Wednesday, July 7, 2010

Let's Try It From The Beginning Again

Let's begin with a simple map, with simple place names, and proceed from there.



This is the kingdom of Hothior, from Divine Right, scanned from my original copy bought used in 1982. We can use it to establish the trading system exactly as I designed it, on a small scale. For my system, I used real data gleaned from two primary sources: an ancient, 1952 encyclopedia, and a United Nations Statistical Yearbook. But we don’t have to get that technical in order to demonstrate how this works. We can hedge and fudge in whatever manner that’s needed.

To start, every kind of produced good in the world has a source. For our needs, from the map of Hothior, we can define eight sources: the four cities, Port Lork, Tadafat, Lapspell and Farnot; the two rivers, the Flood Water and the Ebbing; one forest, the Bad Axe; and the entire country itself, Hothior. There are other sources on the map, namely the Sea, the Shaker Mts., Mivior on the west, the Waterless Downs and so forth (along with the sea) ... but we can ignore all of those and concentrate on just these eight localities. Note that sources do not need to reflect a single geographical point or hex ... because it is not that which determines the value of a produced good.

The trading system starts with gold. Let us say, for simplicity’s sake, that there is only one source on the map that produces gold, and let’s say that that source is the Bad Axe forest. It doesn’t really matter where in the forest, but let’s say two hexes west of Port Lork, where the forest butts up against the Shaker Mts. There you go, we have 1 reference for gold in the kingdom of Hothior. Indeed, for the entire closed system we’re about to build.

Now, it is going to occur to you to think that the gold ought to be more valuable the further from this source that you get, but if you try to build a system on that perfectly realistic assumption, you’re going to drive yourself freaking nuts in very short order. So let’s say, rather, that gold is such a valuable, precious item that the crown has established a ‘gold standard,’ so that no matter where in the kingdom you are, all gold is the same value.

What you need next is a number which indicates the weight of gold that is produced by this one source. Any number will do, really – and your system will very much depend on whether this is a high number or a low number. For our example, we’re going to say that the mine in the Bax Axe forest produces 2,000 ounces of gold.

Very well. Let's say that for the moment, we'll assign 2,000 ounces of gold for each reference we add.  Later, we can change the gold per reference, but we'll start with this.

A good first commodity after gold is grain. Let’s specify some references for grain. I think it very reasonable that the Ebbing and the Flood Water would both have grain farms along their valleys, and that Port Lork and Tadafat on the River are both surrounded by farms. Farnot looks like a fishing town, so let’s say there’s no significant grain there, but there might be some grain produced in the east end of the kingdom, around Lapspell. Of course, the Bad Axe forest is right out. Finally, we can say that Hothior, over all, produces grain.

Altogether, that’s six references: the two rivers, Port Lork, Tadafat and Lapspell, and all of Hothior. Six references at 2,000 ounces of gold per reference gives a total value for all the grain produced in the kingdom as 12,000 ounces of gold.

Now, the tendency will be to think that the total grain should be divided into the total gold, but I’m going to urge you not to undertake that idea. I’ve tried it, I wasted ten years on it, and the logic is faulty. All the gold in the world is not equal to all the grain in the world. It just isn’t. If you compare the value of all the gold mining companies against all the oil drilling companies, you’ll realize the truth of what I’m saying.

For those gentle readers who are saying to themselves, “Well that’s obvious,” I’m so glad. It wasn’t to me. I had to reason it out the hard way. But I’m there now, and hopefully we’re all agreed here and we can move on.

Like gold, we are going to need a weight for all the grain produced. I get these weights from source material, calculated to reflect the 17th century, but we can just make numbers up. Let’s say that Hothior produces 7800 tons of grain. That may not seem like much, but we’ll agree that Hothior is a small country, and technique is the watchword here, and not realism. We could easily say that Hothior produces 20 references, or 30 references, more in meeting with the population it has, but that is of no importance now.

So we’ve established that 6 references of grain = 7,800 tons, and therefore that 1 reference of grain = 1,300 tons. Thus,

2,000 ounces of gold = 1,300 tons of grain. That’s simple enough. If you add another reference of gold, you decrease the cost of grain, and if you add another reference of grain, you increase the cost of grain.

Hold on, what now?

Read that again, very carefully. More gold in the system deflates the price of everything else, as it deflates the value of gold. An increase in the supply of anything always deflates its value. It is sound reasoning, once you recognize that "references" do not equal value, but importance.  They are merely a method for comparing value.

If another reference of gold is added, it does not change the amount of gold in the system. It is an interesting circumstance, one which I solve by already knowing the total amount of gold, everywhere. Thus, the number of gold references is divided by the pre-determined amount of gold, and this determines the value of all references throughout the entire system.

Thus, with 1 reference of gold against 6 references of grain, all the grain in the world would be worth 6 times the value of all the gold in the world. Which, if there is 2,000 gold ounces in the world, would be worth the 12,000 gold ounces we said earlier.

But if we increase the number of references of gold to 2, each gold reference would be equal to 1,000 gold ounces (because the total gold is static). Therefore, the grain in the system would then drop in value by half.

This is why it is good to sprinkle a fair number of gold references throughout, and to have an intial static number that is fairly generous ... so that if you choose to add a gold reference, it isn't a shocking change to the overall system.

Good. This gives you the basis for producing a single list upon which to base gross commodity prices on, which could apply to any part of your world. We’re ready for Step Two.

