Economy Model Version 0.2

[Guildmaster]

Also the demand for each grade is already calculated in the wealth demographics.
If we have 5 wealth categories than it's easiest to have 5 grades of each good, or if we have 6 wealth categories then we have 6 grades of each good, and assume the percentage of each grade to be bought will coorespond with the wealth category...

It can be assumed that poor people who drink wine will mainly drink wine that comes in a box-you've seen the boxes. The not-quite-so-poor will drink something like Sutter Home or some other cheap mass produced wine while the richest are the ones buying from Chateau La Tour etc.

Sorry about oversimplifying my ideas, it gets kinda late here when I get home from work I don't feel too much likt going into depth when I'm this tired.

[amjayee]

Joker's new system seemed good. I can't say who is more correct, Joker or Guildmaster, but I try to think about the ideas here. Right now, I have a headache and can't concentrate on that...

[amjayee]

Ok, here comes some chatter about the good grading system and stuff. Guildmaster's concern about what people will drive with, if they buy 10 cars instead of 15 just because they are better is justified. We need to do this reversed; first we decide the demand for cars for each wealthiness group. Then, the people check, how much money they want to put into cars, and then they buy those kinds of cars they can afford. When the people get more money, they can decide to buy fancier cars; but they will not "upgrade" to better ones just because they are better. An example makes this more clear.

Assume we have 45% of the population of our province belonging to wealthiness group 3. The province has 5 million people, giving us 2.25 million people in group 3. The group 3 people need 0.6 cars per capita, so the demand is 135 car units, when one unit is 10000 cars. Assume now, that grade 2 cars cost 40, grade 3 cars 60, and grade 4 cars 70 currency units at the moment. Available money per 10000 people to waste on cars is 50 units. So, they people will buy grade 2.5 cars; this means 50% of the cars are grade 2, and 50% are grade 3. Using the decimal values is easy; you can get the portion of the higher grade goods simply by extracting the fractional part of the number; 2.35 means there are 35% of grade 3, and rest are grade 2.

How do we decide the decimal grade level? If the people have 50 units of money, with the prices listed above, we find that the value is between grades 2 and 3. So it is 2 point something. The fractional part is (M-P2)/(P3-P2), where M is the amount of money to use, P2 is grade 2 price and 3 is grade 3 price. So, the grade level in our example is 2+((50-40)/(60-40)). Then we can use the fractional part to decide the amounts of cars bought; A3=FxD and A2=D-A3, where A2 is the amount of grade 2 cars, A3 the amount of grade 3 cars, F is the fractional part and D is demand for cars. This algorithm can be optimized a little with some tricks with the order of calculations.

So; we should first find the demand for each product, then the amount of money people have to spend, and finally the grades of goods they can buy. If people can't afford the amount they demand, they will buy grade F goods as much as they can, and leave the demand unsatisfied; next turn, the demand will drop, until the people can afford the amount they demand. When they get more money, or when the prices drop, the demand is checked again. This system would make sure everyone gets what they demand, and allow the people to buy more fancy goods if they have money.

Determining the demand for each good is much more tricky than determining the prices. Perhaps the tech level should be the main factor determining basic demand for each good; then this is modified according to the amount of money the people have, the prices, supply etc. The supply/demand calculations system Joker suggested looked great. It should handle this.

Completely another thing is to determine, how the people will spend their money. For basic goods, like food this is easy, as Joker said; we will find out how much money people use for basic things first. This includes food, shelter etc. What is left over from that is used for other things. This is where tricky things begin; my grading idea assumes, that we find out the demand for every good, and the amount of money people spend for that good first. This might require some changes to the Joker's system.

Generally, I think we should have 10000 people as the basic unit; income and demand would be decided for 10000 people, and the prices of goods would be calculated for a "unit" sufficient for 10000 people. Notice that one unit of people might well demand more than one unit of some good. Ok, this has been said earlier, I just thought about stating it once again.

What about the prices for each grade of goods? Should we make a system, where we pre-determine for each good the basic price, and how much larger the price for the different grades of goods are. For example we could set the basic price for every good to 10; this is the grade F price. Then we could define, that grade E car is always 2 times larger, grade D 4 times, C seven times, B ten times, and A 15 times more expensive than grade F. For all goods we would define the prices similarly. Later, if we find out that we can afford to have separate price for each grade, we could do so.

One thing we need to consider for the economy model; we should allow the possibility, that people don't spend all the money they have got during that turn. If people have very much money, they will spend very much, but they will also use the rest of it for investments; they put it into a bank, which uses that money for investing, or buy stocks, or let someone else buy stocks with those money, or they will found new enterprises themselves. Where else the money for running and building industries would come? Also, in modern world the rich people will have very much excess money. It would be ridiculous to try to spend all of that for cars or wines...

