Editor’s Note: This is part one of a two-part series dealing with EVE Online’s Economy. Look for part two soon.
Part 1: EVE Online Isn’t the Real World
Many aspects of the EVE Online economy superficially resemble real-world market economies, which might tempt us to try using real-world economic theories to understand the game. But EVE differs from the real world in fundamental ways and misunderstanding these differences can lead to mistakes. Here in part one, I explain a number of these key differences, discuss the implications for the in-game economy, and make some recommendations for both the developers and the players. In part two, which will be published later this week, we’ll will discuss how we might rethink or even completely redesign the EVE economy.
No material decay
In the real world, we are constrained by the second law of thermodynamics, where all concentrations of energy are constantly dissipating into the surrounding environment, unless we counteract that process. We must keep eating food to survive and machines need fuel or they don’t move. Anything that is at a higher energy state than its environment tends to rust or break or otherwise decay over time.
The second law of thermodynamics doesn’t exist in EVE Online. Your character doesn’t have to eat and ships don’t burn fuel, except in special instances. There’s no corrosion, wear, or tear, and thus you don’t spend resources repairing your ships, aside from combat damage. Your assets stay in pristine condition indefinitely.
The in-game economy has a natural accretion bias that doesn’t exist in the real world.
Why isn’t capital proliferation a problem in the real world? Because the lifetime upkeep costs on a big navy ship is many times higher than the build cost; Eventually the cost of repairs will outpace the cost of building a new ship. If a real-world navy doesn’t regularly build new ships, its current fleet will eventually fall apart.
Contrast this with EVE. If you build a ship and leave it in a hanger, it just stays there forever. This applies not only to ships, but to almost every asset. Players can just keep adding to stockpiles and they grow and grow, but nothing ever decays.
Recommendations for CCP
We need to be careful when suggesting we add material decay into the game, because having everything break and fall apart on their own is kind of depressing and probably not fun gameplay. Some game designers (like Bethesda) have, however, built entropy into their games, and those games remain wildly popular. On the other hand, infinitely accreting assets is a problem. First, the database keeps getting more bloated, and second, newer players can’t compete against vast amounts of legacy wealth.
If the goal is to prevent an ever-increasing disparity between the wealth of new players and veterans, then material decay should apply to the endgame of big capital ships, powerful Tech 3 and faction ships, and to the enormous stockpiles of materials and ISK. You’d probably want to give players some way to save a limited quantity of assets, maybe letting each player choose 10 or 20 lower-end ships that never decay. The maintenance costs don’t necessarily have to be severe to be effective; even a modest upkeep cost will make players think about trimming their stockpiles.
Recommendations for players
If players want to exploit the lack of material decay to their advantage, it’s as simple as harvesting resources like crazy and stockpiling Everything. Resources can be translated into power and CCP is paying for the storage. World War Bee perfectly demonstrates the power of stockpiled wealth, with the Imperium enduring a defensive war far longer than any other group have previously managed to do, drawing on their deep stockpiles to keep churning out ships to throw into the fire.
No Necessities, Only Luxuries
Without the second law of thermodynamics, there are also no economic necessities in EVE Online. In the real world, you have to constantly find food and shelter just to survive. In-game, you don’t have to do anything. Players gather resources and build stuff not because we have to, but because we bring with us our survival instincts from the real world; we enjoy hoarding resources and combating threats.
To understand the economic implications of this, we need to consider how real world behaviors differ between necessities and luxuries. In the real world, if people are unable to acquire necessities, they turn to desperate actions like stealing, rioting, and banditry in order to survive. In contrast, if people are unable to acquire luxuries, they might get angry or depressed, but they generally don’t do anything drastic. Currently, CCP is trying to tweak the EVE economy, and their guiding mantra states that “Abundance breeds Complacency and Scarcity breeds War.” If EVE Online were a necessity, this might be true. But EVE Online is a luxury; it’s entertainment. If the game provides an abundance of entertainment, you’ll play more. If the game has a scarcity of entertainment, you’ll go look for entertainment elsewhere. In EVE Online, abundance breeds hedonism and scarcity breeds disengagement.
Recommendations for CCP
CCP needs to sell subscriptions and PLEX, or else the company dies. To achieve that, they need to make people want to play EVE Online. Every change they make to the game should be focused on this.
Recommendations for Players
Just do what makes you happy. If playing EVE Online doesn’t make you happy, it’s time to step back and reassess how and why you’re playing this game.
Player-controlled ISK Supply
In EVE Online, the players choose when and how much ISK to add to the money supply, for example via bounties for destroying pirate NPCs, and selling Triglavian red loot and Sleeper blue loot to NPC buy orders. The ISK generated in these ways simply adds to the ISK in circulation. Mechanisms for removing ISK from the money supply are also controlled by players; players choose when to trade (and thus incur transaction taxes), when to buy blueprints, when to cash in their loyalty points, etc. Historically, ISK sinks have not kept pace with ISK generation.
Real world governments do not allow people to create money at their discretion, because doing so would cause them to lose control of the money supply, and thus lose control of inflation. High inflation incentivizes people to buy whatever they can as soon as they can, because everything will become more expensive later. Such panic buying can result in acute shortages of essential goods. In order to avoid excessive inflation, governments have to tax excess money back out of the economy. Curiously, ISK printing in EVE Online does not appear to cause inflation in-game, the reasons for which will be explained below.