What I do at this point is to assign the references to a particular product into the centers that market that product. For the purpose of this template, let’s say that all four towns are markets.

Thus, we assign the river Ebbing and the grain fields around Tadafat to the city of Tadafat itself. We assign the grain around Lapspell to Lapspell. We assign the river Flood Water and the town of Port Lork to Port Lork, and we assign the whole kingdom to Port Lork as well, since it is the capital of Hothior.

Thus we have:



You can get as detailed as you want with assigning references or tenths of references to specific hexes and calculating out the exact amount of what hex is transported to what city, but none of that is really necessary. At any rate, what we have here is a distribution of grain produced in Hothior according to what center accounts for it.

What we do not have is a distribution according to how much it costs. That is another matter entirely.

Let us consider Farnot, which has no grain references. We can see from the map that it is 2 hexes from Port Lork, 3 hexes from Lapspell and 5 hexes from Tadafat.

Suppose we divide the total grain references above by those various distances, in order to get a comparison of geographic convenience to grain sources for the town of Farnot. Now, for reasons that will become evident later, we add 1 to each distance, so that Farnot is ‘3’ from Port Lork, ‘6’ from Tadafat and so on.

Thus, we can calculate that from Port Lork, 3/3 = 1.00; from Tadafat, 2/6 = 0.33; and from Lapspell, 1/4 = 0.25. We’ll keep our numbers at two significant digits (I typically use four for my system), and the total pricing references for Farnot can be established at 1.58.

We can do the same for the other cities as well. Port Lork is zero distance from itself, but we add 1 to make this distance ‘1’ (Aha!); it is ‘4’ from Tadafat and ‘5’ from Lapspell. Thus, Port Lork gives 3/1 = 3.00, Tadafat 2/4 = 0.50, and Lapspell is 1/5 = 0.20. Total: 3.70.

Calculating for all the cities gives us these results:



Tadafat manages to remain quite significant, since it draws more from Port Lork than the reverse. And Farnot is not so far behind Lapspell, since it is much more centrally located and has better access to the Port Lork market.

As an aside, for distance calculation I would tend to say the trip down the Ebbing and Flood Water to Port Lork was more easily accomplished than the reverse, and that both cities were closer together because of the water. The same would be true for Farnot and Lapspell, which are much closer by sea than they are by land. I’d also take note that the sea route from Farnot to Port Lork would not be so helpful, since the long peninsula necessitates a long journey by that means. I’m dispensing with all this because of trying to keep things simple ... but by rule of thumb, I calculate a distance over water at 1/3 the distance over land. I also have a calculation for moving down river as opposed to moving up river, but none of that is important right now.

Fair enough. The observant viewer will take note that the total of all the pricing references is more than 6. It equals 10.13, in fact. You may make use of this dichotomy by proposing that the movement of goods increases the overall value (it’s true! I read it in an economic textbook), but for my system the sum of pricing references is irrelevant – the market is fluid, and there can be more ‘value’ in it than there is actual commodity. Each individual city has the price of grain calculated for that city alone, so it doesn’t goof the system anyway. Try to hold onto the knowledge that the value of grain at this point is merely a base number, to be modified by additional calculations.

Things may appear to get a bit rickety at this point, but the purpose here is to calculate the pricing reference value against the total value of all gold vs. grain, and calculate it into gold pieces.

We already know that the value of grain in the world is 12,000 gold ounces; say we want to determine the base price, in gold pieces, for Farnot. We take the pricing references (1.58) and divide them into the total produced grain references (6) and multiply them against the total value of grain (12,000 gold ounces) – which is 1.58/6*12000 = 3,160.

And just for interest, we divide the local value of grain (3,160 gold ounces) into the total quantity of grain (7,800 tons).

For this next bit, I botched it up entirely the first time that I wrote it. I'll try and get it right this time.

To get the price, we start with the base world price, which is the value in gold of the world's grain (12000 gold ounces) divided by the total weight of the world's grain (7800 tons), which gives ounces/ton, or 1.5385 oz./ton. This is then multiplied by the number of gold coins per ounce. In my world, that’s 8.715 (3.56 grams/coin), but you can make your gold coin any size you want. Let’s say there are six gold coins per gold ounce, and for good measure lets remember there are 200 c.p. per g.p. in old AD&D. Thus, if we want the value in copper coins, we have 1.5385*6*200 = a base price of 1,846.15 c.p. per ton.

This is actually a bit high. I apply (because it proved necessary to control my pricing) a completely ad hoc base line that says a center whose pricing references equals 5% of the world’s total references should produce an average price; Farnot, in our little system, has 26.3% of Hothior’s total. Thus we take that percentage and divide it by 5%, and then we divide that sum by the base price given above – which is 1846.15/(0.263/0.05) = a price ‘adjusted for travel’ of 350.54 c.p. per ton.

Thus we produce a different price for every city, that price not being based on a random system, but upon flat calculations that change based upon the city's physical position in the world.

Well, if you can catch your breath, we can move on to Step Three.

This last price is, in fact, the price I would use for the farmer to sell his hauled, unprepared grain to the town market. This would be grain that, while the chaff was largely removed, would yet have to be cleaned. This is typically done by the miller, who then might sell the prepared grain whole, or use the prepared grain to make flour.

