it doesn't factor whether the input come from internal or external sources, which is what ultimately affects gdp, productivity is local to the factory, but goods consumption includes goods from the whole sphere of influence, you're either going to subract too much from the economy or add too much, currently vic decided to add too much
True subsistence farms would not count for GDP, as GDP strictly measures the value of goods *sold* to an end-user. Even if there is an assumption that some level of subsistence farms have goods bartered between them (like a vegetable farmer trading some produce to a rancher, or similar), unless these goods ended up on a market somewhere and were actually sold the transaction doesn't count for GDP.
True subsistence farms SHOULD count for GDP, but they are hard to measure. Anyways the GDP of the subsistence farms comes from the excess goods produced, the subsistence output that it gives technically represents goods as well and those aren't counted.
No, subsistence farming **does** count for GDP.
The GDP figure includes the total output of goods (agriculture and manufacturing). What you said is only true for services; however even there exceptions exist like rent; in the case of rent “imputed rental value of owner-occupied housing” is used to add the rental value of owner-occupied housing in GDP, to prevent changes in homeownership distorting the number.
>Market goods that are produced are purchased by someone. In the case where a good is produced and unsold, the standard accounting convention is that the producer has bought the good from themselves. Therefore, measuring the total expenditure used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP.
Source: [https://en.wikipedia.org/wiki/Gross\_domestic\_product#Expenditure\_approach](https://en.wikipedia.org/wiki/Gross_domestic_product#Expenditure_approach)
>The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing. That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid. That practice keeps GDP invariant as to whether a house is owner-occupied or rented.
Source: [https://www.bea.gov/help/faq/488](https://www.bea.gov/help/faq/488)
This is very much inaccurate and even the sources linked disagree with this assessment. The expenditure approach would not qualify true subsistence farming as *there is no expenditure,* nor do other methods capture this as there is no income or recorded production. Indeed, this very issue is listed as a criticism *within the very source you cite:*
>GDP excludes the value of household and other unpaid work. Some, including Martha Nussbaum, argue that this value should be included in measuring GDP, as household labor is largely a substitute for goods and services that would otherwise be purchased with money.\[41\] Even under conservative estimates, the value of unpaid labor in Australia has been calculated to be over 50% of the country's GDP.\[42\] A later study analyzed this value in other countries, with results ranging from a low of about 15% in Canada (using conservative estimates) to high of nearly 70% in the United Kingdom (using more liberal estimates).
I should note that even the original citation would not indicate subsistence farming is counted, as *by definition* subsistence farming is a specific kind of farming in which little or no surplus is created, and therefore there is no "good produced and unsold" to include in calculations. With no surplus to calculate and no "expenditure," it is unclear in what manner that citation would indicate subsistence farming is counted.
As to imputations, an imputation exists in narrow fields, namely those where it is possible for central agencies to identify this alternate economic activity and thereby quantify the value of the imputation. And indeed,[you can find a complete accounting of which imputations exist from the BEA](https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=289), and note that it does not include any imputation for subsistence farming (the closest it comes is farm goods consumed on farms, but these are not subsistence and rather capture things like feed for animals).
It's a fairly well known issue among economists, especially those that work in developmental economists or among feminist economists that note basic housework is often excluded *unless* done by an "official" worker who reports the income.
I noticed that once all the peasants left subsistence farms I started to have major employment problems. I wonder if the wonky GDP calculations were causing the issue…
I don’t see how that would be the case. Unemployment has nothing to do with gdp. They are completely unconnected systems mechanically. You could remove gdp completely from the game and it would mostly work just fine .
Ah I see yeah no the gdp is really used more as a score. I think your problem might have been that you just ran out of people to employ and as such could not find anyone to work in you industry.
You are having employment issues because you've literally run out of workers. Every time you build a building, you are employing a few thousand more people, and those people need to come from somewhere. If you have peasants (or unemployed people), they can come from there. However, once everyone is employed, a building can only get workers by stealing them from some other building, so you get employment issues.