So; what do you think about these ideas?
[This message has been edited by amjayee (edited August 17, 2000).]

[Guildmaster]

I definately agree with the perspective difference you have pointed out in that people in Denmark simply drive less...
But also there is more to it than just culture albeit culture does play a big role.

But there is more:
1) Public Transit in America is something that most people have to look up in the dictionary to know what it is. Sure in places like New York where there actually IS an extensive subway/bus system you will see that the per capita automobiles drops significantly, people don't need their cars to survive as there is alternative transit. Most US cities don't even have anything more than a bus service that doesn't have but one or 2 lines that are operational 24 hrs. Even so, the bus is usually more expensive than gas and less convenient than parking.
2) Even if there was public transit, you're again right about the cultural issue here, in that people here live so far away from the city that even for people living around major cities there is no bus system at all way out in the boondocks so the only way to get into town some 100 km away is to walk/bike or drive you can guess what gets you there in a reasonable ammt of time. BTW to live closer in town is waaaay more expensive than the average american can afford. While there may be some bus service that runs every hour until about 6pm on the outskirts of city limits, most people don't even live that close.
3) the cost to buy a car is so cheap here. the only tax you pay is the same sales tax that you pay for any other good liek groceries. Sure you have liscence and registration other fees, I have my little Geo Metro which the price was $895 for it and I paid a total of $1152 including tax, tag, title fees, registration, insurance and everything. Probably would have been well over twice that in Denmark, which means I wouldn't have been able to afford it but then there's public transit there so I wouldn't need it.
4) In America, at least where I live there is anumber of things you will not be able to do without a car. a)get a job b)meet a girl c)go out d)go shopping e)go to school
basically there is no alternative here except a bicycle (which I have BTW) and usually there is no place to lock up your bike so someone doesn't steal it.

So what I'm saying is that it does make sense for a family who can afford to buy 4 camrys to get 2 BMWs assuming two people in the family don't need their own transportation. But mt new question is this:

Do we want to have a separate demand structure for each good which would make the most sense but would take a lot more doing than no one wants to do, or do we want to have a few special cases or have the same demand structure for each good?
eg.
Wine is an aquired taste. Ever noticed that the cultures that produce the most wine also consume the most wine, even though export of wine is as lucrative as it is? Perhaps when winegrowing is a part of culture, winedrinking also becomes part of the same culture. I notice that in California everyone drinks wine (most wine grown in the US is California, best wine in the world I must admit) while here in Florida, while there is always connoisseurs the numbers are about half I think. Just a guess, probably nothing.

Cars: the demand for cars needs to be linked to 1) the availability of public transit and 2) the ratio between urban/rural population in addition to income level. I have noticed that in the city there may be 2 or 3 cars per 4 ppl household but in the country 5 or 6+ in a 4 ppl household!

so does that make any sense?

[The Joker]

Sorry, I have been really buisy with my new job the last few days. I propably wont be able to give you an answer to all the questions untill the weekend. I will just type down some loose comments for now:

Amjayee:

I don't really know about your system. First we shouldn't have wealthiness groups. The wealth of people can not just be put into some group, and besides the wealthy people 1000 years ago would propably be considered poor today.

I think maybe the disagreements we have may have something to do with the cultural differences (at least between me and Guildmaster). Guildmaster is American. And in the US cars are seen as a necesity. It is assumed that people simply NEED x amount of cars, and that their wealth level will only determine the quality of these cars. In Denmark the government has put a 180% sales tax on cars (!). Partly for enviromental reasons, to avoid US style highway madness, partly made as a hidden protectionism, as no cars are produced in Denmark. This has caused cars to be viewed differently in Denmark compared to the US. In Denmark the average amount of cars per family may be down to 1,3 or 1,4 (30 years back the number were lower than 1!). This means that the wealth of people doesn't only decide what cars they buy. It also decides how many cars people buy. This is what caused me to make the amount of cars demanded a function of the wealth of the people in my system. It seems as if Guildmaster's system just assumes that x number of people means x number of cars no matter the wealth. And I just don't think this is a useable assumption.

I can't really see what you all think is so wrong with my system. Why is it unrealistic to assume that when a family can afford 4 Ford Fiesta's they would rather ditch them and buy 2 BMW 320's in stead?

Either way, I can see why my system may be a little too unflexible. But I think the same about Guildmaster's (and Amjayee's) system.

I will think about this and return with more comments.