I’m insane, so I take the time to calculate out all three prices: uncleaned grain, prepared grain and flour. I could work out a price for meal and groats also, but let’s not go there right now.

Now, as it happens, my world has sets of references for hundreds of different goods and services, and one of those groups of references is for ‘foodstuffs;’ like grain throughout the example above, foodstuffs too would derive from sources at specific cities, and be gathered together at markets, and be subject to the same system to create a unique pricing reference for each place of sale. Unlike grain, however, foodstuffs are a service, and work differently from raw material goods like grain (or ores, stone, fruits, fish and so on).

To save us the enormous hassle of working out just what the foodstuffs references there are throughout the kingdom of Hothior in this post (like I want to do this for another five hundred words), let’s just assume that chance means the foodstuffs pricing references = 3.00. There tends to be a lot of foodstuff references in my world.

In calculating the price required to clean grain and make it prepared, we take the adjusted price above - which is the price of uncleaned grain (350.54 c.p./ton) - and divide it by the foodstuffs pricing references (3.00); then add it again to the uncleaned price. Thus, 350.54/3.00+350.54 = 467.38. The difference is the miller’s mark-up for cleaning the grain (‘prepared’ grain).

If the pricing references for foodstuffs is higher, there are more millers and the mark-up is reduced. If there the pricing references are lower, there are less millers and the mark-up is increased. Couldn’t be easier.

Once you know the price of prepared grain, you adjust it again for turning it into flour, once again based on the number of ‘flour’ references, as opposed to ‘foodstuffs.’ The price is then increased again if you’re buying cakes made from the flour by a cakemaker. Cakemakers, too, have their own pricing reference. In all, counting it up for posterity, I find I have 857 different types of pricing references for my system ... each one calculated exactly in the manner above, although I use excel to make most of the calculations automatic.

At this point, I have worked it down that I’m able to calculate the number of references for each individual market center, by dividing it by that center’s distance from every other center, cutting and then dividing it by all the sources everywhere in the world, and then pasting that set of numbers into the first page of an excel spreadsheet that is my pricing template. This then automatically calculates all the prices for the more than 1,200 objects I make available for my players. With cutting and pasting, I can do this in, as I say, less than 60 seconds, saving the new equipment list to a flashdrive which my players can then use.

All of this can be attested by Carl at Three Hams Inn, as he was in my study about a year ago, when I showed him the tables in question and walked him through how they worked.

As you can see from the above, it really isn’t that complicated a system. The complication comes in how many different specific options you wish to add to your world. For example, I have 15 different types of wine, and 12 types of distilled liquor, and that’s without adding Spain, Africa or the New World to my system. Spain undoubtedly has more kinds of wine – hey, I don’t have sherry yet!

Add to this the possible combinations of references, such as wine soaked cakes, which would again increase the price of the cakes in the example above (the price of the wine and the flour are added together, in the right proportions, before they are modified by the cakemaker), and you have an endless potential for automatically generating the prices of things, all within a single, unified system.

Fun, eh? Have I got you thinking now?

48 comments:

Snarls-at-Fleas said...

Totally. Never thought it to be THAT interestings. Thank you.

Sigilic said...

That's why I follow this blog.

Now to take TSR's best effort at a "sandbox", and try to determine the value of iron in Gulg or of silt horror hide in Tyr ...

sunciash: a word oddly befitting the topic of this comment.

GragSmash said...

Alexis, I have to say "god bless the internet" for crazy people like you.

I will have to read this two or three more times before it's digested.

This is really fantastic. Have you ever tried applying it to a real-world scenario to see how well it predicts pricing?

Alexis said...

Thank you all. Grag, it doesn't. Modern transport destroys all distance calculations. This is why, for the most part, Seattle and New York can put the same price on a bottle of coke.

Ryan said...

I appreciate your taking the time to explain this. The basics are easy enough to understand, though I confess I had to read it twice. If I feel the need to know the price of a specific commodity in my game, I might use this template.

I do have a few questions:
1. You mention that the mines produce 2,000 gold ounces, but over what time period? Do you use one unit of time to determine the quantity of X good/service produced by a reference?

2. With regard to foodstuff/service references: As I take it, each of these would represent a particular shop or business producing said service; 3 references means three mills in town where wheat is prepared, 2 references for cakes represent two places in town where baked goods are produced from flour, etc. Am I reading that right? If I'm trying to decide the price of horseshoes or broadswords, would each reference (used to adjust the price of raw iron ore) represent a smithy? If all the service references in a given town are owned by the same person (perhaps one man owns all three smith shops), should they count as one reference?

As for your carping, I will say only this: I have no problem using the environment to screw my players, and I generally do not play softball D&D with my players. (Ask everyone who lost multiple characters to various ill-conceived plans in my last game)
I understand that rain, humidity, etc. can make life miserable for the players, I just don't think I need a book that tells me how to calculate said misery. When it comes to D&D, I'm just not that meticulous.

Alexis said...

Ryan,

You're thinking of it entirely the wrong way. References are not a measurement of any kind, nor are they a representation. They are a ratio. The weights assigned to references can refer to a year, or ten years, or a thousand years ... as long as they are all comparable with one another. So no, you can't say one represents a 'shop' or any other such measurement. I did make reference to the mining of gold, but it may be one mine or hundreds of mines.

Ryan said...

Ok, gotcha... the total amount is all we care about, and how we arrive at that amount is irrelevant, yes?

