Runescape Economics: If you stop playing your dead!

[arabik0]

***Please note that this thread is not the first discussion on the topic***

 

 

 

 

 

 

 

Many of the people who played the old runescape say that money is not what it used to be. They remember when 100k was a lot of money, not spare change.

 

 

 

 

 

 

 

So why is that runescape gp is getting to be worth less and less?

 

 

 

 

 

 

 

This is one of the things that i hope to explain, among other things, in this thread; as well as open up discussion and hopefully some suggestion on how to improve the situation. :D

 

 

 

 

 

 

 

------Contents page-----

 

 

 

 

 

 

 

1.Inflation and interest rates

 

 

 

 

 

 

 

2. Runescape Bank

 

 

 

 

 

 

 

3. Runescape Economy

 

 

 

 

 

 

 

4. What to do about the situation

 

 

 

 

 

 

 

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Inflation and interest rates:

 

 

 

 

 

 

 

To understand the economy of Runescape one must first understand two fundamental concepts of economics, inflation and interest rates. Interest rates in the U.K. are governed by the Monetary Policy Committy which sets the Bank of England's rates. Because the Bank of Engand is the nation bank, i.e. it lends money to all the other banks, it determines how much money, effectively, a bank is going to charge you if you lend money from them.

 

 

 

 

 

 

 

Interest rate changes have many causes and effects and inflation is chief among reasons for both the former and the latter. Inflation is a rise in the general level of prices, as measured against some baseline of purchasing power.

 

 

 

 

 

 

 

In mainstream economics inflation is caused by the interaction of the supply of money with output and interest rates. In general, economists divide into two camps: those who believe that monetary effects dominate all others in setting the rate of inflation and those who believe that the interaction of money, interest and output dominate over other effects.

 

 

 

 

 

 

 

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Runescape Bank:

 

 

 

 

 

 

 

The runescape bank, however, sets no interest rates whatsoever because it does not lend money. Instead it stores items and money for 30gp. It is, in economics terms not a bank, rather just a limitless warehouse for people to store their goods. This is the crux of the whole problem, however. Because runescape is an artificial world there is a limitless supply of gp, being generated either in goods, i.e. item drops, or in money, from NPCs to dead monsters.

 

 

 

 

 

 

 

There is no goverment to define interst rates and keep inflation in check, and there is no bank to keep interest rate at a level which ensure financial stability.

 

 

 

 

 

 

 

The outcome; gp becomes less and less expensive and therefore, theoretically your items should become less expensive. However becuase the generation of gp is so high and inflation is so high, if you are an active player, then this has no bearing on you. Everyone gets more money, but the money is worth less.

 

 

 

 

 

 

 

Take the example of Gregechnida in the Tip.It times (which i am a huge fan off, by the way! :mrgreen:). He stopped playing for 2 years and so his money was much less than when he was an active player. Perhaps this is just an idea of Jagex to make sure you keep paying and playing?

 

 

 

 

 

 

 

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Runescape economics

 

 

 

 

 

 

 

It might be a bit tenuous to say that economics is all down to supply and demand but it seems that Runscape economics is based entirely on that. There is an always increasing demand for items, in new players, and there is an always increasing supply for items, drops from monsters will always outweigh the loss from players dieing. People always level up and so will be able to afford more expensive items.

 

 

 

 

 

 

 

This means that over time items will lose their value. We have seen this everywhere, one of my friends made his money from being the 2nd ever person to reach level 85 slayer. He made a fortune by selling abby whips for 36 million each, now they're worth 2.3.

 

 

 

 

 

 

 

However Jagex has tried to change things. Dragon chains went from 30 mill to 20 mill, then they upgraded KQ, went back up to 30, now there worth 16 mill.

 

 

 

 

 

 

 

This means that there are very few investment oppurtunities. There are no long term buys (apart from Rares) which will mean that you gain money. No investment oppurtunities stifles economic growth and so items get less and less in value and more money is in the economy, it is not a sustainable system.

 

 

 

 

 

 

 

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Suggestions

 

 

 

 

 

 

 

I dont know what any long term solution is but i think that everyone can take heart in the fact that the economy has not collapsed in 5 years, despite what economic theory would suggest so perhaps none is needed.