Demand:

I think my original economy model handled this. It is simply all put into a function, where increased wealth means that people will buy certain goods. What these goods are can always be determined via the demand function. This may not fit completely into the truth, but it is the only way to make a real economy system without way too much complexity.

It could work like this for a 10,000 pop unit (for whom 10 food per turn would be the basic level):

The first 100 credits earned will be used for food.

The next 20 will be used for shelter.

The next 20 for clothes.

The next 20 for more food.

The next 20 for basic consumer goods.

The next 30 for shelter.

....................

The next 200 for cars.

The next 80 for wine.

The next 50 for clothes.

etc etc.

These last 3 would of cause be when people have incomes of several 1000 credits.

The computer will then simply start from the top of this incredibly long list (it will be so in the game) and move it's way downwards untill the people are out of money. Changes in the price of a good will of cause change the demand for it and sometimes also the amount of money spent on it.


Investment:

If you look through my economy model you will see that I have mentioned it somewhere. I think it should work as you described it.

[Guildmaster]

Here's one for you...

we could have the same demand structure for all goods... but some goods we would add "Flags"
or, say the demand structure for diamonds, emeralds, rubys, sapphires all is the same demand structure. But suppose there was a cultural thing where the Iroquois bought up all the emeralds, then you would have a flag next to emeralds saying "Iroquois demand +5" or something like that. In the case of automobiles, it might be "Demand -2 city +2 rural, D= Pop-M(mass transit)" or something like that where we're still using the same demand model for each good but with the ability to add small alterations where needed.

BTW I agree about italian wines, only wines that come close to CA wines! =)

[The Joker]

You're making perfect sence, Guildmaster.

I agree with you on everything you have said in your latest post (which is great, as it means we are finally thinking in the same direction) except about the best wine in the world being Californian. I really, really must disagree here. I am not really an expert in Californian wine, but what I've tryed have all been beaten by French and Italian wine (unlike most people I actually find Italian wine superior to the French) .

But to get back to the subject:

I don't really know which one of your three options we should choose. I agree with you on the pros and cons, but I am not quite sure which one would be best.

Having the same demand structure for all goods, as I have assumed in my economy model would be the most simple thing to do, it would take far less time implementing, and it would require less calculations by the computer.

Having a special demand structure for all goods is probably not needed, as many basic goods (like food and housing) don't really need special cultural algorithms - well, maybe housing would be determined by the weather, but at least food demand would always be the same. Or maybe even this isn't even so... Maybe the price elasticity of food will be determined by the income level of the wealthiest people. They will overbid the poorer ones up to a point where only they could afford to buy all the food they want.

I propably think that we should start out by simply having the same demand structure for all goods, while we develop the model and the rest of the game, and then, when we have most of the model settled (including, but not at all restricted to deciding what goods we are to have) we can add the individual demands for one good at a time.

[The Joker]

quote: ...but some goods we would add "Flags" or, say the demand structure for diamonds, emeralds, rubys, sapphires all is the same demand structure. But suppose there was a cultural thing where the Iroquois bought up all the emeralds, then you would have a flag next to emeralds saying "Iroquois demand +5" or something like that. In the case of automobiles, it might be "Demand -2 city +2 rural, D= Pop-M(mass transit)" or something like that...

I'm sorry Guildmaster, but I really don't understand what you mean. Especcially with the emerald thing.

But I think I get the big picture, as you described in the end. All goods have the same basic demand structure, but if we want we can later add some special abilities if we feel the need for them.

[amjayee]

I agree with Guildamster about that demand is not that simple; people don't buy cars just because they have extra money after buying food and paying bills. They are bought when they are needed, just as all other consumer goods. Guildmaster's last idea about adding this to the demand model sounded good. That's all we need to do. But somehow we need to take into account what people in different situations need to buy. But I agree with Joker we should start with a simple supply/demand model, and later add those things. I don't think it would even be hard to implement the system Guildmaster proposed; it just would require lots of balancing. Overall, I still can't quite figure out all of the economy model, but I will try...

[The Joker]

Amjayee:

quote: Overall, I still can't quite figure out all of the economy model, but I will try...

Well, actuallly I don't think I can either. It is so hard to figure out that it is impossible to see if it will actually work without making it into a computer program.

I am working on updates to the model, but in stead of just posting it in one huge chunk I will simply post it as I develop it, in small pieces, as I did with the new supply/demand system.

------------------
"It is only when we have lost everything
that we are free to do anything."
- Fight Club

[The Joker]

I am having a lot of trouble figuring out the implementation of the two types of calculating the supply of a good:

The first is calculated via the price of the good. Higher price means highe supply.