One major consequence is that the market is forced to compete against these non-market sources of ISK. Imagine a simplified game where players could choose between mining and ratting. Ratting earns 50 million ISK/hr, and all players are trying to maximize their profit. If ore prices go up and players could earn more than 50 million ISK/hr from mining, people will switch from ratting to mining, increasing ore supply and pushing prices back down. If ore prices go down, people switch from mining to ratting, reducing ore supply and pushing prices back up.
What that means is, as long as consistent ISK printing activities exist in the game, supply and demand have no lasting effects on market prices. The ISK printing activity becomes the benchmark by which the profitability of all other activities are measured. The market responds by changing the quantity of goods traded, not the prices. This is why there is no apparent inflation, except for items that are not generated through in-game activities, most notably PLEX. Also, for any given amount of player labour, less entertainment value is produced than if ISK printing were not available. This is assuming that player entertainment revolves around players blowing each other up. The reason is that ISK doesn’t build ships, ores and other harvested materials build ships. Thus, any time spent printing ISK is not contributing to ships or structures being built, which means there is less stuff for players to blow up. If ISK printing didn’t exist, people would have to sell their harvested materials in the market to earn ISK, which contributes to ships being built.
Recommendations for CCP
In principle, there’s enough ISK circulating in the economy for the market to function, and all ISK faucets and sinks can be removed. However, if the game doesn’t have material decay, that would accelerate the accretion of materials, while stopping the accretion of ISK, leading to the uncontrolled deflation of prices. Thus, removing ISK printing must be done in conjunction with the addition of material decay. Also, removing all ISK sinking game mechanics will still leave the ISK sink of players quitting the game, which removes the ISK on their accounts from circulation. Thus, there’ll still need to be some controlled ISK faucets to maintain liquidity in the market.
If CCP doesn’t remove ISK printing, then they should carefully design game activities to control how much ISK is printed per player hour, and who gets to participate in this activity. If we want to de-emphasize ISK printing and make gathering materials for income more meaningful, then every activity should generate the same modest amount of ISK/hr, no matter its difficulty or accessibility. Activities should be differentiated by their material rewards, not their ISK rewards.
Recommendations for Players
Individually, the best way for players to exploit ISK printing is to skill into whatever the best ISK printing activity is available. Given that the market prices of harvested materials will converge towards the ISK printing benchmark, that activity will, on average, be the most profitable activity unless CCP changes the game mechanics. Short-term fluctuations in market prices may temporarily allow higher profits via material harvesting, but prices will eventually return to the benchmark equilibrium as other players change their activities to adjust.
High Labour Mobility
In EVE Online, it is much easier to “change jobs” than in the real world. You learn skills passively in the background, so all you need to do is buy a new ship, travel a bit, and you can go straight into ratting or mining or exploring. In the real world, changing careers is far more costly. Getting educated in the real world is full time work, so you take a massive income cut while you retrain. Moving in the real world is much more expensive and time consuming. Your old work experience would be mostly irrelevant, so you’d have to climb the career ladder from the bottom again.
Furthermore, players in EVE Online never really have difficulty finding “employment”. Some activities are limited by local availability, such as exploration, mining, and combat anomalies. Other activities, such as mission running and abyssal deadspace, provide infinite secure income. This is completely unlike the real world, where stable, well-paying jobs are scarce, and few people are in a position to give one up.
One major consequence of EVE Online’s high labour mobility is that players don’t have to engage in price competition in the market. For example, if you’re a miner and ore prices are falling, you don’t necessarily have to lower your own prices to compete. You can just as easily quit mining and go do something else. This is not something you can realistically do in the real world, which is why real world prices respond more to supply and demand. The ease of finding income in EVE Online gives players a high degree of economic security, which means you can’t force players to take a pay cut and expect them to keep doing the job. It is up to CCP to design game activities that players want to participate in, or else the players can just disengage at no cost to themselves.
Recommendations for CCP
Firstly, CCP needs to understand that players can and will respond very quickly to changes in the game, especially the veteran players who have a lot of skill points and isk. If you make a change to the game and nothing seems to happen in the economy, it’s probably because that change wasn’t well-designed, or else the players have adapted in a way that wasn’t obvious.
More broadly, the philosophical question is: what degree of labour mobility is the most fun for players? The game is less frustrating if players are free to do what they like, but making the game too frictionless reduces the sense of progress that a player feels. One option for reducing labour mobility is an accumulating proficiency bonus for time spent on a particular activity, which decays over time. This will make it temporarily costly for players to change activities, making the decision to do so more consequential.
Recommendations for Players
The way for players to maximize their own labour mobility is to skill into multiple high-income activities, and keep the requisite ships in nearby stations ready to go. Having multiple income activity choices protects the player against any changes to the game that might negatively impact any one form of income activity, and it also allows the player to more rapidly respond to any new opportunities for income. For newer players who don’t yet have enough skill points to master multiple income activities, the best activity to skill into first would be the benchmark ISK printing activity.