The poor getting poorer?

So, I took a gander at the econ stats at https://secondlife.com/community/economy.php

Between July 4, 2004 (edited to add year) and Oct. 31, 2005, the median account balance has fallen 56.1 percent to 500L, and the exchange rate of the Linden rose 18.1 percent.

Just makes me curious about a few things, such as how are merchants doing if people have less cash in pocket? How far do the Lindens want to push an economic policy that restricts the availability of the Linden? What will it be like if the median balance falls lower, say 100L-200L?

Don't know if this has been hashed over before, but it's news to me

A lot has happened between mid-2004 and now. The change you're seeing is the result of the end of event support, the increase in ratings fees, the changes in ratings bonus and finally the termination of ratings bonus.

The intention was to create the effect you're seeing there, I should imagine, by limiting the amount of L$ in circulation to boost its overall value against the US$.

edit: To be clear, we're talking about deliberate manipulation of the economy by Linden Lab.

And if I were Linden Labs, whoa boy, would I love that! I mean, this company basically has license to print its own money and sell it for $US. Why wouldn't you want to get that value up? Heck, you'd be crazy not to -- all the cash-raising benefits of an IPO without the pesky shareholders to get in the way!

Another question: Does that median value take into account the vast number of inactive accounts? People who came, spent their free cash and left their accounts with just 10L or so, never to be seen again? I wonder if that's skewing the stats out of proportion.

Gosh, I'm full of questions today.

1> there is no poor in SL. low L$ balances are personal choices.

2> if money is circulating (USD-->L$-->USD-->L$ etc etc) account balance is really irrelevant.

this is why i argue for a really low value L$

Hrm. I suppose that could, in large part, be said of real life, too.

Not everyone has real-life bank balances that permit buying of Lindens.

if you had to invest a few hundred bucks, i'd almost give ya that.. but by in large most SL stuff hovers in the $50L to $250L range, yer talkin about the occasional quarter or two yer tossin in the big 'sl machine' to have fun...

I honestly doubt the same people who would hem and haw for hours over whether or not to buy 50 linden, would have any qualms with puttin a quarter in a juke box if they really wanted to hear a song at a bar... really its the same thing

Right sl is what you make of it, the thing is if you dont make things to sell you wont make much money here. I think the end of LL handing money out for events is at it's end also.

Ah, but LL doesn't sell L$. Users buy L$ from other users via LindeX.

yes. everyone does. a computer that runs SL effectively costs over 1000 USD. broadband cost 30/month.

SL players are not poor.

Are you sure you know the financial disposition of 90,000 people?

I know of several people, both here and in the real world, who have a great computer system and not a penny in the bank. It happens.




How do we know this is true?

Because that's how they say it works, that's how it appears to work, and if they sold their own L$, they'd cause massive inflation, which would not be in their best interests.

I suppose it happens to people with misplaced financial priorities.

I hate to tell you this, but this is not real life. If person has L$500 in their account on average as they buy $L and then spend them, they can still be rich if they have hundreds of thousands of US$ in the bank. If a person has $L100,000 balance on average, but they have US$100 in the bank than they are poor. You don't measure a person's wealth by their $L balance. Not to mention people have a great deal of their money in the Linden exchange making everybody's balances look smaller, and on top of that a person can have an average of L$500 balance, but be buying thousands of $L as they find stuff they want to buy where they spend the entire amount they buy instantly. $L balance does not give you an idea of wealth in SL.

To make matters worse, you only have the median. You don't have the mean, or the standard deviation to try to do some analysis on the distribution of wealth across second life. The $L median could be 500$L with the people ranging from the 51%-60% range averaging L$50,000. You can't get much out of a median alone.

OMG LIES



Anyway, back to some of my original questions: If people have fewer Lindens on-hand in general now (and that's IF), does that mean that vendors are seeing less revenue?

I really didn't mean for this to degenerate into a debate about welfare states, budgeting priorities or capitalism as a system. I promise you, not my intent.

What I am curious about is what that might mean for in-world businesses.

i know several people who are bad at managing their money also.

Lorelei, a couple of things are at work here.

First, as someone else said, the "median" is not the average. It just means that 50% of the accounts have less than that amount in Lindens (including alt accounts and dormant accounts). A large percentage of accounts opened recently are "free" accounts opened as trials by folks that may have looked around, spent whatever starter Lindens they got (if any) but have not earned more Lindens.

Second, the balance does not indicate how much money is flowing through those accounts. I suspect that many (perhaps most) Participants are consumers, who spend what Lindens they get as fast as they get them. Like many folks in real life, they may be getting and spending more now that 6 months ago, but at the end of each day have little in their pocket.

So, the median balance in Lindens may mean very little other than the recent opening up of SL to "free accounts" who came, shopped and now spend every penny they get as fast as they get it. If the culture has changed from one populated mostly by "builders and savers" to one populated mostly by "consumers," that may be good news for vendors.

Without direct data on transactions in-world, I see no necessary correlation between cash Lindens on hand and what economists might call GNP (Gross National Product).

Some data on transactions in world is kept, because the log-in page at secondlife.com shows a ticking display of "transactions today" in dollars. I don't know where or if one can access that data cumulated by day, week, month, etc.

Of course, I don't know what 90,000 accounts (representing some lesser number of people counting alternative accounts) actually do. But these are my hypotheses, which I'm willing to reconsider if someone has some actual data to contradict or refine them.

Frank

Some of us would rather spend on your money on real things than buy play money on the internet. Real things like real land with a real sunset to view and real water that flows by.

If you really believe that LL is not sellling money. I have a bridge in Brooklyn I would like to sell to you. and will throw in some prim Florida real estate too


Rox

Details please. Other than disbursements through stipends and bonuses, as well as the occasional construction contract. Are you saying you know that LL is selling new L$ through Lindex or through another venue? And at a time when they've worked so hard to get the price of L$ up relative to the US$?

There's a lot of money on the Lindex all right. I notice Anshe is dropping on the leaderboard, so I suspect she is slowly selling off, trying not to upset the market too much by dumping. Too bad LL doesn't take a page from that non-dumping book re: the amount of new land. But I digress ... again.

so?

Can I borrow some $ Jauani?

1: If the Lindens sold enough L$ for it to matter, the price would plunge, and they wouldn't want that..

2: Vendor sales aren't failing, just look at the economy page again..





The median balance on 2004-07-04 (earliest figures) was over L$1000, and the exchange rate was low (by todays standards) and the in world sales were 30,629,284.. On 2005-10-30 (latest figures) median balance was 500, exchange rate normal, in world sales 130,051,240..

What it doesn't include is population.. And how many accounts have been inactive since.. BUT, my sales have gone up a LOT since the beggining of 2005..

yeah? let's see some new stats:

L$ paid in stipends
L$ paid in dwell
L$ paid in discretionary awards

priorities my butt...try a 3k computer owned by a person suddenly disabled for two years who is endlessly having to battle disability and thus hav NO income....
get a real perspective, middle class ;P