Late Night Thoughts on the Wacky WoW Economy

By the time I post this it will be New Years Eve. The genesis for tonight's rambling began months and months ago, and I suddenly felt it time to release these harrowing thoughts on my loyal readers (I think I just heard a cricket, and it's the middle of the frickin winter).

I went to Business school. More correctly stated, I went to UNLV and studied Finance and Real Estate in UNLV's Business College, because Universities are actually made up of...oh, most college people are on break and don't want to hear another lecture for a month or so, so I'll move on.

Anyhoo, as I was saying, while in business school you learn a thing or two about, well, business, but quite a bit more about people. After having a good 7-8 years in the real world I can honestly say that about half of what is taught is a load of crap. I am sorry to any college student reading this, I don't mean to make you feel like your completely wasting your parent's or your own money (or the government's, in which case is perfectly fine), I'm just saying what I feel is true. You see, in college I never had a professor talk about the emergence of FAKE economies. They based all their cirriculum on the "Real World"...bunch of idiots.

Then again, what is a "fake" economy. I have three names, a first, second and a last. All my life I have been known by my middle name. But when people find out that the name I go by is my middle one the question inevitably follows: "So then what's your REAL name?" After 35 years of this (I just had my birthday, and yes I'm now unemployed and 35, horray for me), I've found myself growing tired of the same question. My middle name is just as real as my first, it's just in a different position on my driver's license. But being the benevolent human that I am, quick to show pity to the mentally impared, I spare them a lecture and inform them that my FIRST name is [fill in guess here].

Where am I even going with this? It's the consequence of not writing a significant or thoughtful post for almost two weeks now, I'm going soft and taking my brain with me. Or it may be that it's 1am and by back hurts and I can't sleep and I'm a little too, uh, medicated. I believe what I'm trying to do is tie in the gorilla that is the WoW economy with some personal recollection of some past experiences to try to create some meaningful connection that you can understand as a reader and some idiodic point that I'm attempting to make as a writer. Oh wow, it's late.

Anyhoowahoo, in business school I learned about this little bug called inflation. What is inflation? Well that can be simple or complicated, depending on your previous studies and current, accurate knowledge. Basically inflation manifests itself in the form of progressively increasing prices in order to purchase the same item, whether that is a bag of corn, a gallon of milk, or a barrell of crude oil. So let's say you need milk. Today you go to the store and pay $2, tomorrow it's $2.05. Did the milk suddenly change its properties or chemical structure or something weird like that? Well whatever happened the price of milk "Inflated", or increased.

Many things affect whether prices of good inflate, one of which is a shift in the supply curve of money, artifically increasing the money supply of a country. Think of it this way, diamonds are supposedly valuable because there aren't billions of them up for sale, but the more diamonds there are the less valuable they become, not because some law of the universe dicates it so, but that's just what tends to happen when humans understand and can see that there is a shift in the supply of some good, they simply begin to value it less than the day before.

To watch the WoW economy operate at the beginning of this expansion is an economists wet dream. Economics has always been treated as a social science by Universities accross my country, added into business schools due to it's focus on financial systems. Economists don't just study the numbers, they are looking at behaviors of the people, or the psychology of the masses. And when they feel like winning some nobel prize they draw some graphs and do some math.

(By the way, I really do respect economists, I'm just having a bit of fun)

One of the things that interests me the most is watching the work of inflation in all its glory. What's interesting is as people play more, a simplistic theory would be that people, over time, will tend to accumulate money. There is no fed to pump money into the economy artificially, and there are mechanisms in place (aka gold sinks) that play a role in taking money out of the system from time to time. These are tools used to help regulate potential inflationary risks. How I see it, however, is there are more mechanisms designed by the game to take your money than to pump some back in artificially. So given common economic theory of money (yes, I know there are multiple definitions of money), there's a better chance for a supply shift in the opposite direction, a shift to the left on the graph, money leaving. That sort of shift would tend to raise the value of each piece of gold in the game, keeping prices low and inflation in check.

But prices are a funny thing, as unpredictable as the people's brains who play the game. I've noticed a couple things lately. First, there are no shortages of supplies of any good out there, yet I see leg enchants being sold for 4-5K gold. Raw green quality gems being sold for 150g, and their more perfect, cut counterparts for 15g. There are more bots than ever, so there's plenty of herbs and skins for everyone. But people are using the "there's demand, that's driving the prices up" argument that frannkly doesn't hold water with me.

