Friday, September 12, 2008

So what's so bad about inflation anyway?

I've recently started reading some WoW "economic" blogs (how come I haven't heard of them before? Well, expect an update to my blogroll soonish), and while there's quite a lot of useful information there, there are also inevitably some things I don't quite agree with. One of these things is that inflation is usually considered a bad thing. Now, I suppose in the real world it is, but we aren't talking about the real world - we're talking about a game where despite many similarities, the economy is very different from a real one.

The general argument behind the "inflation is bad" opinion is that assuming you have a certain amount of gold and prices are inflated, you will be able to afford less on the AH. While it is a valid argument, it assumes that the amount of gold you have doesn't inflate along with prices. But, unless you only have the money you take off of dead mobs and from things sold to a vendor*, that assumption just doesn't hold. Whether you grind for items to sell on the AH, sell your trades, or just play the AH, inflation means you can get moar gold. Theoretically, your own capitol should increase at roughly the same rate as the inflation rate.

On the other hand, vedor prices are constant - no inflation there. That means that with inflation essentially making gold cheaper, anything purchased from an NPC essentially becomes cheaper. That means training, mounts, 42-slot bags and even the "everyday stuff" like food and drinks.

I also believe it's a good thing for "newbies"**. True, they won't be able to afford things on the AH, but I think there isn't actually anything they'd need there. And if they are buying things on the AH (I'm talking about buying things to use, not playing the AH), they don't stand much chance to have enough money anyway, so the inflation won't hurt them. If they're smart, however, and get gathering professions, inflation means they can make more gold for selling Silverleaf, making it that much easier when it comes time to fork over the big bucks for their mount.

I'll tell you who inflation does hurt, though - people who have bought their gold. They paid for 10,000g hoping it'll cover the epic mount for their power-leveled 70 and still be enough to maintain their raiding for a while, and now they're finding that their money is quickly disappearing. But you know what? I can't say I feel too badly for them... They can just buy some more.

* And let's face it, that population is pretty small. Not only that, but those people probably don't buy anything on the AH either, so any inflation of AH prices won't effect them in the least.

** Not necessarily actual newbies, rather chars starting out on a new realm without a level 70 who has mountains of gold.


Gevlon said...

The inflation itself is really not good or bad. It simply means money worth less.

However there is another group of players that are hurt by the inflation: those who made their money by daily quests. The quest rewards are not inflated. But hey, it's THEM who caused the inflation on the first place (to be specific the introduction of the daily quests that give money but no items to the market), so let them eat their medicine.

PS: could you please link the economic blogs you found, I want to read all of them to make mine better.

Tal said...

I'd link those blogs, but most of them don't seem to be too active recently.
I should update my blogroll, though. I'll make time for it tomorrow.