Friday, April 30, 2021

The March 2021 Monthly Economic Report: RMT Tokens And The Indices

CCP published the monthly economic report (MER) for March last week. Happens every month, right? But someone on the EVE sub-Reddit found out that RMT tokens are included in the MER. Again, not news. We have known this for years. I think the first time I wrote about the subject was in the Hurricane Hilmar post from September 2019. At the time, I wrote that the RMT tokens, if one includes PLEX, made up about 49% of the EVE economy.

The size of the EVE Economy during Hurricane Hilmar

Then someone wrote a huge post on r/eve stating that PLEX makes up a large part of the consumer price index (CPI). Not only was that news, but #FakeNews. The reason the pie chart above that I created back in 2019 has two sources is because no PLEX valuation information is found in the MER. With misinformation starting to fly around, I thought I could expand on my explanation from 18 months ago.

First, an RMT token is an item that is acquired from the EVE Online cash shop that is purchasable with real world currency. Two categories containing cash shop items, Apparel and SKINs, are usually not considered RMT tokens. With a combined value of 2.3 trillion ISK of goods sold in March, players usually don't even consider the presence of the cosmetic items on the economy.

Accessories from the Index Baskets.csv file in the March 2021 MER

The items considered RMT tokens are found in the Accessories category. Four of the items, the Aurum tokens, were removed from the game when CCP performed the PLEX revamp in May 2017. At this time, the 30-Day Pilot's License Extension (PLEX) was also removed and replaced with PLEX at an exchange rate of 1 to 500.

Looking at the primaryIndex field shows that PLEX is currently not included in any of the economic indices in the MER. I personally think the consumer price index (CPI) should not include PLEX as it serves as a virtual currency replacing aurum. In the real world, measures of economic activity like GDP and the CPI do not include currency exchange transactions. The same should hold true in EVE.

Yes, CCP treats the new version of PLEX differently

When writing this post, I was curious how CCP handled the old 30 Day Pilot's License Extension in the data. To see, I opened the IndexBaskets.csv file from the April 2016 MER and looked to see which index the item fell into. I was relieved to see the item didn't fall into any of the indices pre-revamp.

The value of the Accessory category is at an all-time low

This leads to the final six items in the Accessories category which qualify as RMT tokens. CCP divides this into two groups: skill injectors and services. The skill injectors include the Daily Alpha Injector and Small Skill Injector as well as the more popular Large Skill Injector. The three items that count as services are the Multiple Pilot Training Certificate, Pilot's Body Resculpt Certificate and the popular Skill Extractor. All the RMT tokens except the Skill Extractor are counted in the CPI. The value of  Skill Extractor sales counts in the Secondary Producer Price Index (SPPI). In March 2021, the total value of these six items contributed 96.4 trillion ISK to the CPI and 27.5 trillion ISK to the SPPI.

The EVE economy is shrinking

What kicked off the latest wave of concern over the data in the MER in general, especially the consumer price index, is the graph showing a very slight increase in the CPI since December 2020 and relatively flat line since October. If one believes that PLEX is included in the CPI, I can see why someone would believe PLEX and the RMT tokens are covering up inflation in other areas of the economy. In March, PLEX alone made up 25% of the total value of transactions in New Eden. In addition, the price of PLEX in The Forge has declined 32.8% since the value of the CPI reached its all-time high in January 2019. One item with that large a share of the market experiencing that big a drop in price could hide a lot of inflation. But PLEX is not included in the CPI.

The indices with and without the RMT tokens

A couple of more observations about the consumer price index based on the long-term data. The first is that the general direction of the value measured by the CPI generally trends the same way with or without the inclusion of the RMT tokens. The first exception was from March 2016 to June 2016 when the Accessories category was first created to handle the introduction of skill extractors and injectors into the game. The other major division of trends occurred from December 2018 to February 2019. I suspect the increase in RMT tokens was related to the wars surrounding the trade hubs occurring around that time.

The other observation is how much the value of the CPI dropped from January 2019 to March 2021. The value of all items in the CPI dropped 37.2%, or 210.8 trillion ISK, during that period. Removing the RMT tokens only makes the drop appear better in comparison. Without counting the Accessories category, the value counted by the CPI dropped 85.7 trillion ISK, or 24.9%. The divergence between the CPI with and without including the RMT tokens is averaging about 0.4% per month.

How do they come up with these numbers?

Finally, I want to address the obvious question. Why don't I just make my own indices? My answer: have you seen the data? I honestly do not think CCP uses the data they provide with the MER to calculate the CPI. The one time I tried, I gave up when I realized the files contained no information on Tech III subsystems after July 2017. I found more problems in the data, but I gave up when I realized that data was missing.

Hopefully, this post served as an introduction to some of the factors involved when dealing with the data in the monthly economic report. I also hoped that looking at some of the history of the indices might give the reader some sort of insight into how the economy is functioning today.

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