You see, anyone who knows a lick about economics knows that there is a delicate interplay between supply and demand, and markets tend to fight to find an equilibrium price somewhere. But economies are run by people, and people are unpredictable, and people are selfish, and there's always some douche bag that is trying to sell one herb for 1500g. Cataclysm hit shelves and masses of people decided that they would post thousands of auctions for whatever price they could sell them for. And you know what, the economy seemed to work fine. There were plenty of really hard core players that had the gold to spend whatever, making more and more goods and services inelastic, far more (on a percentage basis) than any REAL WORLD economy could ever boast.

Just about everything can be sold for anything now, or so it seems. And I cannot explain it. Frankly, any economist would say that both supply and demand curves shifted, thereby NOT causing prices to increase, but there are people out there who want you to believe that supply curves have not shifted, or that demand is so high that its shift on the graph merits the insane prices. Personally I think it's everyone silently agreeing to make money, ya know, for the good fo the game. But as people make tons of cash and things slow down and prices fall, what happens to that new player who rolls around Azeroth with 1500g in his/her bag and would like to run heroics or raid but cannot afford their 10,000 per week pricetag to buy all the gems and enchants and repairs and all.

I honestly have no clue how the WoW economy works, no clue at all. I'm amazed it does, even as it defies some real world economic theories. I guess there's nothing much to complain about, people seem to do just fine, but I have this nagging thought in the back of my mind. Are we creating just one more "Barrier to entry" for wanna-be raiders by charging insane prices for raw supplies (even though there's no lack) and even more insane markups by the crafters for the required enchants, etc demanded by any good raid leader? If WotLK was an expansion about inclusion, everyone got epics, everyone ran ICC, everyone did this or that, are we helping to swing the pendulum just a little too far the other way (Blizz has already swung it in the direction of exclusion) by artificially inflating prices ourselves because we can get away with it?

I don't think the average WoW player runs around with 30K gold in his/her bag. In my guild there are a couple, but most run under 3-5K at ALL times. Are we preventing newer, less wealthy people from experiencing something? True, anyone can work at it and make money to fulfill whatever goal they want, I know that, but not everyone is as equally cunning as another, we're all different and have different levels of knowledge, skill, and salesmanship. Maybe I'm totally wrong, maybe I'm just making crap up because it's like, really, really late for me to be up, but nobody is awake, the home is silent, and I got to thinking.

One Million Reasons!

"Terrell has 25 million reasons why he should be alive."
-- Kim Etheredge, Terrell Owens' publicist

To sports fans, you'll recognize this quote. After it was reported that Cincinnati Bengals Wide Receiver Terrell Owens (not playing for Bengals at the time) allegedly attempted to committ suicide, Owens' publicist, in a statement to the press, made the above remark in reference to Owens' recent signed contract.

I've hired Kim here at Deuwowlity to make another statement, this time on behalf of goblins and gold-lovers alike: "Now you have one million (1,000,000) reasons to play WoW."

That's all I could get from her, oh well. She makes a point, which she probably got from checking out MMO-Champion today, where a reminder of sorts was given to us that the gold cap has been raised to One Million. While technically, it seems the actual cap is 999,999g 99s & 99c, we'll round up by one copper and make it an even Million.

Me

What does this mean? For me it means very little, as I've never even approached the gold cap that was in place currently. I guarantee, even if I play this game for 5 more years, I will never have 1M gold in my backpack, or even a total of 1M gold spread out over every alt of every realm, faction, or race, etc. I don't place much value on playing the gold game. There have been exactly three times where I have played that game, and each time it lasted no longer than a week.

The first was when I decided to save up for my epic flying training. It took about 2-3 days to get 5K gold, and I played the game for a few days past that. The second time was when our guild truly became a raiding guild, I wanted to save money for the large amount of gemming/enchanting/other stuff that was going to be needed, so I played the gold game for another 5 days and made tons of gold (per my standards - given I only was online a couple hours a day). The thrid and final time was after I stopped raiding and decided to save for Cataclysm. For a week I played the gold game on an even more limited basis (an hour a day or so), and within that time I earned nearly 10K for each of my two mains (YES I HAVE TWO MAINS, AND SOON I'LL HAVE THREE, WHACHA GONNA DO?).

So, it's not that I don't know how to make gold, it's that I choose not to.

Gold Sellers

I realize there are gold sellers out there who were just made happier that they can now horde more gold per account, but I don't really see this as a buff to gold selling. My opinion is that there will always be people seeking to break the law, and no matter the gold cap, those folk will find ways to sell gold just as they have done in the past. So while they may find the increase of the gold cap a benefit, I don't see that it will boost or curtail gold selling. The only thing that will curtail gold selling are strict regulations and even more strict enforcement. I'm not very tech savy, so I don't know exactly how to police it well, but there must be a way to enforce it better than whatever Blizz is currently doing (if anything).