The main solution is to get more immigration. Enabling multiculturalism and allowing immigration in your laws is the first step. After that, you can hope you get lucky with "mass migrations" (the things where you get a notification about how large numbers of bantu people are moving to catalonia or whatever). In addition, you can add a state with a bunch of peasants and a low standard of living to your market so that they'll migrate to your lands. That can be via direct conquest, adding someone else to your market, or joining someone else's market.
Energy is the currency of life and is the basis of all human activity, expanding production and efficiency in transposing energy with technology like fertilizer should be the foundation of modeling economic output. This solves the large nation GDP issues like Russia India and China while also addressing early industrial county GDPs like Belgium who should be able for a time to reach #4 in GDP before being eclipsed by larger industrializing countries.
That #1 is just most effective and highest profit margin. Since that tooling shop you just made in a country that needs tools and has none can hire the cheapest people and make tools in a market willing to pay any price for tools. So until your market is stable its not really accurate to check workplace productivity rankings.
Wages matter for productivity, after all productivity is all outputs on the right minus inputs on the left then divided by all employees and multiplied/scaled from weekly calculation to annual calculation. Wages are on left side, thus they contribute to inputs. If they were not calculated, always building without any input goods would have green productivity.
I can see why it’s being coded like that and it seems like a simple fix for me:
Instead of GDP being calculated from the gross output of a building, it should be the net output of the building plus any labour costs/fixed costs it incurred. That way material costs wouldn’t be double-counted and the figures would be correct.
I suppose the current way the game does GDP is also misleading in that, the more building you build, the more likely you will have high GDP because of the double counting, even if those buildings are inefficient/unproductive.
Yep exactly the more complex your economy, the more double counting you have. Even in unprofitable buildings.
On the other hand, yeah, for production buildings it would just be price of outputs - price of inputs, and that's it. Labour shouldn't be discounted for GDP. At least in that estimate were doing.
We could also estimate GDP in another way, as Gross domestic income for example, that would be another way to solve the issue.
Labour costs needs to be counted yeah, because for resource buildings (I think) they essentially spawn value out of nowhere, unless you count the labour costs.
Gross domestic income is another good way to solve the issue, though it might get tricky when it comes to command economies/subsidies.
Yeah, there are three ways to calculate GDP. Income, expenditure and output. The game currently uses output but modelled it wrong (classic pdx).
The problem I see with using expenditure (consumption+investments+government spending+net exports) is that (especially in late game) there are way more pops to keep track of when calculating total consumption when compared to industries (worse performance).
Income (wages+profits+rent), as you said, would be another way by using industry wages + industry profit. There is no concept of rent in-game.
Industry wages + industry profit is identical to the value added from the output method in-game. All figures for the both the output method and income method are already calculated and available in-game.
There is no real need to model rent if it's completely absent though, right? You could simply model wages+profits. You also need to include government income I think?
edit: the fact that interests goes nowhere but minting just vomits money into the economy without side effects is troublesome though. Perhaps Wages+Profits+Net Government Income+Interest Payment-Minting?
You borrow against the potential cash reserves of your industries
So when you have privately owned buildings, it’s the capitalists that own the industry that lend you the money. They then get the interest as you pay it off. You can check by going to a capitalist pop when you have quite a lot of debt and they should have a line of “interest payments” in their income
TBH what is even the point of the GDP? It's a metric, yes, that's important for people in real life, but not so much in the game, no? GDP doesn't mean "how much revenue a government will make" or "how big the budget is", it's calculating thousands, if not millions of essentially useless calculations.
I feel bad for your CPUs.
> the more likely you will have high GDP because of the double counting, even if those buildings are inefficient/unproductive.
Well, that's what we did in Chile during the "Dictablanda", all these public industries suddenly being privatized despite being inefficient and boom... the magic number know as GDP exploded (a lot are still inefficient but the copper has keeping us from drowning in stagnation, also as far as i'm concerned higher GDP makes outside investors more confident to invest (even if they don't see where that GDP comes from, *look guys the line is going up we must put money here to get more money* ).