 

 

 

 

 

 

 

However it is rather annoying that my d chain is only worth 16 mill, when i bought it for 22! :wall:

 

 

 

 

 

 

 

Never mind :)

[12pure34]

Supplie and demand

 

 

 

 

 

 

 

I can't put it any easier, Supplie and demand

 

 

 

Wonder this: there are 1000 people in Runescape

 

 

 

Let us say that 10 can afford a dragon chain. Suddenly.. an 11th dragon chain comes in the game. Nobody can afford it, so the seller has to decrease his price to be able to sell it. This would be example 1.

 

 

 

 

 

 

 

Example 2: 1000 people have 100k money. That is an average of 100gp each. Now, new money comes in the game. Whoever gets that money, is considered richer then the others. They can then use the money. The poorer 'create' (gather) resources as ores and logs which are bought by the richer, as they can use the money to decrease their time spend on a skill by buying. With those new resources, they create items which are sold or high alchemied for new money to come in the game. A circle is created. The gatheres, who 'create' the resources are at the bottom. More skillfull / richer players are considered at the top of the 'economic foodchain'.

 

 

 

 

 

 

 

Now I could give a few more examples, but I think I made my point.

 

 

 

Also, something I haven't said before.

 

 

 

You considered replacement products. The demand for a product 'Y' can drasticly lower if a better product 'Z' is added in the game. Compare to diskfloppies to CDs to MP3.

 

 

 

 

 

 

 

Good luck, you might even want to read the tip.it letters Duke Freedom wrote. They explain a lot of the Runescape Inner Economy.

 

 

 

Cheerz,

 

 

 

12pure34

 

 

 

 

 

 

 

Edited after several posts about wrong choice of words.

[dragon312]

well theres simply more money in the game as there was when 100k was much :roll:

[adthegreat-]

Good post, although alot of it was just about Economics in general there was some interedting appilcation to how Runescape works.

 

 

 

 

 

 

 

In reference to your thought that you have to keep playing in order to survive economically, i don't believe Jagex did that intentionally, although if it did more credit to them, however i think that it is what possibly makes the game as popular as it is. Any interesting thing to note is that with the 'Manage Thy Kingdom' game you can convert money to commodities without trading or playing with great dedication, i think this may reduce the 'Keep up or get out the of the way' effect of inflation.

[12pure34]

Good post, although alot of it was just about Economics in general there was some interedting appilcation to how Runescape works.

 

 

 

 

 

 

 

In reference to your thought that you have to keep playing in order to survive economically, i don't believe Jagex did that intentionally, although if it did more credit to them, however i think that it is what possibly makes the game as popular as it is. Any interesting thing to note is that with the 'Manage Thy Kingdom' game you can convert money to commodities without trading or playing with great dedication, i think this may reduce the 'Keep up or get out the of the way' effect of inflation.

 

 

 

 

 

 

 

Interesting thought about the Manage Thy Kingdom. Did not even thought of that. But first off all let me mension, construction THE skill for anti - inflation. Reducing the money in the game. Even as we speak. I think this should get a few thoughts aswell?

 

 

 

 

 

 

 

I'll give a more worked out comment later this evening or tomorrow, as I am out of time at the moment, but it is sure a subject I'd love to discuss about.

[Kiriyama]

Reason for inflation- Less supply more demand.

 

 

 

Reason for decrease in price- More supply and demand.

[arabik0]

 

 

 

Reason for decrease in price- More supply and demand.

 

 

 

 

 

 

 

Its not that simple sworddude. You cant just say that prices decrease because there is more supply and demand. If supply and demand increase in the same quantaties as you imply, then prices stay the same, but there are simply more goods available. What you say takes no account of fluctuation in supply and demand.

 

 

 

 

 

 

 

Also inflation has nothing to do with more supply and less demand. Inflation is to do with how much currency is available for the economy, in purchasing power.

[arabik0]

 

 

 

Interesting thought about the Manage Thy Kingdom. Did not even thought of that. But first off all let me mension, construction THE skill for anti - inflation. Reducing the money in the game. Even as we speak. I think this should get a few thoughts aswell?