Word verification: neratio. How appropriate.

Jimmy Simpson said...

Okay, you have lost me up here. Here are the starting measurements:
"Very well. 1 reference = 2,000 ounces of gold. We’re on our way."

"So we’ve established that 6 references of grain = 7,800 tons, and therefore that 1 reference of grain = 1,300 tons. Thus, 2,000 ounces of gold = 1,300 tons of grain."

You then state:
"If you add another reference of gold, you increase the value of grain, and if you add another reference of grain, you decrease the value of grain."

But your example, a couple of paragraphs down, doesn't make sense to me:
"So, providing another reference of gold would mean another mine that also produced 2,000 ounces of gold. And thus 4,000 ounces of gold would equal 7,800 tons of grain."

My question is, why, when you have 1 reference of gold, it is equal to 1300 tons of grain (1/6 of kingdom total), but if you add a second reference of gold, those 2 references now equal 7800 tons of grain (the whole amount of the kingdom).

I think your logic or terminology is tripping me up somewhere.

Jimmy

Alexis said...

No, you're right. That was an error. Those 2 references should equal 2600 tons of grain. My bad.

Ian said...

Alexis,

First off, great job. I'm very impressed.

In analyzing your example, I've tried to set up a spread sheet of my own to calculate the grain value in a very small portion of my map (just to test it out).

For a while, I was running into a problem: the lower the pricing reference, the lower the cost of the good. This just didn't make any sense to me. If there is less grain in the area shouldn't it be more expensive rather than less?

So I decided to run your numbers again and see if there are a math error or a set left out.

I could follow your logic up until:

"We take the pricing references (1.58) and divide them into the total produced grain references (6) and multiply them against the total value of grain (12,000 gold ounces) – which is 1.58/6*12000 = 3,160."

After that, I am lost. I continue running "3160/12000*6*200" to find a base price of 1845.15 cp per ton, but I end up computing the total to be 316. I've tried modifying the formula slightly in several different ways but never end up with 1845.15.

Was there a step left out? or am I just missing something. Any light shed on this issue would be helpful.

Cheers,
Ian

tsojcanth said...

We already know that the value of grain in the world is 12,000 gold ounces;
Sorry, no. I have big issues with this. Plus the fact that labour is completely disregarded in the calculations really irks me as it clashed badly with concepts such as agricultural surplus and service costs (like products transformation and transportation).

Plus: the simple fact that gold gets stashed up somewhere while more is extracted tends to make it less valuable over time (excluding network effects) while grain is consumed (it is "sinked", in MUDspeak).

Alexis said...

Ian,

It's not your fault. It is my stupid error. This system has been making these calculations for me automatically for so long that I've half forgotten how it works, and I've explained it completely wrong.

You'll find the correct explanation, giving the 1846.15 answer, written in red above, which I'll be fixing right after answering your comment.

Alexis said...

Without question, tsojcanth, this is a supposition of the highest order. There’s absolutely no reason to believe that it is true in any way, shape or form. What I have is an encyclopedia which mentions over and over certain things that are made, some of which have only a few references, some of which have many references. From this encyclopedia, for the parts of the earth I have done (most of Europe and Asia), gold is mentioned as a manufacture 152 times. Silver, 87 times. Copper, 183 times. Wheat, 509 times. Caviar, 10 times. Dairying, 132 times. Reindeer, 24 times. Wax, 89 times. Jewelry, 34 times. Violins, 6 times. Shipbuilding, 219 times. Aloe, 1 time. Bromine, 1 time. Glazed fruit, 1 time. Otter pelts, 1 time. And so on and so forth.

Any sociologist will tell you that if you start from a large enough selection, patterns will emerge. I have already said that I have thousands and thousands of references that I’ve gathered, each read and carefully copied from one single source, describing thousands of locations. I know that yes, this in no way proves the validity of my argument, but it does provide an argument that any system so built is undeniably cohesive. And cohesion, in this instance, outranks accuracy. In fact, accuracy is a complete humbug, since the game itself is not founded on ‘accuracy’ in any manner you can suggest.

I tell you honestly, tsojcanth, I have no reliable and complete figures for labour upon which to base any system. If you have such figures, and you can build a system that doesn’t irk you by taking into account those things that you think are important, all power to you. I won’t stand in your roadway. Have fun with it. Please print it on your blog when you have it all worked out, I’d enjoy reading how YOU solved those problems.

But if you’re asking me to take those things into account just to humor your misgivings, I’m sorry. I’m not going to do that. You’re just going to have to learn to live with being irked and all.

Isle said...

This is really cool. I'm struggling to follow along. Help!

I've followed you up to about Fig. 3 (pricing references for each city). I'm getting correct values for Farnot, Port Lork and Tadafat, but I get 1.93 for Lapspell:

0/4 from Farnot, 1/1 from itself, 3/5 from Port Lork and 2/6 from Tadafat.

What'd I miss?

Adam Thornton said...

I have nothing constructive to say.

This is pure, distilled awesome.

Adam

Isle said...

@Ian

I was also worried about a low pricing reference producing a lower price, which would be backwards. It's taken care of when Alexis applies his 5% baseline at the end of "Step Two".

The pricing reference for a city divided by the total number of references more or less gives us the percentage of the world's grain a city has access to. We then divide this number by five percent and use the result to adjust around the 'average' price of grain.