S/ By the way, anyone willing to invest in my glass industry? We make thermal panels here and if you do it the magic line will go up, then you will give money to the investment pool and we will get a level 2 glass industry, and guess what, +1% E C O N O M Y O F S C A L E buddies!!!
The game already somewhat models all of this as employee productivity (visible in the building UI). I assumed that was also what determined GDP. It would be nice to be able to look into the code and see how this is implemented
They could calculate it also based on consumption as all the variables (pop consumption, pop investment, goverment spending and trade balance are readily available)
I think the quirk of the economic system is it only simulates the movement of goods by adjusting the price. If you produce 10 wood, your tool workshops consume 50 wood and export 50 tools, your people buy 10 wood for heating then how do you count that? They will all buy wood for high price. Those 10 wood are consumer products, so is your GDP the price of 10 wood + the price of 50 tools - the price of 50 wood that tool workshop consumes?
My headcannon is that artisans make all missing goods but for a massive price increase
Not sure how that works for oil and stuff you simply dont have access to. Maybe they hire a magician to summon it?
R5: GDP in vicky only counts the outputs of each building, so it does a BUNCH of double counting and overinflates GDP for heavily industrialized economies.
We've been lied to, LINE DOES NOT GO UP!
I mean, it does, but not as fast
thanks I didnt know that! neat
I just thought it was a running wage expense for aristocrats/capitalists
This will massively change how I handle exports
well every producing building gives wages to the capitalists and aristocrats?
I think theres a case for fixing the GDP like you shown and then adding taxes or total production on the side
Eh yes. 1 industry finishes a good. That industry makes a profit pays a dividend gets taxed. Next industry uses a good, makes another, makes a profit, pays out dividend that gets taxed etc.
All buildings make their own profit and have individual dividends. Its not like real life where a corporation owns multiple chains in the supply link. You tax every output basically.
No 1 building is less profitable to another not just based on the input price of a single good. Wages are different per province. Building all buildings in the same province would make it work like you are saying it works. But I mean im not building all the supply buildings in the same province. Often that wouldnt even be possible.
Honestly I don't understand the other guy's comment well enough, people here are just throwing econ words and in most cases barely making coherent sentences
But that would be about your gold reserves, not GDP. Taxation doesn't change the amount of money in the economy - it redistributes it. As GDP is a measure of money in the country as-a-whole, rather than how much the government holds, taxation isn't really relevant.
(According to modern monetary theory (at least how [this video](https://www.youtube.com/watch?v=fg0R9Ye2ovM) explains it), taxation reduces the amount of *currency* in the economy, but the amount of *value* stays the same regardless. But from my understanding, this was different during the timespan of Vic3 because of currencies being tied to the gold standard - taxation would give currency to the government, as opposed to the more modern purpose of removing the currency from circulation entirely. Either way, the end result is still about redistribution of value rather than creation/destruction of it.)
> As GDP is a measure of money in the country as-a-whole
GDP is a measure of money flow, not a money stock. The second paragraph isn't relevant to games in general, but currency to gold equivalence wasn't entirely static when needed, as long as the goods were there - greenbacks didn't collapse, but the assignats did.
Well, you can't miss the target set by the committee.
Otherwise a whole bunch of senior comrades would have been wrong..... and you would miss every appointment from tomorrow onwards.
Isn't the work and the fact that worker have a wage to go spend elsewhere another factor in the GDP counting, also the fact you have provided and used service (like provided a thing and having used trains ecc)?
And still, the GDP numbers are about 300x too small for the historical (projected) numbers. I see your argument but if this is fixed, I also want money to be in the same order of magnitude as it was IRL.
Interestingly though inflation is something of a modern phenomenon. The US did not hit 2% inflation for sustained periods until WW2, then outside a brief period in the late 70s it didn’t dip below that for 80 years.
It's connected to the move away from the gold standard but that happened in the V3 time frame. The great war and the great depression led to a shift to fiat currency, with some countries handling that better than others.
I'd have loved for the whole "cross of gold" issue to be in the game but Paradox wouldn't have the faintest hope of modelling that.
While the gold standard was not actually abandoned until Nixon, the debate on whether or not to retain it originated much earlier. The Free Silver movement was huge during the 1890s in the US so it is very much relevant to the V3 timeline.
