Economy Model Version 0.2

[amjayee]

Guildmaster: I think that's quite exhaustive. I agree that WWI resembles a lot the wars in civ2, but there is something missing - our political model should be able to handle complex system of alliances and attitudes towards each other, that change rapidly depending on the situation; something civ2 did quite badly.

Joker: It's good for you to learn programming - that's something that'll definitely come in handy in your future, even if you don't become a master in it. And Visual C++ is a very good program to use. About programming the model demo, I had some free time last week, but then I became sick and didn't have the energy to work with it very much. But I did start working with some basic classes. I have also some other programming tasks, and I'm developing them all every minute I have free time. I will report any progress.

[The Joker]

Well, I hope you're feeling better, Amjayee!

About the demo, I may have come up with a way to handle the changes in supply that should occur.

S.Kroeze said, that it would be unlikely for more than 2% of the workers to ever switch sector within a turn. I think we could use that for our model.

Let's assume, that not 2, but 3% of the population is actually ready to change sector each turn. These 3% will just be drafted equally from all sectors. To find out which sector they will actually end up in, I think we should use the price of each good.

To take the examble from the demo, turn 1:

The province has 100,000 people in it, and they're all farmers. 10,000 people can produce 20 items of each good, so currently the production in this province is 200 food, and there is 1000 credits spread among the people. The demand for food per PU is 8, for housing is 1 and for clothing is 1. This means a total demand for food to be 80, for housing to be 10 and for clothing to be 10. This causes the price of each of the three goods to be:


Food: 10+(80-200)/(0,05*80) = -20

So the price of food is 1.

Housing: 10+(10-0)/(0,07*10) = 10+1/0.07 = 24.3

Clothing: 10+(10-0)/(0,1*10) = 10+1/0,1 = 20


This means that the ratio at which the 3% of the population changes sector moves into each of the 3 sectors.

It is calculated this way:

1+24.3+20 = 45,3

1/45,3 = 2,2%
24,3/45,3 = 53,6%
20/45,3 = 44,2%

So out of the 3% changing sector 2,2% of them (meaning 0,066% of the pop meaning 66 people) actually ends up staying in the food business. 53,6% of them (1,608% of the pop meaning 1608 people) switches to the housing sector, and 44,2 of them (1,326% of the pop meaning 1326 people) ends up in the clothing industry.

This system makes sure that when there is a really large need for a good (the price is high) many people will change to that sector, and in the long run people should stop changing business, as the price on all goods should become more and more similar.

This system may or may not be flexible enough to work. The only real way to see is to implement it into the demo and see what happends. Of cause this system is not useable for the next versions of the economy program, or at least not directly (unlike the demand system, which should work in it's present form in more complex models, too), since it does not include capital. But I think it could be possible to add capital to it in some way or another.


Also, heardie, I've seen your economy calculator. Great! How did you make it? It was pretty much what I expected the economy demo to be like (although the economy demo should be more advanced) - a simple, windoes enviroment, and variables that can be changed easily. The demo would then have a Next Turn button in stead of the Calculate button. If it is possible to make such a demo without much programming experience (right now the only thing I can make are dos programs like that Hello World thingy) then maybe I could make or at least change the demo? I mean, in stead of Amjayee programming something that he has not spent much time designing it would work better if I made it, since I know excactly how it should work. Then Amjayee could in stead use his time programming the pop model, which is his creation, or a map of some sort. I think that would work great, and would also make it possible for us to get something done quicker. That is, if I can program it...

What does everyone think?


BTW, Guildmaster, that is also pretty much what I have learned about the start of WW1. It was truly a stupid war!

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

"It is ok to show horrific violence
as long as noboby says any naughty words."
- South Park

[The Joker]

Oh yeah, is there any way I can decompile (if it's called that) heardie's econ calculator - I mean, change it back into c++ source code? That way I could take a look at how it's made, and hopefully learn some programming skills while I'm at it.

[Guildmaster]

What are we going to do about black market goods?

It makes sense to me that some goods are legal in some countries while illegal in others. Perhaps Marijuana may be a legitimate trade good in Amsterdam, it's a black market good in New York.

