to gradually increase the supply of resources over time otherwise if the quantity was fixed at the beginning then those who got in early may have had an unfair advantage in accumulating resources (ie wealth) over others. Such an uneven distribution of wealth is indeed observed in the real world, but the game’s objective is to make money for its creators I guess, and you’re not going to get a lot of players if only the early players have all the success. So they have an incentive to generate a more even distribution of wealth by introducing new resources over time that can be exploited by all players.

Anyway, since the supply of resources was under control of the game operators, I presume that these effects can be corrected for (in a statistical sense) when estimating things like economic growth. It would be very interesting to see how much of the growth in economic activity in the game has come from people learning to play the game better (ie productivity increases) versus the ‘artificial’ growth due to increased population and increased resources. Inflation is also interesting. The game has a currency and I presume the supply of that is also under control. It would be interesting to see how changes in money supply affected inflation.

As I’ve said before, I think games like this are a very good way of studying economic phenomena. Economics is at a disadvantage compared to other sciences in that we can’t often run experiments to generate data and test our theories. Experimental economists do run experiments with subjects in a lab that try to mimic some particular economic situation. But these experiments are often very simplified versions of real situations, and there’s a question about whether the subjects take them seriously enough and behave as they would in the real world. With an online game, the players may have more incentive to take things seriously, since they care about doing well in the game. Of course the game still needs to be designed well to give people the right incentives to test any particular theory, but I think it’s a very promising area for economic research.