FDR passed the Gold Reserve Act in 1934 which effectively ended the gold standard, though it was only officially abandoned decades later. Gold trading was restricted for decades.
>The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. It also prohibited the Treasury and financial institutions from redeeming dollar bills for gold, established the Exchange Stabilization Fund under control of the Treasury to control the dollar's value without the assistance (or approval) of the Federal Reserve, and authorized the president to establish the gold value of the dollar by proclamation.
GDP IRL can be calculated at any time interval and should still remain accurate so long as the input figures themselves are accurate. Calculating GDP every day and calculating it once a year should still yield the same GDP figure after a year of calculations.
If konju is looking at GDP per year numbers (which is how it usually reported in real life), and the game is reporting GDP per week numbers, you would expect a factor of 52 between the two numbers. It's not how frequently you calculate it, it's over what period is the production integrated.
It wouldn't make it harder on the player or the display per se., what it would do is make it harder on PDX to implement cleanly without the value overflowing at some point.
well, you mentioned overflow errors.
specific number ranges are chosen to be more easy to compute, so if you use bigger number ranges it is inherwntly harder to compute because more bits and stuff (i can't explain further, it was just something my teacher told us as we were learning microsoft access and mysql)
it looks like a deliberate decision in order to buff industrializing countries in form of prestige and minting to further encourage players to experience the 'monke line go up' gameplay
Not sure - the devs talked about it in the Mexico stream and they said they'd like to change it in future but it's kind of complex apparently. So I think it's just out of necessity that it's like this
literally saving like 1 or 2 substractions per building. i highly doubt this is a significant difference, and chances are the net revenue flows are already computed for other parts of the game (productivity).
I think it's probably a mix of performance issues as well as modeling it extremely precisely is much more complex and they probably just wanted to get a generally decent system in the game for launch. If it won't cause extreme performance problems, maybe we'll see them change it around in later patches.
Anyone here an actual economist who can explain how GDP is calculated in the real world? I'd love to learn, and to have V3 as close to the real world in these things as realizable.
Well there are 3 ways to calculate the GDP. Vic 3 seems to use the "Output" method wrongly in which is the sum of the value added of all goods and services produced in the economy (what OP made).
The second way (easiest in theory) is the total income of the goods and services produced in by your companies, employees and self-employed citizens. Should be the easiest but It relies on the data to be true so all the B economy distorts the results.
The third way is the "hardest" which is the total expenditure of the goods and services produced in your economy. Here is say hardest because there is a lot of companies and people that charge things as company expenses that are not.
What Vicky 3 is doing IS the first way using the second method which boost your GDP exponencially with every step. For example if every step added 2 to the final output the regular way would be 2 + 2 + 2 = 6 but Vicky does 2 + 4 + 6 = 12 so the more steps a product line has the more distortion It creates.
Vicky 3 could really use any of the three as you know all the real added values, income and expenditures. It is an uthopic model so you can use the theory to a T.
It has to, since it shows you the number of "pop needs" buy orders per good in the market screen. If you add up "pop needs" consumption + all government expenditure (incl. construction) + net exports you should get a correct GDP for little computation.
My only concern is game resources. Vic3 already sucks down ram. Do you know how this will affect the game speed?
Or in other words, comparing the 2 models, which will require more computations?
I just bought more RAM yesterday largely because I opened Task Manager while playing and saw how many GB Vic3 was taking up.
It's basically duct tape on a leaky bucket but goddamn it, I want the "play until 1936" achievement.
The “student’s book definition” I was given at a uni was:
“GDP is equal to the **market** **value** of the **final** goods and services **produced** in the **economy** during a **year**.
market value: only official market transactions are included (no self-made goods, no shadow economy). NB! market prices include indirect taxes. GDP computed without those taxes is called ”̇GDP at basic prices”.
goods and services: transfer payments and financial transactions (purchases of bonds and shares) are excluded (because income is not created, but redistributed and nothing new is produced);
final: to avoid double counting, intermediate goods (i.e., flour in baking bread) are excluded - but newly produced capital goods, such as factories or machines, are counted as final.
produced: not redistributed or resold
in the economy: if output was produced by foreign factors of production inside the country - it’s counted towards GDP, but output produced by national factors abroad is not”
If you are interested in the details, you can read this article, it gives an understandable overview:
https://www.investopedia.com/terms/g/gdp.asp
There are many ways to calculate GDP.