Are we going to have two separate economies?

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Peace and trust can win the day despite all your losing
-Led Zepplin

[heardie]

Hi Joker

Glad you like my economy calculator. Glad you liked it. Just one thing though, it was made to be just a calculator to find out values, not an acutally simululation. I didn't do it in c++, but in Visual Basic 3. All I did was draw the text boxes, and then when you click submit sub their values into the formula, and then display it.

[Guildmaster]

I have learned something else in history class... about the great depression.

As a plan to help Germany make reparations payments for WW1, the US adopted a plan to loan Germany gobs and gobs of money to a)rebuild Germany's economy and b)pay off the reparations. When production had outproduced demand, aka demand was satiated and no one bought goods anymore, factories started to lay off excess workers in an attempt to cut losses. Well then the crash happened and all the banks lost their money. People afraid the banks would go bankrupt began to make runs on banks and pull their money out in droves, well that in effect caused the banks to go bankrupt. so people heard of the banks going bankrupt and then it became a self-perpetuating cycle. Problem: The loans made to Germany were dependant on that same money. Once it dried up, the money used to prop up the German economy dried up and the money used to make reparations payments dried up. So Germany stops making payments, and the British & French economys which became dependant on the reparations money got hit. So that's how the depression spread from one country to another. Also, to further damage Germany's economy, there was this bank in Austria which I don't remember the name, but it was the oldest bank in Central Europe at the time. When Germany and Austria went to sign a free-trade agreement the French who had a lot of money invested in this bank responded by withdrawing all of it. That bank went bankrupt, and now all of a sudden people in the US heard about it and said "Well geez, if THAT bank can go bankrupt, even our biggest and best banks can too." So they made runs on the bigger banks and they, too, ended up going bankrupt whereas before it used to be just the small insignificant banks that were affected.

Only country that wasn;t affected by the depression was Soviet Russia. Since they were communist, no one wanted to include them in the great scheme of things so therefore no one traded with them anyway.

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Goes down smooth when I get a clean hit of that skunky, funky, smelly green sh.t
- Cypress Hill

[The Joker]

I don't have much time know, so this will be quick. I will post again tomorrow.


Guildmaster:

We should propably have some goods that are potentially illegal in some countries. And this would create a black market. But actually black markets are much more important in planned economies, so in such we should have a good way of portraying them.

I think the depression would propably be harder to portray than e.g. the oil crisis. I am not really sure how the former started, but I think it had something to do with a crisis in the food sector (in the US).


Heardie:

I think the demo would actually be little more than an advanced calculator. Think about it. It should be possible to add a small algorithm to the calculator, so it would only be necessary to select an income, and then have the calculator figure out what people buy. And then it would be easy to add a change in supply to this, so the supply changes via the demand. I will elaborate on this tomorrow.


Bye bye!

[The Joker]

Hmmm...

Not much going on at the moment.

I suppose you are all buissy. Honestly speaking I am too.

But anyway, I think that to boost some life back into GGS we should begin doing more than just discussing economy, which is virtually all we're doing at the moment (apart from the website). Especcially conserning potential members. I don't really think many people will join a project that is only conserned with one detail.

So we should start some threads about other topics as well. The problem with doing this, however, is, that the basic models of the game should propably be set before we can begin developing more advanced stuff.

But there are at least some things that we can discuss even now:

Map (Is this done?)

Population

Turn system (How this should work)

More?

It feels like we have dugged ourselves into some deep hole: We can't really settle much of the design untill we have programmed demos of the basic models, and we can't program demos untill we have settled some design. How can we solve this?

Some things we need to do:

Get our own forum

Make a thread that can introduce newcomers to the project, and tell them how they can be of assistance

Get a less free structure - I think we need to commit ourselves more to some models, and then focus on those, in stead of just posting randomly.

Do you agree with these things or am I way off?

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

"It is ok to show horrific violence
as long as noboby says any naughty words."
- South Park

[amjayee]

Guildmaster: Once again, that sounded quite exhaustive. I'm just wondering, is it possible to model somthing like that in the game - at least it's a little difficult, since we would need to go into great detail. But perhaps we could come up with something more simple. We'll have to see.