Goblins

This group, more than any, should be excited about this change. They can now treasure approximately 4 times as much gold as before. What they will use it for I have no idea, but I'm sure they'll be able to find something. Maybe there will be a race to gold cap, perhaps one of these days we'll see some gold-making website claim that they hit 1M gold and they are the new, self-proclaimed Master of the Universe.

I say fine, let 'em have their glory, let 'em have their day in the sun. I'm all for free markets, and if they can achieve the new gold cap quickly without doing anything against the official Blizzard rules, then I say go for it! There are many legitimate and creative tactics out there for making loads of gold, and those that value that activity will be great at it and I applaud them for it.

Not Terrell

If given a choice, I'd rather be in Terrell's shoes than be first to gold cap. $25 Million real world dollars would be infinitely more welcome than $1M virtual gold. But I'm not Terrell, so I'll have to make due with a fantasy for now.

Fruit Salad

I like it. Strawberries, Kiwi, Banana, Seedless Grapes (Green), Pear, Mandarin Oranges, Pineapple, you name it! Fruit Salad is yummy. Today I'd like to take some time talking about a variety of things, just like varied fruits in a fruit salad.

Bananas
This tasty fruit is long, yellow, and has a skin you need to peel away to see the actual fruit. But until you peel that skin away you don't really know how good that banana is.

The same goes with reclusive wow players. Those that sit on the sidelines and don't disturb anyone. They don't start a group but are always looking for one...silently. When they see something they like they may jump at it. So let's say you're forming a raid and you go into chat to LFM. There's a good chance that a Banana is there waiting.

That long awaiting soul, a bit too scared to get something going, needs encouragement to peel away their facade, but only when that player joins your group and you actually play with him/her do you know if they were worth bringing in the first place.

Are you a banana?

Strawberry
Over the past month or so Blizzard has been forthcoming about upcoming changes that will occur once Cataclysm hits, or shortly before. The blue posts have been many, with even more responses. But I can't help but think it's all kind of like a Strawberry.

What do you see when you see a strawberry? The red coating and the seeds on the outside, right? Seeds are the beginning, the genesis, the motive. We've received reasons for the changes in Cataclysm, we have even seen the color and shape of the game, but there is something that is still out of reach, it seems, which appears to be caused by the fact that we don't have all the information nor can we see the end result of those changes in front of us on our monitors.

I know I've gone to the store and purchased strawberries, but it's not always easy to tell which ones may not be as filled with as much sweet juice as I think, or maybe it's a particularly bitter patch of strawberries, or maybe the inside isn't quite ripe. I think I can see what it will be because I can see the seeds, the reasons behind, but I'm convinced that I won't know how that strawberry will taste, how Cataclysm will actually play out, until I have it in front of me. Still, it does seem mouthwatering.

Pineapple
A most welcome addition to my fruit salad today, and in honor of my wife's love for pineapples, I'd like to say a little something about raiding. Pineapples have some of the sweetest juices and captivating fragrances of any fruit I've tasted in my entire life. A truly ripe, sweet, and perfect pineapple has few rivals anywhere in the world. Versitile as it is it's found by itself or on pizza or part of exotic recipies in some of the most well known restaurants. But there is an evil side to pineapple, one that my wife knows only too well, and that it can be extremely painful to those who are allergic to it.

Raiding, at least in my own experience, I can't speak for you, has provided me with some of the most varied experiences in my gameplay. My sweetest victories have happened with my fellow raiders, conquest filling my mouth with pure satisfaction. I have danced, dodged, jumped, twisted, and willed myself with others to triumphant ends from Naxx to Ulduar to ICC. But often an allergic reaction will surface, tempers flare, and raids can utterly fail. Often all it takes is one to catch the allergic symptoms and it can become contagious.

Hopefully you taste the sweetness that comes from raid success more often than feeling the affects of an allergic reaction. But don't let those allergies keep you from Pineappling!

Watermellon
I know, it's not in my original list above. Deal with it. The other day I bought a watermellon at the store that was about 5-6 inches in diameter. They are larger most of the time, true, some can even engorge to county fair blue ribbon sizes of 4-5 feet tall.

The AH prices for small, nearly obsolete items on my server are county fair sized. Inflation is a natural side effect of the creation of an economy, but so is deflation. My point is that there are various factors that cause a price to move up or down, I won't inflict the tedious reasons upon you here. But lately I've noticed that I can't get an axe for my level 14 whatever without paying 26 gold for it. When I first started playing wow and learned of the auction house I could get the same axe for 1-2 gold, now it's either crap or grind for some heirloom items so I don't have to worry about spending that much gold.

But what about the new players that are still coming into the game? There's little reason to expect that they are carrying around 300g in their backpack at level 15, but that's what they would need to buy any gear upgrades so they don't have to enter dungeons in grays. I always try to keep it reasonable, if I put a weapon for a level 15 at auction, it's going up for just a couple gold, maybe 3. Call me a softie, but I cannot gouge the new player, I feel like I'm doing something wrong.

