How Does One Measure An Economy?

This post has been submitted by Xsinthis. Please leave a comment letting us know if you'd like to see Xsinthis write again here at JMTC.

This has been a question that has been plaguing me for a while now, how does one put a server’s worth into tangible terms. Is it even possible? Is it within a player’s ability to calculate? Could even the fine folk at Blizzard solve this? In the real world we have many ways to quantify a countries economic status. GDP, stock markets, average income, quality of life etc, no such thing in World of Warcraft. That information either has no warcraft parallel (no true stock market warcraft) or isn’t readily attainable (GDP, average income).

So How Do We Go About It Then?

While working on my Economy Quantifier Program these past weeks, several ideas have been going through my head while working on the data The Undermine Journal so generously provides.  The sum of the purchase price of an auction house is one of the first that came to my mind, but after a few days of processing the data I realized how prone it is to being manipulated. Some days I’d see a spike of over 20% in the AH worth for a 48 hour period. Obviously someone put up some rare item(s) for large sums of cash, but that event screwed up the stats for the two days because they obviously didn’t sell since the spike lasted exactly 48 hours, and since they didn’t sell it had no real effect on or from the economy, probably just some idiot overpricing their items. Good stat to track either way (just in case) so I started recording the averages, left it in, and moved on.

The number of listing on the AH is another stat I started recording, but even from the get go I realized it was in no way a proper measurement for an economy, since those listings could be listed for coppers of thousands of gold; still an interesting stat to track though, so I left it in.

After some work I managed to calculate how many listings were posted per hour. Not how many were sold, and not the change in the listing numbers, but how many auctions were created per hour. This turned out to be an excellent stat – but not for what I intended.  This number provided an excellent measurement on how busy the server is, and so far is one of the most important stats I’ve been able to pin down, but again it has no meaning on the actual economy of the server.

One last figure I’ve thought of is the average price per item. Very good stat to measure the economy, but two major problem with this, along with every other method I’ve gone over so far: First, this doesn’t distinguish between items that sell and items that don’t, it’s  the average price items are posted at, not sold, so it is polluted. Now while it should be a very minor pollution, anything other than 100% is pointless for this exercise. Second, all these are based from the auction house solely, and while it is a major source of economic interactions, it completely misses out on face to face interactions, and even C.o.D. interactions. I can’t even begin to fathom how much gold changes hand this way.

In a Perfect World, How Would We Measure It Then?

If I could request any data for Blizzard to make available, within reason, it would be what auctions actually sold.  This would lead to an explosion of analytical information in the World of Warcraft blogosphere, we would finally be able to measure not only how many auctions get sold, but what the average cost is, and even how much gold changes hand per day! We could even calculate how much gold bleeds out of the economy from AH cuts. This would still leave out face to face interactions, but it would be a huge step in the right direction and any other information that would include face-to-face would be too hard or simply impossible for Blizzard to provide.

It would also provide much more useful and relevant information to sites like The Undermine Journal and we’d be able to calculate the average sale cost of items, not just listing price, and more! Yes I think until Blizzard releases this information we can get closer and closer to fitting a server’s economy with a number that defines it.

What is the Point of Collecting These Stats?

Many people might be questioning the point of collecting all this data and that’s good, it is always good to question! I have many reasons why I want this data, and I’m sure there are some people out there that could come up with more.  Besides general curiosity and labelling purposes (my server’s got a small economy, my server has a big economy etc) the main use would be theorycrafting, trend tracking, trend predicting etc. We’d be able to predict short term trends (when does most business happen during the day,  long term trends (when does the most activity occur during the week)  and trends across seasons and patches (what effect do different holidays have? What patches in the past have had the most effect on the economy?). It could be a very powerful tool to predict future market trends once we can study past effect. Of course we can only start now tracking these trends, but the longer we do, the better we’ll be able to predict future ones, and imagine what we could do with our gold then!

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17 comments: on "How Does One Measure An Economy?"

  1. Will you be writing a research report on this? There are actually some interesting economic papers out there about WoW economies. Of course I don't understand complex economical theory, but it definitely is interesting to read what people have researched about this MMO!
    I found this article very interesting, and although you will probably get haters saying "WHERES MY DAILY GOLD TIP!!!1!1!!", i think that this article was a nice fresh change to what we've seen on JMTC recently.

  2. It was a very nice idea! Just wanna say thank you for the information you have shared. Just continue writing this kind of post. I will be your loyal reader. Thanks again.