About the economy model, what is currently taking my time is, that I want to use excactly the same structure in the program that I would be using in the final version, just simpler. This is because I don't want to be changing the program structure every time we make the model more complex. It is a little difficult to design the classes, since nothing like this has been done before, but I'm making progress.

Lately, I was banging my head against a tree when I tried to figure out how the people would buy things. Let's assume we have x social classes, and one of them has y money to spend on z goods. For each one of those z goods they have 3 figures: how much they require, or absolutely must have, how much they demand, or would like to buy, and how much they are going to buy this turn. Requirement stays usually constant; it is figured out separately for each social class. For lower classes, it is the amount they need to stay alive, for higher classes it is how much they need to maintain their social status. For example highest class must use more money for housing or cars, else they are not anymore considered to belong to their class.

Demand is dealt with Joker's model, it changes every turn. Then the last, how much people actually buy, is decided according to how much they have money, and how much they actually need to buy. Here comes the problem: can the people demand more than they can afford, or is the demand decided based partly on the people's wealthiness? It does not need to be so. Also, can the people demand more than they need? Meaning, I think there should be some kind of upper limit for how much people of certain class will demand. I think demand should be completely separate from the people's wealthiness. People of certain class demand certain things in certain situation. If they can't afford those things, they will be a little unhappy, and after a little while, if the prices don't seem to go down, correct down their demands.

Also it's a problem how people will use their money. If they can afford everything they demand, I think they would buy all that, but nothing more; the extra money would be used for investments, and demand would be corrected up, perhaps. If the people can afford what they require, but not what they demand, I think they would buy what they require, and then use some priorities to buy other things: for example they would start from food, and buy the amount of their demand. Then we could use some percentages; we might assume that then people would try to satisfy at least 90% of their housing demand, 80% of their clothing demand and so on. Those figures were completely imaginary, we should make percentages for each good. Also I think incertain classes, some percentage of the money would always go to investments; this would model the fact, that money is not distributed evenly within a class; some people could always afford to invest. (Well, at least almost always.)

Sorry, this was not very clear, I didn't think this through properly. But my message is, that when programming, it is necessary to know excactly how each thing is done. I can make things up from my head, of course, but it's more appropriate if we discuss those here.

Here is what I'm intending to do; I will have a population class, that handles the population model (very simple, but it's there). There will be one instance of that class in the demo. The population class will store the economic info for that population. Also there would be on region class, also very simple, that stores that region's economy data. I will explain that later. You don't need to know how classes work, they are just building blocks of object-oriented programming. Within the population class there would be a bunch of social classes; each one of those would store the requirement, demand and how much the people buy for each good. Also each social class would store the available money and those kinds of things. I intend to have three social classes for the demo, food, housing and clothing producers. That would be changed later, of course. Each region class would store the supply for each good within that region, and stuff.

This was a short and bad explanation of the program structure. If I do it this way, the only thing we need to do when we increase the complexity of the model is to add some new goods and social classes, and some code to handle those.

At least in the beginning, the demo will be dos-based, and work in the console window of Windows; creating a windows environment with Visual C++ is a little time-consuming task, and I'd like to have the model working properly before trying to make it work in windows. But of course we don't necessarily need a windows version...

[RonHiler]

quote: Originally posted by amjayee on 10-09-2000 03:39 AM At least in the beginning, the demo will be dos-based, and work in the console window of Windows; creating a windows environment with Visual C++ is a little time-consuming task, and I'd like to have the model working properly before trying to make it work in windows. But of course we don't necessarily need a windows version...

Hmmm, I would recommend against the console window thing, myself. Bite the bullet, and set up a couple of windows. It doesn't take very long, it's just a matter of filling in a couple of data structures.

The problem with console stuff is it kind of locks you into a procedural style program, unless you take special measures in your main loop to get into an event-driven program (ie a huge case statement). And why bother when this is built into Windows already? You'd just end up pulling all that case code back out again when you converted to real windows. Not to mention it's not really all that easy to convert back and forth. Once you start in a console, you're not very likely to switch over. And consoles are not very professional looking.