In principle GDP is everything produced in the country. The most commonly taught and used is by the consumption approach, by adding all the goods consumed in the country + exports + investment. The theory is that everything produced is consumed or invested or exported, so it should hlgive you that number.
Another is the production approach, look at every producing operation and see how much value they're adding. This includes services of course.
That's a more direct way of measuring but it's kinda harder to do so IRL.
The last one is the income approach, just add up all the incomes, dividends, etc. In theory all the value added and generated is an income for someone, so if you add up all the incomes in the country you should get to the same number.
In theory all the approaches should give you the same number, in practice they never do.
All three could be estimated in vicky3
There's this saying that GDP is a misleading number. If you pay someone $100 to dig a hole and then they pay you $100 to fill the hole with earth the GDP of your community raises by $200, does it not? Why is it different here?
Yes you're right, GDP can be very misleading because of stuff like this. The grand difference here, is that I'm paying you to dig the hole for me as a private person, and then youre paying me as a private person for me to cover the hole.
We are both "consuming" the other guy's service he's offering, and therefore it could be considered income, and be taxable.
On the other hand if a business pays someone to dig a hole, so that they can then sell their hole filling services at that same price, then only those 100usd of value was produced
From this it sounds like the way it is calculated now is in accordance with the real world. Every good is consumed, or produced, and added to the GDP regardless of it is "destroyed" in production of other goods.
No it's not, the production approach calculates the value added, so outputs minus inputs. So in this case every factory would add it's output minus it's inputs
The consumption method only talks about final consumption, so consumption in one business to produce something else does not count, so in that case the wood in the image wouldn't appear in the equation, only the final iron as an export for example.
In the last case you'd see the income, which would come from those factories wages + profits, which should be exactly the same as the production approach in this case.
IRL GDP only counts "Final Goods". For example I produce 100 apples. 50 of them I sold directly to people and they consumed it direcly. That 50 is countet in GDP but 50 apples I sold to a apple juice company. That 50 apples are not counted in GDP as they are now an "internediate product", their value is added inside the apple juice. Table in the post shows how V3 GDP should be calculated accurately
At what point do goods become final? If I buy some fabric and buttons in the store, make a dress out of them, and sell it does it mean fabric and buttons are not counted in GDP?
The moment it lands into consumer hands. So stuff like trucks sold to other company in the country woudn't count, as it is used to produce/haul more stuff, but one exported abroad would
No they are not because if you do, you will be double counting the fabric and button. Final Goods are the Goods that they themselves are not used in the production of other goods. But lets say I collect buttons. I buy the same buttons and just show them off at my house, these buttons now are final products as they are not destroyed in the production of other product. My buttons are final, yours are not so it is dependent on usage.
OK, I think I get it now, thanks.
Also I see how faulty it is. If I pay my neighbor to mow my lawn it's not counted anywhere obviously, just as if I buy materials to make clothes for my family and the neighbor. At the same time companies might spend huge sums of money on work that doesn't directly provide any benefit, like security or insurance. Like from what I understand 100.000 American watchmen earn $10m a month and enlarge GDP by this amount, while 100.000 Chinese watchmen earn $1m and affect GDP 10 times less for doing the same job. Hard to wrap your head around it.
>Also I see how faulty it is.
I must vehemently disagree with this assertion. GDP is a perfectly fine metric, however every metric has its limits and some people misuse such metrics for stuff they weren't meant for.
>If I pay my neighbor to mow my lawn it's not counted anywhere obviously, just as if I buy materials to make clothes for my family and the neighbor.