 

 

 

 

 

 

 

 

 

 

That actually a very interesting point which i haven't thought about. Perhaps construction was introduced specifically as an anti-inflation device in Runescape? After all, the lads at Jagex must be wondering what type of economy they've created. Its out of their control really, look at holiday drops. I wonder how many skills or mini-games etc. have been created to try and curb inflation?

 

 

 

 

 

 

 

Good thought pure :thumbsup:

[Guitarted7]

chains like 13 mil now

[Zyrkon]

Well. I didn't read all of that but..

 

 

 

 

 

 

 

If you're gonna take a break or something, invest on rares :oops:

[Elessar3019]

Well. I didn't read all of that but..

 

 

 

 

 

 

 

If you're gonna take a break or something, invest on rares :oops:

 

 

 

A good idea, but remember: as time goes on, more and more of what we know now as "rares" (i.e. dragon chain/barrows armour) will become common as the number of items increases from more drops. Because the number of a certain item will increase, the price will decrease as it becomes easier to find and harder to sell.

 

 

 

 

 

 

 

That may not have been very clear, so here's an example: I buy a Guthans warspear for 3mill. In a year, the number of warspears in the game goes from 1,000 to 5,000. Therefore, the price will go from 3mill to 600k. Over time, it will become as cheap as a d long because nobody will buy it for the absurd price of 3mill when they can get it anywhere.

[Zyrkon]

 

Well. I didn't read all of that but..

 

 

 

 

 

 

 

If you're gonna take a break or something, invest on rares :oops:

 

 

 

A good idea, but remember: as time goes on, more and more of what we know now as "rares" (i.e. dragon chain/barrows armour) will become common as the number of items increases from more drops. Because the number of a certain item will increase, the price will decrease as it becomes easier to find and harder to sell.

 

 

 

 

 

 

 

That may not have been very clear, so here's an example: I buy a Guthans warspear for 3mill. In a year, the number of warspears in the game goes from 1,000 to 5,000. Therefore, the price will go from 3mill to 600k. Over time, it will become as cheap as a d long because nobody will buy it for the absurd price of 3mill when they can get it anywhere.

 

 

 

 

 

 

 

Yea.. I understood that completely.. But what I meant on rares was those lil pumpkins, masks, santas etc. I should've said discontinued items :wink:

 

 

 

 

 

 

 

If you had 10 million gp now, it would be much less worth in the summer. :-k

[chris28]

I dont think items will ever be worth nothing because there comes a point where they've reduced in value so much people don't bother collecting them anymore and no one will want to sell for such a cheap price and so the value goes back up, then more people decide to collect the item again and the price goes back down. Its a see-saw basically.

 

 

 

Example: Dragon chains drop to 10 mill in price, no one thinks going to kalphite queen to get one is profitable anymore so no one does. Then although there are alot of dragon chains in the game there are not enough sellers to satisfy people who want to take advantage of the price drop (Not many players will go to kalphite queen and not many players will want to sell their chain they got for 16mill), (although rumours could be spread that chains will continue dropping and players will be in a rush to sell). This means there are people wanting to buy but almost no people to sell and therefore the buyers will start bidding more, usually you get one person that bids 10 mill then other players add on 100k. Then because of the price rise more dragon chains will come on to the market and the price will go back down as there are more sellers.

[confused]

I hate to point out the obvious but all you have to do is buy a rare. :oops:

 

 

 

 

 

 

 

It's *almost* certain to be worth more than the gp you bought it for over a reasonable period of time.

[Rebdragon]

Nice post, but you basically dragged on the following short idea for a few paragraphs, without adding much to it:

 

 

 

 

 

 

 

"As more money is added to the game, it becomes worth less (basic rule of inflation). With money coming in faster than it is going out, gp, and therefore items based in value on said gp, become worth less."

 

 

 

 

 

 

 

This is a concept in Runescape that we've understood for years :? , so I don't totally understand what you were trying to tell us. That, and that tangent on interest rates doesn't even pertain to Runescape at all, so there was no point in mentioning it.

[Malhavok]

its alot easier to make money in the first place.

 

 

 

more money means higher prices on high demand items.

 

 

 

high prices demand more money

 

 

 

repeat

[Biabf]

Ask and suplie..