The second is calculated via the production factors needed to make stuff - capital, raw materials and labour.

These two sides of the supply can not really be linked together. I would like to have a system where the price of the good determined how many of the production factors are needed, and then these determine how much the supply will get. But this is really tricky to do.

I will continue to think about this and return when I have found some way to solve it. I would really welcome suggestions if anyone has any.

------------------
"It is only when we have lost everything
that we are free to do anything."
- Fight Club

[Guildmaster]

Why don't we add a demand factor that is category dependant? Instead of having a seperate demand calculated for each good and having it be an inacurate demand, why not have a demand for each category of good calculated independantly and any trade good will satisfy the demand?
Say for example:

The resourse demand is dependant on the ammt of industry and production ques, also on the ammt and wealth of available consumers for all goods

The transportation demand includes everything from horses and chariots to automobiles and bullet trains, and is dependant on the population and density of any given area, (greater density means less of a demand per capita, but a greater overall demand.) Also, this could be used to solve the dilema Joker and I got into over, by saying the availability of public transit satisfies a major chunk of the transportation demand leaving less demand for automobiles.

Communications demand is tricky, anyone else want to do this you're welcome to it! =)
I would think there is a constant demand for better technology...

(note also that each demand has a severe effect on ctual gameplay, lack of adequate transportation or communication can destroy an empire just as easily as lack of food)

Textile demand, or fabrics, clothing and blankets depending on population, but also on grade bought as lower grade clothing wears out faster and has to be replaced more often.
Example, you need textiles for 10000 people... you have enough cotton to satisfy 6000, can import enough silk to do another 500 and can manufacture enough nylon to cover the rest. (just a rough idea)

Construction demand is dependant on a)income per capita, b)population, c)population density, d)projected growth, e)quality of prior construction, etc etc a number of dependants for this demand.

You get the general idea. I think the problem with a set calculation for each demand is that it isn't actually creating a demand. I don't know how much generalization we can do with this before we have to start saying "This makes sense but that doesn't."

If this doesn't work we might try this:
Have a number of seperate demand formulas, label them formula A, B, C, and D. For each trade good, you use the right formula. Say for food, cotton, and beer you use formula B but for wine and silk you use D. If we have different variables in each formula, we can have all the benefits of separate calculations without taking up all the space...
For example:
formula A) D=a+b(2c)
formula B) D=2a+3b+c
for cotton we say Use formula a where a=supply, b=consumers, c=molasses
for dildos we say a=hookers, b=lonely housewives and c=1/avg. penis size
for cars we use formula b where a=wheelbase, b)top speed, and c=# of cupholders.

Or whatever. I think this might work what do you think?

[The Joker]

That is truly a fantastic idea, Guildmaster!

It would really solve a lot of our problems, without much trouble.

Would it be reasonable to say, that when people have bought the food they need they would simply spend a certain amount of money on certain categories? This would mean that the amount and the categories chosen would depend on the income of the people, but not on the actual price on the goods in each category. This would really make the job easier, as we don't have to check the amount of money spent with the amount of money earned all the time. We simply know that when people earn 1000 credits per turn they will spend 200 on housing, 50 on information, 150 on transport etc - this amount would not depend on the actual price of the goods in each category.

The price on the goods in each category would simply determine what goods in the category to buy. Of cause when people have some of the demand for health covered by free medical insurance they will spend less money on it, and when they have access to extensive public transportation they will spend less money on cars.

I think that this system will propably be the last demand system we will have to develop!

I will think about it and return with more thoughts on the subject.

------------------
"It is only when we have lost everything
that we are free to do anything."
- Fight Club

[amjayee]

I agree, this idea sounds much more sensible than the earlier ones, and it simplifies things quite a lot. It will also support the large timespan better than earlier.

As Guildmaster said, any product would satisfy the demand in that category. Perhaps the system would be, that people will always try to get the best technology; if there are cars available, they will buy them instead of horse carts; though cars are more expensive, so the people who can't afford cars would still buy carts. So, there would be demand for several levels of technology. Also with communication; there are mobile phones available, but still ordinary telephones are used very much.

This is not only because the people can't afford buying the mobile phones, but also because changing from ordinary to mobile requires great deal of investments in infrastructure. In future we will propably use only mobile phones; in Finland there are already more mobiles than ordinary phones, and many people have a mobile as their only phone.

Just some thoughts of the demand for better technology. We will need to think about this more.

[The Joker]

I am REALLY getting tired of this.
[This message has been edited by The Joker (edited August 28, 2000).]