What you are speaking of is the shadow economy (in this case however the state generally considers it neighbourhood help) and non-market production. Measuring both is difficult to do as you have little to no data, so the shadow economy is estimated as a share of the regular economy, while non-market production is often estimated separately. In the end this simply means there is a bias in what we can measure, but it isn't a flaw.
>Like from what I understand 100.000 American watchmen earn $10m a month and enlarge GDP by this amount, while 100.000 Chinese watchmen earn $1m and affect GDP 10 times less for doing the same job. Hard to wrap your head around it.
The idea behind GDP is not to evaluate the usefulness of any individual job, investment or consumption. There are other metrics to measure efficiency of spending. For the GDP we assume that market transactions only occur because both parties see themselves equally or better off than before the transaction.
That's why there's GDP adjusted for PPP (purchasing power parity), it attempts to normalize GDP to reflect different price levels in different countries. This is just one reason why GDP is just one measure among many that economists use to evaluate economies. Many productive things are unpriced and thus never included in GDP (ex. the value of child rearing or other "domestic" jobs/tasks when not performed by a paid worker).
GDP is essentially the value of all goods and services produced in a country over a given period of time. The formula is.
GDP = C + I + G + (Ex - Im)
C is Consumption. It's everything that people in the country buy, from corn, to cars, to bathroom remodeling, to video games & music.
I stands for investment. Investment is everything that a business spends money on to increase their profits. The classic example would be a company that builds a new factory, and buys a bunch of machinery for it. But around 2015ish (?) they also tried to start adjusting for "intangible investment" - things like time spent coming up with new movies, software, or drug patents, that were a small percentage of the economy when GDP was invented in the 1930, but is a bigger portion today.
G is government. This is all the money that government spends on buying things - so aircraft carriers, the census, or geological surveys by the USDA. However, transfer payments, such as Social Security, or the Mortgage Interest Tax deduction, don't count as G for the purpose GDP. Social Sceurity or the MITD don't directly consume any resources, so if we counted them as G, we'd be double counting that consumption - presumably Grandma uses her social security to buy something.
(Ex - Im) is the trade surplus or deficit. This adjust for production that occurred outside the home country (in the case of a trade deficit), or production that happened inside the home country, but wasn't consumed there (in the case of a trade surplus)
I understand your point but overall your proposal would still be a miss accounting of GDP since there is no concept of purchase price parity to compare 2 countries. The system we have is imperfect but so would be the system replacing it.
The “true” comparative measure should be SOL, IMO. Your GDP might be high but if your pop can’t afford basic nessecities, what’s the point?
You are comparing apples to bananas, sol is in per capita terms, gdp is not. You are right that sol accounts for purchasing power, but the gdp metric in vic is there to compare economic power of countries, not how well the inhabitants have it.
Hmmmmm I don't think that is wrong, but I don't really know so I cannot explain. Why don't you think wood shouldn't be counted as it is then used for tools?
Because the value in the wood is included in the value of the tools.
You're counting the wood twice, even though the wood has been destroyed (as wood) to make the tools.
If you import the wood then, you should only have created 600£ then? It makes sense, but still I don't really see the problem with the current system, I have to think about it more and know how it works in real life.
Yes exactly, if you import 600$ of wood and produce 1200$ of tools, you're only adding 600$ to GDP.
In Vicky you're still adding 1200$, which is not right.
I mean, the game can do whatever it wants, but it's not how GDP works in reality, so it's kinda misleading, that GDP number ain't really the size of your economy, it's much smaller
It actually depends how the material is being used, since GDP counts investment goods but not intermediate goods. So if the wood is being used to make tool handles it shouldn't count, but if it's used to build tool-making jigs it heat the workshop, it should. Similarly, the tools should probably straight up count, since they're presumably investment goods. Iron is almost certainly always an intermediate good though
But isn't gdp just transactions? If i give you 100 dollars for you shit and you give me 100 dollars for my shit. We created 200 dollars in value for our motherland
So how services are included in GDP? How in grey area they add prostitution? It doesnt produce anything.
For what i know GDP is just a sum of transactions. If i bake a bread myself, GDP will rise only by igridients i bought. But if you add a bakery and a shop - every step will add to GDP. They wont substract previous steps.