Don't "free market" crap me, I work in accounitng and finance and economics in real life so I understand all that, but this game ain't the real world, fatty, so listen to what I'm saying. If you charge 25 gold for a weapon with +1 Strength and +1 Stamina, I think you suck. You probably have a low self-esteem that you'll never admit to, and you'll defend yourself by using big words such as supply and demand, but the fact is that you're trying to compensate for not having something else in your life and gouging people with unnecessary inflated prices simply means that you're a jerk...ergo you suck!

Enough with the Watermelloning!

Well that's all for today, I always enjoy ending on a tirade. Hope you take it personally, that means that I'm right and you suck. If not, I hope you laughed. Thanks for your visit, as always!

Cents and Centsability

Please do not make fun of me for knowing about Jane Austin. She wrote my wife's favorite book, Pride and Prejudice (& Sense and Sensibility), which has been made into film by many screenwriters over the years. Another author, Leo Tolstoy, wrote stories about Russian aristocracy similar to Jane Austin's novels which often revolve around persons within the elite of British wealth. Both authors offer insight into these worlds, the common thread in their explorations into the human condition is money.

Stay with me, I like to present a backdrop to every story I tell or topic I discuss.

Where was I? Oh yes, money. Another author I wish to highlight is Victor Hugo, well known in the US and around the world as the writer of Les Miserables. Yes, the musical was based off an incredibly famous novel. Hugo was a champion of the poor and miserable of France. He explored the human condition from the other end of the spectrum opposite Tolstoy and Austin. Hugo's works are filled with poor and oppressed individuals and the lives they were often forced to live, from planning a revolution to having to steal bread to live. So as Tolstoy wrote of princes in battle against Napoleon, Hugo wrote of a man who was so lowly that even the dog houses were too good of a place for him to sleep.

Money is one of the most powerful forces on earth, in the real world at least. While in games, even though it has its power and influences, it does not rival its real world impact on people. As I have played WoW there have been times of great wealth (for me) and times of sheer poverty. I remember trying to start up a new character, my first toon, with zero money. No copper, no silver, no gold. Those were difficult times, but I learned quickly to sell products that other people used a lot. Eventually I would earn enough to fuel all of my gaming activities.

Now there are nearly as many different attitudes about in-game currency as there are people. Some value the challenge of making thousands of gold a day, while others only get money from what they loot or the trash they sell. And some don't know that they can even sell trash, poor souls. Some people buy expensive mounts while others buy stuff off the AH just to flip it and get even more money.

Is there a right and wrong attitude for the money we make and spend? If I am not interested in hitting the gold cap, does that mean that I have no vision or am an idiot? I think the only thing it means is that I don't value that activity, not that I'm incapable or too stupid to accomplish it. Conversly, if my main activity on WoW is to make money at all costs, does that mean that I'm necessarily greedy and a goldmonger? Not at all. It could simply mean that you want to attempt the challenge of being the richest player in WoW.

However, there are players who are not very quick or understand the dynamics of economies. Some because they have either never had the opportunity to learn or have neglected it. Others simply due to age.

I have two kids (ages 7 & 9) that I allow to play sometimes, both are terrible at making money and I'm always having to finance their activities. Their inability to make money is not because they are slackers or idiots (by the way, I love my kids, so if you call them stupid there is a very good chance I will hunt you down and hurt you), they don't make money because they just don't care. They want to slay dragons and even raise baby murlocs in a good home. Swinging a sword is fun for them, not spending hours upon hours at the auction house. My kids don't understand economies, and that's ok. They have different values, and for them that is enough.

If we learn anything from great world authors is that there are redeeming qualities in both the uber-wealthy and the starving-poor. Yet there are also some who exibit the qualities of Iago in Shakespeare's Othello. Those are the dangerous ones, they will literally lie, cheat and steal in order to get more gold. They will paint a picture to the world while silently weaving webs of mistrust and betrayal. They promise you one thing only to hack your account and take everything your character has. For whatever reason they value theft and dishonesty. I think these individuals are a special case and don't fit well into the topic at hand.

Whatever people do for/with money in-game is their choice, most of the time. It's based on what they value and what types of activities they consider "fun" (which is subjective and varying). I think it's great that just as there is a choice between PvP and PvE we can make a choice between caring about the WoW economy and virtual gold and not caring. However, there is one thing that is similar to virtual economies and real life, in both cases money is needed at some point to progress or survive. So no matter what your attitude, sooner or later you're gonna need it. Tolstoy, Austin and Hugo understood this perfectly.