On another note: Are you locked into using MSVC? Borland Builder is a far superior compiler. If you were using it, you would never even consider using a console program. It takes about 10 seconds to set up a window in BB, and about another hour to complete an entire working UI But I don't want to start a compiler war, here. I can understand if you want to use MSVC. It is the industry standard, for some unknown reason (that is utterly beyond my ability to understand).

Hope it's going well.

Ron

[The Joker]

It is really nice to hear that you are making progress with the economy model, Amjayee.

To answer some of your questions:

Depression:
I think it should be possible to model a depression with our economy model. The ability to do that is one of the main reasons that I think we would need one. Obviously we don't need banks going bankrupt in the game - that is too much complexity - but a general decrease in the activity in several sectors due to a crisis in one should be very possible.

Demand and must haves:
I really don't think there should be any difference in the game between demands and requirements. We like to think that we must have TVs, computers and cell phones, but people in Africa don't really need anything but food, clothing and housing. This means that I believe demand/must haves should only be a function of people's wealth. And of cause when the amount of goods they can buy drops they become upunhappy. If you make the demand only a function of wealth (# money they have) there is no need for class specific demand or anything else, since it will all be implemented via their wealth. The capitalists (I am using this word in lack of a better one) are wealthy so they demand many goods, the workers are poor so they demand few. And this will mean that each class has it's own demand.


I think I might have a way to show you how I think it should be done. I will simply write down what should happen in the order it should happen:

P(food) is the price of food, P(clothing) is the price of clothing and P(housing is the price of housing).
D(food) is the demand for food when the price is 10, likewise with D(clothing) and D(housing).
S(food) is the supply of food, likewise with S(clothing) and S(housing).
E(food) is the elasticity of food, likewise with E(clothing) and E(housing).
Pop is the population.
Pop(food) is the amount of people working in the food sector, likewise with Pop(clothing) and Pop(housing).
Pro(food) is the amount of goods 10,000 people working in the food sector can produce per turn, likewise with Pro(clothing) and Pro(housing).
When i use the term P(food)N or Pop(clothing)N it means the values that these will have the next turn.


1: # people working in each sector (producing each good) for this turn is changed according to the price determined in the last turn. The way this is done is so:

Every turn 3% of the pop have the potential to change sector. The sector these end up in is determined via the price of each good.

Pop(food) = (Pop(food last turn) * 0.97) + (P(food) / (P(food) + P(clothing) + P(housing)) * 0.03 * Pop)

Pop(clothing)N = (Pop(clothing) * 0.97) + (P(clothing) / (P(food) + P(clothing) + P(housing)) * 0.03 * Pop)

Pop(housing)N = (Pop(housing) * 0.97) + (P(housing) / (P(food) + P(clothing) + P(housing)) * 0.03 * Pop)


2: The supply of each good for the next turn is calculated, simply by multiplying the amount of people working in each sector with the productivity:

S(food) = Pop(food) * Pro(food) / 10,000

S(clothing) = Pop(clothing) * Pro(clothing) / 10,000

S(housing) = Pop(housing) * Pro(housing) / 10,000


3: People use the income they have just earned. The goods they demand is calculated via the list of goods – like the one I have posted previously. For convenience I will post it here again:

quote: Good 1-5 bought is food Good 6 bought is housing Good 7-8 is food Good 9 is clothing Good 10 is food Good 11 is housing Good 12 is food Good 13 is clothing Good 14 is food Good 15-16 is housing Good 17 is food Good 18-19 is clothing Good 20-22 is housing Good 23 is food Good 24 is clothing Good 25-28 is housing Good 29 is food Good 30-32 is clothing Good 33-38 is housing Good 39-40 is food Good 40-43 is clothing Good 44-50 is housing

This is used to find out what people will actually consume. This is by far the most tricky part of the demo. The rest of the demo is simply a calculator. This needs an algorithm. I think it could be made like this:

To do this we will need the income available to each PU (10,000 people) and the amount of people. This income will be used for goods. Note that at this point this will only work as long as we have only 1 class, and therefor everybody has the same income. Different classes will need a variation of this function.