 

 

 

ask and suplie..

 

 

 

I can't put it any easier, ask and suplie.

 

 

 

Wonder this: there are 1000 people in Runescape

 

 

 

Let us say that 10 can afford a dragon chain. Suddenly.. an 11th dragon chain comes in the game. Nobody can afford it, so the seller has to decrease his price to be able to sell it. This would be example 1.

 

 

 

 

 

 

 

Example 2: 1000 people have 100k money. That is an average of 100gp each. Now, new money comes in the game. Whoever gets that money, is considered richer then the others. They can then use the money. The poorer 'create' (gather) resources as ores and logs which are bought by the richer, as they can use the money to decrease their time spend on a skill by buying. With those new resources, they create items which are sold or high alchemied for new money to come in the game. A circle is created. The gatheres, who 'create' the resources are at the bottom. More skillfull / richer players are considered at the top of the 'economic foodchain'.

 

 

 

 

 

 

 

Now I could give a few more examples, but I think I made my point.

 

 

 

Also, something I haven't said before.

 

 

 

You considered replacement products. The demand for a product 'Y' can drasticly lower if a better product 'Z' is added in the game. Compare to diskfloppies to CDs to MP3.

 

 

 

 

 

 

 

Good luck, you might even want to read the tip.it letters Duke Freedom wrote. They explain a lot of the Runescape Inner Economy.

 

 

 

Cheerz,

 

 

 

12pure34

Sorry to bre annoying but it generally known as 'Supply and Demand' not Ask and Suplie'

[12pure34]

 

Ask and suplie..

 

 

 

ask and suplie..

 

 

 

I can't put it any easier, ask and suplie.

 

 

 

Wonder this: there are 1000 people in Runescape

 

 

 

Let us say that 10 can afford a dragon chain. Suddenly.. an 11th dragon chain comes in the game. Nobody can afford it, so the seller has to decrease his price to be able to sell it. This would be example 1.

 

 

 

 

 

 

 

Example 2: 1000 people have 100k money. That is an average of 100gp each. Now, new money comes in the game. Whoever gets that money, is considered richer then the others. They can then use the money. The poorer 'create' (gather) resources as ores and logs which are bought by the richer, as they can use the money to decrease their time spend on a skill by buying. With those new resources, they create items which are sold or high alchemied for new money to come in the game. A circle is created. The gatheres, who 'create' the resources are at the bottom. More skillfull / richer players are considered at the top of the 'economic foodchain'.

 

 

 

 

 

 

 

Now I could give a few more examples, but I think I made my point.

 

 

 

Also, something I haven't said before.

 

 

 

You considered replacement products. The demand for a product 'Y' can drasticly lower if a better product 'Z' is added in the game. Compare to diskfloppies to CDs to MP3.

 

 

 

 

 

 

 

Good luck, you might even want to read the tip.it letters Duke Freedom wrote. They explain a lot of the Runescape Inner Economy.

 

 

 

Cheerz,

 

 

 

12pure34

Sorry to bre annoying but it generally known as 'Supply and Demand' not Ask and Suplie'

 

 

 

My mistake.. I ment Supply and demand. As english not being my first language, I hope you can forgive me that :oops:

 

 

 

 

 

 

 

But investing in rares is a far away goal for.. well.. I think 99% of us players. So this is a bad advice. A usefell advice for the Poorer players amung us, is to invest in Items. As already said several times above, money becomes generaly worth less. This was ofcourse reduced by construction. But Jagex is doing.. pretty much nothing to do against this effect. Maybe because they are affraid about ruining the game. But to my opinion, it is already doing so by itself. :anxious:

 

 

 

 

 

 

 

Yes, that is right, im afraid of economic effects of rares on very long periods of time. They will become worth more then the maximal GP people are able to bank. This will mean Goldpieces are not sufficient enough for buying a rare. This will create an extremely large demand of usefell resources as logs, coal and runes. But the most frightening is the fact that the price may stop growing. Or even.. go down :uhh:

 

 

 

 

 

 

 

Besides, interest in rares will lower, as fewer rares will be actively in the game and because of todays grow of the game, fewer people will actually know a rare. Let us not even discuss about actually achieving in purchasing one.