If a city produces much more than 5% of the world's grain (as all the cities in this small example do) then the denominator grows above 1, driving prices down. If a city produces less than five percent, then the denominator drops between 1 and 0, driving prices up.

Very cool!

Isle said...

Now I'm just being nosy, but I have another question: Are your references for services (foodstuffs, bakers) as opposed to goods (grain) a function of population, or of availability of goods, or both? Or just more information pulled from encyclopedias?

Ian said...

Thanks Alexis for clearing that up. I created a small, three-city world to test these ideas in and everything looks good. Nice job.

Cheers,
Ian

Carl said...

Thanks for this, Alexis. Terrific stuff, really.

I want to go home and play with my spreadsheet now. Unfortunately, my employer has other ideas of how I should be spending my time.

Every time I re-read your original posts on your system I learn something new. Thanks again for posting this follow-up and summary.

-Carl

Alexis said...

Isle,

&^%*&#$$ ... yes. 1.93 for Lapspell.

I have no idea where I put my brain when I wrote this post.

Alexis said...

Answering your next question, Isle; the services were pulled from the encyclopedia also. It would rattle off a list like,

Malaga, Spain ... producing cotton goods, refined sugar, the famous Malaga wines, chemicals, furniture, pig iron, foundry work.

For chemicals I read 'alchemy'; and for foundry work I read 'smelting.' Each one of these things is a service, since it is the modification of mined or agriculturally grown resources.

Jimmy Simpson said...

First off, thanks for posting this. It is very interesting to see how other people design the inner workings of their world.

But, I now have another couple of questions. I have built a spreadsheet that calculates the results for Farnot and the other cities. Aside from rounding error, I come up to what you got for Farnot.

Now, for the first question. You state, "say we want to determine the base price, in gold pieces, for Farnot. We take the pricing references (1.58) and divide them into the total produced grain references (6) and multiply them against the total value of grain (12,000 gold ounces) – which is 1.58/6*12000 = 3,160." I can't find where this is used again. Am I missing something?

Now, using my spreadsheet, I can see what happens if I add a 7th Grain reference (at Lapspell for this example). I come up with the following prices (again minor rounding differences)
City.....price(6).....price(7)
Farnot.....350.58........353.13
Lapspell...286.94........220.51
Port Lork..149.68........165.69
Tadafat....189.66........209.79

My second question is, what happens to these calculations if another Gold reference is added? I see no place that the Gold Reference is used in the calculation at all. The only place I can see for adding the amount of Gold to the formula is here, "To get the price, we start with the base world price, which is the value in gold of the world's grain (12000 gold ounces) divided by the total weight of the world's grain (7800 tons), which gives ounces/ton, or 1.5385 oz./ton." If you add in a multiplier equal to (Total Value of Gold)/(Gold Reference), this would give you your inflation, and it would affect everything all the way down.

Jimmy

Alexis said...

Jimmy,

First question: the total value of gold for that city has no use in determining the price, but does give a GDP total for the city ... if a city budget is to be predicted. 3,160 ounces of gold is 18960 g.p.; if we assume that this is for a year’s supply of grain, and 3% of this is taxed, the city takes in 568.8 g.p. per year from just grain.

Second Question

You have once again caught me. This is FIVE errors I made in explaining the system on this post. I suppose that this will go on, and on, and on ...

Jimmy, I have rewritten the passage near the top of the post which wraps up step 1, just before proceeding with step 2. You will find it answers your question.

tsojcanth said...

@alexis: I wish I had phrased my comment better: as a non-native speaker it's always hard to pick the right words, especially in a media so emphatically poor such as a blog comment. I just meant to point at a couple of flaws. And yes i do obviously agree that design coherence (and fun) is way more important than realism. But ad this level, keeping a gamist perspective, I'd rather have something that takes into account food surplus, labour and unrest than having thousands of resource production data points (also because many resources are easily substitutable, in my games I have "wine" and "beer" which are mostly substitutable, except wine is made from fruit and beer from grain, and wine is "posh", as in "adapt to people of a certain social level").

re:economic systems: I tend to have an economic system in my campaigns quite close to that of sid meyer's civilization serie. Strategic resources being traded from country to country, and also inside each country. It's possible for in-game events to disrupt them, as I write here and as I truly believe that the players should live with the consequences of their actions, we tend to use a system "good enough" to support that. I tend not to go much further than this as not many players care about trading subtleties more than "incense is cheap here, right? i'll buy four amphorae to sell them to the temples back north". None of my players enjoy trading: probably they would if my worlds had "better" economies.

re:transport:if you know the available amount of mercantile transportation "references" available it might be possible to add the service as a trader markup to the price of the various goods, possibly streamlining things.

re:more detailed economic systems: in the past I wrote an automatic trading system for an italian virtual worlds, way before WoW "auction houses" and its forefathers the like came up with the same idea. Years later, after playing too much Patrician, a overly long phase of tinkering with game economics still stops me from having a prototype.

re:observing patterns: yes, you can find patterns in any large dataset. The problem is that, as you know, it works also with datasets of random numbers.

I also meant to write other stuff but i forgot what i meant to write, and this is getting too long anyway.

R said...

Where can I sign-up for your next workshop or class? If only they had this type of information at conventions, I would actually go to them again :-)

The Hex Master said...