It will need a number of piles to make this work. First it will need the Income pile (this income pile will be for 1 PU only). Credits is removed from this as they are being used to buy goods. Second we need the pile of goods that I have shown in the quote. This pile will be special since what is important in it is not the number of items in it, but just the item on top of it. The program will start by taking the good on top of the pile, run it through the function, and then take the next good in the pile, then the next etc. We also need a pile for each good we have. When a good is being removed from the pile of goods it will be added to the pile of the good that it belongs to. A food item will be added to the food pile etc. This gives us 5 piles, named Income, Good, Food, Clothing and Housing.

Maybe this codelike text can explain what I think should happen next:

If Income > 10
Take 1 good from Good pile and add to the pile of the good which sort it is (named pile X)
P(good) = 10 + (S(good) - (X * pop / 10,000)) / E(good) /* X * pop / 10,000 is actually the same as D(good) */
Y = S(good) * P(good) /* Y is the amount of money people spend on the good – there will be a Y for each goods, and when all the Y’s are added to each other they will equal the original income – people spend as much money as they earn! */

If Y > Income * pop / 10,000 /* the last part is needed since Income is just for 1 PU, and we need to look at the entire pop when doing this */
Then the previous function will go out of order and in stead the If Income <= 10 function will start, even though the income is more than 10.

Else
Income = Income - change in Y /* Y after the last function minus Y before the last function */
The new Income will be sent through the function again.

If Income <= 10
Y = Y + (Income * pop / 10,000)
Income = 0
P(good) = Y / S(good)

If Income = 0
The function will simply end and the current prices and demands for all goods will be final for this turn and passed on to the next function.

By programming this (which I can’t do (yet, I hope)) I am pretty sure that we would end up with the right result. The function will continue running while putting in the new goods from the Good pile each time untill the income has been spent. Note that Income will end up being excactly 0 no matter what happens. When the income drops below 10 the regular, advanced price function will be replaced by a simpler one. But since that is used only to finetune the price for very small changes in demand (less than 1 per PU) it wont really matter in the big picture.

I know that this propably seems really complicated. But I believe very strongly that it should work, by simply coding each line at a time.


4: This step is not really needed for the demo, since there is only one class there, but later this will be the step where the people’s income will be calculated, by using the price and supply found in the previous turn (note: This should not happen the first turn). In the demo there is only one class, and since the amount of money is constant the class will always have the same income. But later on the income for each class should be handled seperately. The amount earned in each sector will equal Y from step 3. Later on we will also include the money spent for labour and raw materials here, to find the surplus in each sector. But now it is not really needed.


5: End turn. All the external things occur (player and AI actions etc) and after that the values from this turn is passed on to the next, in which the function moves back to step 1.

Hmmm...

I think this should be workable. I am writing this down as much for myself as for you guys, since it is pretty dificult for me to see excactly what should happen in the demo, and when it should happen. I feel a lot more clear on this matter now after I have written it down.

But of cause this is primarily to Amjayee, to present as clear a vision as I can on the economy model.


Dos vs Windows based demo:

Well, currently I have no idea how to make a windows based program, so I don’t know how long it would take you. But if it doesn’t take too long I must say that I agree with Ron and would prefer, at least at some point in the process, to have a windows enviroment as opposed to the Dos one. It doesn’t need to be anything fancy, just a UI like Heardie’s calculator. The beauty of the Windows enviroment is the freedom it gives. You can simply go in and change all variables as you see fit, and hit a Next Turn button when you’re done. At least the Dos programs I have made untill now (simple calculators and stuff) have the UI of a Siemens cell phone. I would like to be able to play around with the demo, and change variables, like increasing productivity and pop size as the turns go by, to simulate an actual game. A Windows enviroment makes this really user friendly.


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"I'm a white male, age 18 to 49. EVERYONE
listens to me, no matter how dumb my suggestions are."
- Homer J. Simpson
[This message has been edited by The Joker (edited October 09, 2000).]
[This message has been edited by The Joker (edited October 09, 2000).]
[This message has been edited by The Joker (edited October 12, 2000).]