 

 

 

 

 

 

 

Yes, I am creating a doomscenario.. Seems like a future apocolypse to few. Sounds like disaster to others. But realistic to me. Nothing.. I qoute Nothing.. last forever. (except diamonds.. but in the game, that doesn't hold either.)

[swampjedi]

I am thinking that partyhats may be capping out in value. They've been pretty stable (at least, not rising over a certain level) for some time now.

[Gilformen]

if only if only...

 

 

 

you know why there is so much money within the game? if people only got money by killing monsters and selling to general stores, the inflation would be much slower, but since they introduced high level alchemy, players can create goods and turn them into money themselves, which creates millions upon millions of gp that came out of nowhere.

[Smapla]

Ask and suplie..

 

 

 

ask and suplie..

 

 

 

I can't put it any easier, ask and suplie.

 

 

 

Wonder this: there are 1000 people in Runescape

 

 

 

Let us say that 10 can afford a dragon chain. Suddenly.. an 11th dragon chain comes in the game. Nobody can afford it, so the seller has to decrease his price to be able to sell it. This would be example 1.

 

 

 

 

 

 

 

Example 2: 1000 people have 100k money. That is an average of 100gp each. Now, new money comes in the game. Whoever gets that money, is considered richer then the others. They can then use the money. The poorer 'create' (gather) resources as ores and logs which are bought by the richer, as they can use the money to decrease their time spend on a skill by buying. With those new resources, they create items which are sold or high alchemied for new money to come in the game. A circle is created. The gatheres, who 'create' the resources are at the bottom. More skillfull / richer players are considered at the top of the 'economic foodchain'.

 

 

 

 

 

 

 

Now I could give a few more examples, but I think I made my point.

 

 

 

Also, something I haven't said before.

 

 

 

You considered replacement products. The demand for a product 'Y' can drasticly lower if a better product 'Z' is added in the game. Compare to diskfloppies to CDs to MP3.

 

 

 

 

 

 

 

Good luck, you might even want to read the tip.it letters Duke Freedom wrote. They explain a lot of the Runescape Inner Economy.

 

 

 

Cheerz,

 

 

 

12pure34

 

 

 

 

 

 

 

dude, it's supply and demand

[adthegreat-]

I am thinking that partyhats may be capping out in value. They've been pretty stable (at least, not rising over a certain level) for some time now.

 

 

 

 

 

 

 

I have classed Party Hats as Giffen Goods before, but another side to the arguement that your post has made me consider is that demand is no longer rising for Party Hats because people are coming to the realisation that they will never have one unless they are on the 'rare ladder' now. It certainly seemed in the past that with new players joining we had a price rise due to an increase in demand (more people wanting to buy rares) which moved infinitely faster than supply (which obviously does not change).

 

 

 

 

 

 

 

However if demand falls, Real prices (not considering inflation) will fall, and reach somewhat of an equilibrium in Real price due to people selling for less then more etc.

[wakka102]

Nice post, but you basically dragged on the following short idea for a few paragraphs, without adding much to it:

 

 

 

 

 

 

 

"As more money is added to the game, it becomes worth less (basic rule of inflation). With money coming in faster than it is going out, gp, and therefore items based in value on said gp, become worth less."

 

 

 

 

 

 

 

This is a concept in Runescape that we've understood for years :? , so I don't totally understand what you were trying to tell us. That, and that tangent on interest rates doesn't even pertain to Runescape at all, so there was no point in mentioning it.

I believe the comment on interest rates were more of a suggestion to help stabalise the runescape economy rather then something that is already in it.

[icecube]

I'm sure once it gets really out of hand, JaGEx will release some kind of counter-measure to balance out the rapid inflation. But otherwise, yes those without Rares would be screwed.

[adthegreat-]

I believe the comment on interest rates were more of a suggestion to help stabalise the runescape economy rather then something that is already in it.

 

 

 

 

 

 

 

True, but to be more precise, the comment is what Governments do in real life to control inflation (see: monetary policy), not neccessarily a suggestion (as i pointed out earlier, 'Manage Thy Kingdom' may be our investment opportunity to reduce inflation).