The best economics textbook may soon be a video game. The next Warren Buffett is probably sitting on a couch somewhere in the world right now, holding no stocks, bonds, or crypto – but a controller.
When I was a kid in the early ’80s, when the only global pandemic everyone seemed to worry about was Pac-Man fever, they told us that video games rotten our brains out, that to play would make us both hyper-violent and hyper-lazy.
It was all absurd for the most part, it seems. Instead, as the gaming industry has overtaken movies and sports in America – as games themselves are the site of the kind of artistic explosion and innovation we’ve seen in modern art, music and movies in the 20th century – there are also strong arguments to be made. that rather than rotting our brains, video games can enrich them. Games can help us manage our money and our lives better.
“It’s just a theory – a game theory”, like Matthew Patrick, one of my sons’ favorite Youtubers tells its 14 million subscribers at the end of each video. But I decided to put it to the test.
The game of life
There is a quote sometimes attributed to Ted Turner, that âLife is just a game. Money is how we count. I’ve always found it to be a loathsome sentiment, but Edward Castronova, an economist and media professor at Indiana University who has studied the virtual economies of video games, says people compare life to games. for thousands of years – and there is some truth to it.
“The phrase life is a game does not mean that life is silly,” he writes in “Life is a Game: What Game Design Says About the Human Condition,” his fascinating and delightfully strange on the subject. âThis means that life presents choices to all, and those choices – combined with the inevitable chance produced by the choices of others as well as by Nature itself – come back in terms of gains and losses. “
Money is at least one way to keep score. In 2020, when the game “Animal Crossing” became a huge success, many marveled at the suddenness of children and adults around the world. inadvertently learning how prices and arbitrage job.
This should come as no surprise, Castronova, who has conducted games price experiments, told me. âI have never seen anything in a video game that violates a known or accepted economic theory. Economic behavior in games is exactly like economic behavior in life,â he said.
What do gamers think about the idea that games teach gamers about economics and money management? I asked Tyler Blevins, better known as Ninja, one of the world’s most successful professional gamers, who has made millions by streaming his game on Twitch and YouTube.
âI mean, V-Bucks, man,â he said, referring to the in-game virtual currency that made him famous, Fortnite. âSo they just added this thing called gold. And basically the more you break down and take out your opponents, the more gold you build over time, and then you can use that gold to upgrade your weapons.
In role-playing games, you learn to trade and even deal with inflation, Ninja told me. The sophisticated economic drivers of today’s games force gamers to consider scarcity, supply chain issues, and trade wars.
But even in a first-person shooter like Fortnite, there’s a lot of strategy involved in managing your gold and resources, Ninja said. âIt’s basically like budgeting. I guarantee you there are younger players who think the exact same thing, even if they don’t know it – like, “I only have enough to upgrade my shotgun once” – they literally budget.
Ninja has spent years honing his gaming skills, coordinating mouse, eye, and finger movements to move and aim faster and more accurately than his competition. He attributes his success to talent and hard work. When I asked him what the role of luck was in his own rise to gaming stardom or how much luck matters in gaming in general, he looked like so many CEOs or other stars I interviewed over the years.
âThere’s almost no luck in top-level competitive gameplay, really,â he said.
Pay to win
Luck might not be a factor, but in gaming economics players care a lot about fairness. There are games that allow players to buy an edge by spending more money, sort of the equivalent of one percent buying their child from USC.
âThese games are what we call paid games and nobody really likes,â Ninja said. âI mean, any real gamer is going to cringe when they hear that a game is like this. Although there are V-Bucks in the game, it’s free. Fortnite is not a paid game. .
Players prefer their virtual worlds to be meritocracies, Castronova said. âDesigners need to strike a balance between equal opportunities and equal outcomes. Everyone should start with the same amount. They care about the wage rate, how much stuff you can get per hour. What doesn’t bother them is equality of results. That is, more skillful players or those who spend more time should be able to accumulate more benefits.
Game developers have hired economists on their staff to make these virtual savings well. I spoke to Justin TH Smith, data scientist and economist at Electronic Arts.
âGames that do this well communicate to the player, we appreciate the time and effort you put into the game,â he said. âShowing players that they are appreciated is a difficult thing to do. And that’s why we have to have the right currencies and the economy. People make tradeoffs between time, money, and risk, just like they do in real life. “
There are lessons here for policymakers about what makes a just and equitable society, and also what could spark the next revolution, Castronova said. âThe social sciences use game-type models to analyze real-life situations. More generally, we can say that all games are models. Each game tries to model an aspect of reality. Chess is a model of war. Poker is a model of negotiation. Hockey is a model of Canadian saloon brawl.
To learn more about how high school teachers and teachers are using games to teach economics ideas in the classroom, listen to the new episode of our podcast, “The Best New Ideas for Money”.
Play what you know
Ninja has no pretensions to becoming the next Warren Buffett. He says his approach to video games is reminiscent of his approach to his money: he’s methodical, he does his homework, and he trains – a lot. He entrusts the management of his business to his wife Jess and to the professionals. The games certainly helped him assess money decisions.
When he was recently approached by an NFT and crypto investment opportunity, he was interested, but ultimately hesitated. âThey explained everything to me, man. And I know it’s potentially the future, but it was all too confusing for me.
Instead, he invested in something he knows and understands. âMy investment in PokÃ©mon cards lately has just been out of this world. They’ve skyrocketed.
Warren Buffett would approve of this game.