[Guildmaster]

Same thing that caused the depression in the 30s was a result of WW1, is the exact same effect caused in the late 80s & early 90s after the Vietnam War... at least in the US. The difference being that in the 30s, there were a number of factors I mentioned earlier that facilitated the spread of the depression from one country to another. This is the cause:

After the war was over, hundreds of thousands upwards of millions of young men of marital age came back home.
That's why, here's how:
They come home from the war and start a family. During the war, the demand for simple consumer goods was very very limited. By consumer goods, I mean ovens, refrigerators, washers, dryers, basic consumer goods that every household needs. So the sudden influx of new homes and families creates a sudden demand in the void where there was none. This demand would have been there without the war, but it subsided. This effect is similar to the sonic boom effect, in that all the sound waves hit at the same time having a (Damn I just learned the term in chemistry class...) you know what I mean.
So in order to fill the demand, the companies that produce these products go into overload hiring up just about everyone they can and producing as much as they can to meet the demand. Well this all happens at once and all at once the demand is satiated, no more demand. Well the companies are still producing mass ammounts of goods so in order to cut losses they cut jobs, thus raising unemployment etc etc the domino effect.

This would have happened to the US in the 1950s were it not for the Korean War, when the demand boom was about to hit another generation went off to fight another war.

I would say that any time you have over 50% of your nations males age 18-25 go fight a war for a few years and suddenly come back you create a whole bunch of new families (housing demand) at once. There should be a lag between when a demand is satiated and the industry cuts the supply to the new levels.

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Goes down smooth when I get a clean hit of that skunky, funky, smelly green sh.t
- Cypress Hill

[The Joker]

Wow, I didn't even know that, Guildmaster. But of cause when I think about it it makes a lot of sence. It might be a bit hard to portray in the economy model though. It would mean that we would have to make demand dependant of the number of families in a province. But it should be possible to make it happen, in one way or another.

Mostly a quick war is excellent for boosting the economy. It creates a demand for military gadgets, and thereby it means more jobs etc. But in the long run wars are poor for the economy. I think making this possible should be no hard task. Increase the military bugdet and create jobs, which creates a boom. But in the long run a war means fewer technological advances (since you're using all your money for the war) and thereby it hurts your economy.

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"I'm a white male, age 18 to 49. Everyone listens to me, no matter how dumb my suggestions are."
- Homer J. Simpson
[This message has been edited by The Joker (edited October 11, 2000).]

[ElmoTheElk]

About the baby boom after a war: Here in The Netherlands ans in some more west-european countries, the WW2 caused an explosion in birth. All there new babies are now about 50 years old and so within some years (about 10) when they all quit working, this will results in an relative old and non-working population.

What I mean to say is that at this time, economy will crash if the right actions are not takes to avoid this. In our game, it may be hard to program this, or it may not (I have not enough programming knowlege of this), but it certainly is an quiet important aspect of your economical status (the age of your people).

What can we do with that?

[Guildmaster]

I don't think it should be too hard, as long as we get our population/age group model straight.
You figure an average retirement age and go from there. This way you're not modeling the disaster, but the disaster is simply a natural occurance that works within the model.

We need to focus our economy model to track demand as a factor not only of wealth, but as of course population and age of population. Assume that people between the ages of 18-25 have a higher demand for "Household Consumer Goods" because they're starting a family, while people outside that age group don't have so much of that demand.
War is something totally different, except in that it interacts with the economy model by temporarily taking people from that age group out of the active economy and returning them all at once.

If we need to do anything at all, just make it so that even people older than 25 returning from the war still keep the demand group for HCGs.

You know strike that, better idea: Go into the population model and decide a "Mating Factor" or something like that, this number tracks how many people in which age group are of the "settling down to start a family" time of their lives. Assume an average age based on technology and stuff and attach a bell curve since some people start early and others later. Then in case of a war, you take the number of those people that would be starting a family at such and such an age and take them out of the demand group. Then as the war drags on, that number accumulates, and when they all return from the war, you have the initial demand that would have existed before plus the number of people returning from the war.
That makes it simply a population factor and the economy will just interact with that.

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Goes down smooth when I get a clean hit of that skunky, funky, smelly green sh.t
- Cypress Hill