How do you define the total gold in the system? Does it include non-circulating coin such as in a dragon's horde or buried beneath the sands of a lost city? If players recover a significant amount of wealth and spend it, do you add it to the system? Do you have any mechanic for varying the amount of gold in the system via loss or new mines?

Alexis said...

Hex Master,

I calculate my total gold in the system by the use of the United Nations International Statistics Yearbook 1988, which gives the gold produced for that year as 1,771,000 kg. In comparing 1988 with 1650, research I’ve done suggests that the increase in industrial production during that period increased approximately 50,000% ... giving me a nice, round number with which to divide; so 1,771,000 kg over 500 gives approximately 311,000 oz of gold distributed through my system (I use imperial measurements for my world, so the metric is converted).

I’m not dead sure about those numbers, I don’t have my work in front of me, but it is somewhere around those.

It does not take into account ‘circulating gold,’ which I estimate is 9 times the gold produced in a year ... this based on the principle that 1% of all made or resourced material becomes unusable per month. This doesn’t hold for agricultural goods, obviously, but I overlook that because the system demands as much simplification as possible, and I don’t give a shit. I get around the issue by comparing the total gold produced in one year against the total of everything produced in one year.

(adjusted, of course, for industrial development to 1650)

Frank said...

I've been reading through your economics stuff. Very cool. I'm not sure I grok it all yet.

For those of us interested in setting up our own fantasy world, could you share the quantities you have derived for what a reference of each comodity is?

I'm also curious the process you go through to determine all the factors that contribute to things like the cost of a horse (from your prices posts).

Frank

The Hex Master said...

I like that mechanic quite a bit. Since you're still mapping I assume that all the resources aren't plotted yet either. Doesn't that inflate your prices or do you use only a fraction of the total gold in your price calculations to represent the gold in the "known world?"

Alexis said...

Frank,

I thank you for your interest, but there's only so much of the system I'm prepared to give away for free. From this point on, you're on your own.

Hex Master,

You're correct in your assessment. I haven't plotted all the resources yet. Those areas which have not been added include Spain & Portugal (which I'm researching off and on at the present), all of West and South Africa (Egypt, Ethiopia and Sudan have been researched), the East Indies including Indonesia, the Pacific Islands, Australia and all of the New World.

I am uncertain what to do with Australia. It is inhabited by non-humans, and technically not 'discovered' yet by Europeans. I suspect I'm going to do something extraordinary with it ... I am playing with the idea that it might be an area based upon advanced magic/technology, with steampunk overtones. Not certain.

Prices do tend to inflate a bit, and yes, right again! I use only the Old World resource numbers for my calculations. When I start to work out the New World resources, I'll adjust my figures.

The Hex Master said...

I figured you'd adjust for that. I've only detailed in a Europe-sized region in my game. Rather than get a grand total for all the world's gold, I'm going to set an average per capita gold production rate at 0.006 ounces per person per year and pay it out as I "explore."

Have you come up with anything for fantastic economies? That's an area I need to get a handle on; my game includes Birthright style realm spells which can effect the productivity of several provinces for months on end. I know you've posted before that you don't use magic on that scale but I'd like to know your thoughts on what a nation of elves living in treehouses does for food? (Speculative pedantry; putting the AG in magic. Sounds like a new genre! ;) )

Alexis said...

I'm a bit behind on this question, Hex; I don't really have any interest in 'fantastic economies.' I wouldn't want to design on.

My answer to the elves thing would be, don't put them in trees. Trees are a rather useless defense against virtually everything, from climate to fire (a favorite tool for besiegers). My elves live in stone or pitch-soaked timber forts like everyone else.

gilgamec said...

I've been playing with your system, and I'm a little unclear on a couple of things:
1. Why do you assume that one reference of wheat is worth the same as one reference of gold? Is is as simple as "My Collier's mentions the gold mines of Bohemia as often as the wheat fields of Bavaria, so their economic values should be about the same"?
2. Your ad hoc 5% base line (i.e. a city with 5% of the references has the average price) seems pretty arbitrary. Is it just something you picked because it gave you values that seemed reasonable? Do you use a different number for different goods, or is it 5% across the board?

I ask about these two in particular because (as you have no doubt found in ten years of playing with this) if you multiply them together (value of a reference * baseline percent) you get the price of one reference's worth of stuff if distances (transport costs?) are zero. It seems that altering one or both might therefore give you a nice way to take account of the fact that some goods are much more amenable to transport than others. (You've already effectively set the transport cost for gold to zero.)

Or have I completely misunderstood the meaning of the distance, and it's not related to transport cost?

Alexis said...

gilgamec,

You are correct. The first IS an assumption and the 5% is ad hoc. Any percentage would do.

I gave no consideration for a 'transport cost.' It was a mainstay of earlier systems, but I found it unwieldy; worse, it increased the cost of heavy goods enormously (like grains) while having little or no effect on luxuries ... which in turn meant a tariff system for luxuries. Furthermore, it required that I establish a different ad hoc total, namely, how much does it cost to transport 1 ton 1 mile.

I found in an economics textbook the principle I use instead. It neatly bundles up these considerations in a single calculation.

Steve Lalanne said...

theorder,

Is the value obtained from the formula multiplied by a base product price? If not, it seems that an item's price is always 1 coin whenever item supply = item demand.

I like the inclusion of money as a good and its inflationary effects (economically I am an Austrian).

Frank said...

Wondering if you're still answering questions on this?

I'm looking at trying this out with an SF setting.

