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General Articles: Fan Fest: Economics Overview

By Keith Cross on November 12, 2007

Fan Fest: Economics Overview

While at Fanfest I had the opportunity to sit in on a presentation by Dr. Eyjólfur "Eyjo" Guðmundsson, EVE’s resident economist, where he spoke of the work that he’s been doing and some of the information that he has gathered for EVE’s first Quarterly Economic Newsletter. He revealed that the focus of the first QEM would be on the demographics of the EVE universe, the macroeconomics of EVE where he takes at EVE’s monetary system and money supply, and price levels and changes where he looks at inflation/deflation with some interesting conclusions.

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Demographics

Dr. Eyjo stared by showing us a graph indicating the average number of skill points among characters of each faction and the distribution of those points in each skill category across each faction. The graph showed that skill points are fairly evenly distributed between the factions with each faction in the 8 to 9 million average skill point range. The graph also showed that skills were fairly evenly distributed among each skill category, but there were noticeable differences in the weapon skills chosen for characters of different races. The weapon skill distribution indicates that players are choosing these skills based on the racial bonuses for their faction, which reinforces the strengths and weakness of each race. The next graph ignored race and faction, focusing simply on showing how many players have how many skill points. The results were interesting, showing that the grand majority of characters have less that 1,000,000 skill points, and the player with the most has a whopping 91 million skill points. We were told that this character has been around since beta.

We were also treated to a recent snapshot of the population distribution across the universe to see where players were spending their time. At the time the snapshot was taken, 78% of the population was in high security space, 13% were in low sec space, and only 9% were located in 0.0 space. This came as a bit of a surprise as Dr. Eyjo and many from the gathered crowd expected the number of players in 0.0 to be higher. Of course this was just a snapshot, and a single point on a graph is by no means indicative of a trend. With this in mind, Dr. Eyjo promised more snapshots in the future so we can get a better view of this emerging picture of EVE’s population.

Macroeconomics

But who cares about demographics and people when you’ve got money on your mind. Dr. Eyjo revealed that EVE’s economy currently has around 90 trillion ISK in the system. 65 trillion of that wealth is in the hands of active players, while 10 trillion more is held by corporations, and the remainder is ISK on inactive accounts. The inactive ISK are included in the calculations because the accounts could be activated at any time and could be back in the system at any time.

EVE’s economy is based on gathering resources and turning those resources into goods. Pilots gather ore, minerals, and components, and sell these to producers who make new ships and gear for the pilots who in turn go out and use these ships to gather more resources. Or they get their new ship blown up somewhere in the process, either way the cycle goes on. Dr. Eyjo revealed that daily trade between pilots and producers in EVE averages 2.1 trillion ISK per day. That adds up to a lot of people getting blown up, and indicates that getting blown up is good for the economy, so keep that in mind the next time you get ganked.

ISK in the system and trade per day doesn’t really measure the total wealth in the game. To figure out how much wealth is in the EVE universe, one would have to include assets like the aforementioned ships that tend to explode while you’re going about your economic activities. Dr. Eyjo plans to reveal information on these assets valued at current market prices and information on the GDP in the first Quarterly Economic Newsletter.

Inflation/Deflation

With all of that money floating around, a hot topic for many players of EVE is the subject of inflation. When given the opportunity to ask questions of Dr. Eyjo, several players expressed concerns over the EVE universe being a closed economic system, with new money coming from NPCs they were concerned about inflation. So it was surprising to many when Dr. Eyjo revealed that overall there is deflation in EVE, saying “You can buy more for your ISK than you could a year ago.”

He described some of the current factors influencing inflation, such as there being lots of cash currently in the system, and that it seems that things are stable right now because people are busy gathering and saving minerals in advance of the Trinity expansion, which will make many new ships available.

EVEconomics

The research into the economics of EVE has really just begun. As Dr. Eyjo has said in the past, EVE is not a simulated or virtual economy; it is a real, living, breathing economy. It shares many traits and parallels with the real world economy and Dr. Eyjo, CPP, and many enterprising EVE players see a lot of potential for going deeper with advanced financial and banking systems. The first step toward that end is the Quarterly Economic Newsletter, to which this presentation was an introduction and prelude. The QEN is the first of its kind to take an in-depth look at the economics of a virtual world and coincidentally should be released the same day that this article is posted.