  3. Silverthorn said... June 30, 2011 at 9:27 AM

    Interesting, but somewhat esoteric. You're essentially trying to determine the gross national product from looking at the stock exchange!

    I'd be more interested in conclusions, such as what works and doesn't work in large and small economies-- and how to profit from it.

  4. You're on the right track, Xsinthis. These are questions that every serious gold-maker SHOULD be thinking about. The sooner we can properly ascertain the symmetry between the large-scale economic factors, the sooner we can put the individual pieces to work FOR us.

    I enjoyed the post.

  5. @Dicci: Thanks, and yes I plan on doing a report once I collect more data

    @Silverthorn: Yes, but it's the best method we have! Like I said no way of determining face to face trades, and no 100% way of determining sales, so until that happens these stats are the best we got

    And thanks Kathroman ^_^

  6. 1 thing we do know for a fact: We know the Vendor price (of most items anyway, because some items aren;t vendorable). The vendor price is the absolute MINIMUM, and therefore isn;t it the TRUE value of an item?

    AH prices are all speculative.

    How are you including vendor prices?

  7. Interesting article, but the point was vague and the conclusion felt tacked on. I would be interested in reading more posts from this author or in this style.

  8. Best guest post I've seen here in a while. I'd love to hear more about this topic and from this writer.

    Keep up the great work!

  9. Xsinthis is a fresh face that has been doing a few guest posts around the blogosphere.

    Here's another great guest post by Xsinthis I ran across of his on another site.

    As far as this post goes, I enjoyed it and am looknig forward to more articles by Xsinthis. I enjoy reading new posts by new writers.

  10. Very interesting, and well written, article. I do have a question though. (hey, you're the one that said questions are good :P ) Would Blizz really need to release the information on items sold via AH? TUJ already has that information, although it's not one bulk page of information. Each item you search for on TUJ shows you the recent sales of said item and how much they sold for and when. I'm curious if there is a way for the maker(s) of TUJ to be able to track that info differently than they do now. There's an addon (so to speak) for TUJ that's uploaded weekly with the average selling price of items across all servers. It shows this value in your tooltip when hovering over an item. Maybe there's a way they can do the same for items sold and not just items listed.

  11. Silverthorn said... June 30, 2011 at 4:55 PM

    I understand that the data is limited, but there are still some conclusions that (hopefully) can be drawn. Another source of data could be the Warcraft Census information. Can you cross reference the server population with the AH listings?

    Some obvious things will emerge -- fewer players means fewer auctions, of course, but what's being sold? Are there too many crafters and not enough gatherers? Or maybe there's little or no crafting going on over the AH? If I were to move a character to such a server, what would be the most profitable-- gatherer, crafter, raider, or.... AH goblin.

    Of course, if the whole faction economy sucks, it's lean times for the goblins, too. That's the sort of predictive model I'd like to see.

  12. Thela, the sold item data from TUJ is an educated guess, it does a series of checks on the auction to try and determine if it was a sale or not. As you probably heard there were a lot of errors with it, and way too much too be reliable for this kind of work. Also, the sold data isn't made available by TUJ even if I wanted to use such data.

    Silverthorn, those are some very good ideas! I'll look for ways to implement them in my scrpit.

    And thanks for the encouragement everyone!

  13. Good way to get off all this 4.2 information that every other blog is spamming out.

    I'd keep him around.

  14. Very Nice!

    Interesting post.

    Definately wanna read where your conclusions will bring you.

    I think there is 1 aspect of your analysis you are forgetting.

    And that is the Age of the player base of the given server.

    I am sure that the age of the population greatly affects prices that items are sold for.

    For Instance:

    You have a 12 yr old that saw a pet in game and goes on the AH to buy it. Most 12 yrs olds probably dont research the value of an item and buys whatever is the cheapest on the AH.

    On the reverse side of that, you have goblins.. likely in the 18 to 50 age range taht probably research everything so as to not get "scammed" out of their "hard" earned gold.

    I think if there was a way to measure this, you would find interesting results.

    Keep up the good work

  15. This is probably one of the best quest writers I've seen on this site in a LONG while. (Some, ok most lately are atrocious.)

    Very interesting read.

  16. Loved the article. Very well written, easy to understand, to the point and interesting! Please keep them coming.

  17. Awesome to see how much work you've put into this, and very exciting

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