One question I had was if I concentrated on the commodities that I expected to matter most to play, would that have negative impact? I might have less detail if I don't have all the commodities that go into the production of a piece of technology, but I don't think leaving say, fruits out, would impact the price of grains would it?

I need to have whatever is going drive the currency standard (which I assume should be a commodity that is very portable, or does it actually matter, can the currency commodity actually be some bulk raw material?)

Thanks

Frank

Frank said...

I had another question. If one has two economies that are currently not connected in any way, would you treat them separately, and then, when trade opened, refigure all the prices?

Alexis said...

I continue to answer questions on every post on my blog.

If you examine the manner in which the prices are generated, you'll see that the price of one commodity does not necessarily affect any other ... with the exception of gold. Gold affects every price (it's the baseline).

Thus, if you were to establish the price of, say, bread at 1 c.p. per loaf no matter where in your world you were, that would not affect the fluctuating price of lead or cattle or aqua regia ... if those were the things you chose to allow to fluctuate.

Of course, you don't need to make gold your standard. You could work out your own method for making grain a standard; I suppose you could create a standard based on the "hammer" ideal from Civilization IV. I'm not sure how that would be done, but I'm certain it could be.

Ryan said...

Thank you Internet for making posts like these possible.
Hopefully you will entertain a question I had regarding this post:
I understand that the 5% rule if a city has more than 5% of the total supply of an item is arbitrary, and you use it as a balancing adjustment: However, doesn't that destroy a lot of the reasoning for the previous calculations? When I apply this 5% rule across the board for the four marketplaces, the total value of the grain is significantly less than the 12,000 oz of gold that we established at the beginning of the scenario (by an order of magnitude). Shouldn't we just leave the costs of the commodities as they are, and maybe just adjust the gold:commodity ratio to bring it into the sphere of reasonable prices?
Maybe I just didn't follow you correctly.

Alexis Smolensk said...

Thank the internet if you must, Ryan, but the internet didn't invent this.

The 5% only designates a "par-value" for all given products. Note, it's not 5% for grain and then 3% for something else, then 7.1% for something else. Therefore it is one par adjustment for all products, everywhere. Adjusting the par value up would make everything - all commodities - more expensive. Dropping it would cheapen everything. 5% seemed like a nice, round number. I chose it for no other reason.

Secondly, this tends to work better for me as for a common commodity like grain, I have hundreds of references, not as few as are indicated here (I think cereals altogether is more than 1,500) ... I run a big, big world. This is a small example.

Tim said...

Well, I've gotten around consulting these economics posts and I've officially begun to take on the monumental task of developing an economic system.

So just to clarify, how did you decide on the "values" of the references in your world? I see mention of converting UN statistics back to a period's relative industrial development (comparing 1988 to 1650), but it seems that ultimately the references themselves simply exist to represent the relative quantities of resources compared to one another, right? So it doesn't matter whether Hothior produces 2,000 ounces of gold annually but only whether it produces 1 reference of gold compared to 6 grain references. If this is the case, I feel like I can start deciding how many references may exist in my world (thankfully not as big as the Earth, only 2.5 million square miles) for each resource, although I admit I don't have a very good sense of how plentiful it should all be - any suggestions on what qualifies as a reference? They seem fairly equivalent to the resources of the Civilization series.

As for references as resources, are you looking at raw materials as one form, and then each variant (when a raw material is used in another form, like in wines, cakes or flour) as an additional form? So if Hothior has 6 grain references, there will be a certain number of flour references relative to that number (presumably lower). The post seems to suggest this to me.

I hope I'm not probing too deeply into your system's specifics. Because of the technological and superficial differences between each DM's world, I'm unsure as to how much I can crib as-is before my world no longer looks like how I wanted it. And, while I am hoping to start my own personal bottom-up economic development, I want to provide my players with something useful now, as the world feels painfully unfinished in many areas, much more than I would like. (Although I've been struggling to hold off on changing the system in some form every day, and instead consider the problem and potential solutions for a while longer!)

And of course, thank you so much for writing these awesome world-building posts in addition to all the other great ideas you promote on this blog - it always has me questioning what I do each game, and what I take for granted.

Homer2101 said...

Tim, I am not Alexis and so obviously may be completely wrong, but I will try to answer your question.

The references of a product produced in a trade center represent its proportional contribution to the global output of that product. In the posted example, Farnot produces 0 grain references and so accounts for 0% of global grain output; Lapspell produces 1 grain reference and accounts for 16% of global grain output. The product references to which a center has access is a function of each center's output and distance.

When calculating the base price of a product, only the total global production matter. We ignore access in base price calculations. It is irrelevant at this stage whether the 6 grain references are produced in one trade center or in four.

The system assumes that the base price of a reference of any product is equal to the base price of a gold reference and, consequently that every reference has an approximately equal base value. For example, the base price of a reference of grain will always be equal to the base price of a reference of gold. That means the amount of stuff inside each reference should be comparable in value at its source, else you'll get weird prices.

For example, if 1 reference of iron is 1 ton of iron, and 1 reference of grain is 1 sack of grain, then 1 ton of iron will equal to 1 sack of grain in this system. Even if that makes no sense. How you generate the amount of stuff per product reference is irrelevant to the system, so long as the references have comparable base value.

The base price of a gold reference is just the amount of gold in each gold reference. If there's a lot of gold in a gold reference, then a gold reference has a high base price; if there's little gold in a gold reference, then a gold reference is has a low base price. We can convert gold into coins based on gold per coin. We can also assume that an ounce of gold is a currency in and of itself. We can even declare by fiat that a reference of product is equal to some arbitrary currency value and ignore gold entirely. What matters is that the amount of stuff in various references have a more or less comparable value, because we're interested in the relative prices. Playing with gold amount and gold references just moves all of the prices around without changing their relationship to one another.

Picture: http://i.imgur.com/P6P2g4o.png

The base price of a product is directly proportional to (1) the total references of that product in the system and (2) the total amount of gold in the system. The base price of a product is inversely proportional to (1) the total amount of product in the system and (2) the total gold references in the system.

Alexis Smolensk said...

That's quite spot on to the mark, Homer. My only issue would be that we very much care about the amount of stuff per product reference - since the comparative values process is only the first stage in creating specific prices for specific goods.

There has to be a reasonable tonnage of 'stuff' per reference in order to ensure that the prices across the system reflect a rational expectation. Personally, that is what I use the UN Statistics Yearbook that Tim mentions for - since it establishes global production of a wide range of goods based upon their weight and number, giving me a baseline for the plentitude of each commodity. Without these numbers, reflective of the population and industrialization of my world, the system of references would be useless.

Mujadaddy said...

"if we increase the number of references of gold to 2, each gold reference would be equal to 1,000 gold ounces (because the total gold is static). Therefore, the grain in the system would then drop in value by half."

Global Value of all Grain = (GrainRefs/GoldRefs)*Weight of a single GoldRef, ie,
12000 oz of Gold = 6/1 * 2000 oz

But, if we add another reference to the fixed total of gold, not only has 2000 been reduced to 1000, the "1" reference is a "2" so the value is actually reduced by a quarter. IE,

3000 oz of Gold = 6/2 * 1000 oz

Have I missed something obvious?

Alexis Smolensk said...

Yes. For some reason you've changed the total amount of gold in the system twice.

The number of references has no effect whatsoever on the AMOUNT of gold or the AMOUNT of grain.

You're getting confused because of the manner in which I started. I stated that "1 reference = 2,000 ounces of gold." That is an unfortunate statement. In fact, I can see how it really fucks up the logic.

I am sorry about that. This was a difficult post to write - and it has already been edited several times for errors in explanation. I'll be going back to edit it again.

I have re-written the sentence to read, "Let's say that for the moment, we'll assign 2,000 ounces of gold for each reference we add. Later, we can change the gold per reference, but we'll start with this."

Alexis Smolensk said...

Continued from the previous comment:

Okay, I'll try to get this straight.

Total amount of grain: 7,800 tons
Total amount of gold (regardless of the number of references): 2,000 oz.

Number of references for grain or gold: whatever number we say.

Let's use these numbers to start:

Number of grain references: 6
Number of gold references: 1

Total VALUE of both grain & gold = 14,000 oz. gold.

Total grain tonnage per grain reference: 7,800/6 = 1,300 tons

Total VALUE of grain in gold per ton:

1,300 tons = 2,000 oz. of gold.

We do NOT divide the total grain into the total gold.

Now, IF we add another gold reference, WE DO NOT increase the total amount of the gold.

IF we add another grain reference, we DO increase the total amount of gold.

That is because gold is the standard.

1 more grain reference would create an additional VALUE of 2,000 gold oz, but would not in fact create any more gold in the world. Moreover, a 7th grain reference would reduce the total amount of tonnage per reference.

7 grain references, not 6, would mean:

7,800 tons of grain/7 references = 1,114 tons per references.

Which in turn would mean,

1,114 tons = 2,000 oz. of gold.

On the other hand, IF we add that second gold reference, then:

Each gold reference = 1,000 oz. of gold.

Each grain reference would then equal 1,000 oz. of gold.

The more gold references you add, the more the whole system declines in price.

More gold references means that the gold is more widespread, or 'moves faster' in the system, so despite the actual total amount of gold NOT increasing, the total value of all other commodities apart from gold DROPS in value.



Alexis Smolensk said...

Continued from the previous comment:

Let's go with the new numbers:

Number of grain references: 7
Number of gold references: 6

Total amount of grain and gold has NOT changed. Total gold is still 2,000 oz. Total grain is still 7,800 tons.

NEW total value of both grain & gold: nine references multiplied against the total amount of oz. of gold per gold reference:

9,000 oz. gold.

Let me be as clear as possible:

The VALUE of 7 references of grain (regardless of the actual tonnage of grain produced) equals:

The total amount of gold produced divided by the number of gold references multiplied by 7 = 7,000 oz. gold.

The other 2 gold references are then equal to 2,000 additional oz. of gold, the actual gold in existence.

Are we getting there?

Mujadaddy said...

I've found my error. I'd said,

Global Value of all Grain = (GrainRefs/GoldRefs)*Weight of a single GoldRef

However, it's actually,

Global Value of all Grain = (GrainRefs/GoldRefs)*Weight of ALL GoldRefs

Now we're linear again. Thanks. By the way,

Shortcut Image

Per-Campaign, G will be a constant. Per-Commodity, R^2*G/W will be a constant. Take this term (R^2*G/W) and divide the LocalRefs into it, and you should get the ounces of gold per unit weight of the commodity.

In other words, only the distance calculations make your life hard ;)