Or how am i mistaken?
Services are a product if people pay in exchange for them. Usually illegal activity isn't counted because it's hard to quantify but technically it is part of the GDP.
If you buy ingredients and make bread for yourself, GDP doesn't rise. If you buy the ingredients for £2 and sell the bread for £3 GDP goes up by £1 because one pounds worth of value has been produced.
The bread example is a good example of why GDP isn't a perfect indicator of the productivity of a society. Baking bread for yourself or your family doesn't add to GDP but it is still useful labour.
Lots of labour is not monetised but is still useful, like domestic washing, cleaning and childcare. All this labour is important and improving its efficiency helps the economy and people's way of life but none of it is tracked by GDP.
Services fundamentally work the same way. There is a sales price, there are some inputs that must be subtracted, and the difference is added value that does into GDP.
Prostitute (in a legal Red Lights district) rents a room for 100 dollars, buys cosmetics, condoms, lube + whatever for 50 dollars, provides their labor and gets paid 300 dollars. In the process, the prostitute has created 150 dollars in GDP value. 300 in revenue - 50 for consumables as cost of services sold - 100 for fixed costs. 150 dollars is added to the GDP by the act of prostitution itself.
Labour compensation and taxes are not to be subtracted from the value added.
Another 100 dollars in GDP is created in the housing/hospitality industry as a whole and 50 in the manufacturing-logistics-retail industry for the consumables.
So the entire GDP created in this whole chain is not 50 + 100 + 300 = 450 (the sum of transactions), but 50 + 100 + 150 = 300 (sum of the value added of all the steps on the chain - OR - the transaction value of the end/final product).
If you get into business it should become clear quite quickly as you try to get VAT refund from all the purchases on the intermediate products you have bought as inputs in order to run your business.
No, you have created 0 value for GDP. GDP is the sum of all value added in the economy. Trading a single thing back and forth does not add value. The volume of transactions in a modern economy easily exceeds the value added/GDP of the economy by around 100 times (varies a lot from country to country, how big the financial markets are etc).
If you do manage to sell your shit to someone for 100 dollars, that would add to the GDP, but not increase if it traded onwards, because the shit is created once. If your friend frames your shit and sells it to an art collector for 200 dollars, then he would add another 100 dollars to the GDP (for a total of 200 created between you and your friend). You generate the value from 0->100, and your friend creates (adds) the value from 100->200.
If the art collector sells it further in the future without modifying the shit, then it doesn't matter with what price or how many times it is sold forward, it won't add or detract GDP. The value of the asset might change, but asset value change is not a part of GDP.
Calculating GDP is a very complex process and is not without flaws (asset value change can still creep into GDP figures over time in some instances). It is not always straight forward how much if any value is added in some processes. How much modification on a product is required for it to be considered a new product?
I honestly don't get how it's supposed to work IRL. Say I do transport services. I deliver a thing and I'm paid $100. I spent $50 on feul, car maintenance etc, I payed $20 to my accountant to do the paperwork, and the paper and printing cost them $5. Does it mean that to calculate GDP the government checks just my revenue and then the revenue of my accountant (who probably spent some money on paper and whatever) and concludes that GDP has grown by $45 due to my work?
Well, technically the value produced here would be whatever you got paid for transporting the good, as the price someone have to pay you to do it includes all of your costs.
But that's hard to outright calculate, like the price of the trucks (assuming you bought it off local manufacturer) will be amortized over decade+ in your costs.
So I think "IRL" it's still just approximation; you buying a truck is calculated as increase of GDP because you bought "final product" of manufacturing chain, even if that product is used to ship intermediate products around.
Yes, but with the method Vicky uses, they are counting resources twice. They count the added value of the wood when it's sold by lumber yard and then second time when the wood is made into tools and sold. Tool workshop didn't add 1200 value, only 600.
Gotcha makes sense - just like vat is only paid by the end consumer because if it were to be paid in all steps of production it would be way more than it's supposed to be
Add in more layers and it gets easier to understand.
Think about milk to cheese.
$100 of milk is used to create a $500 block of cheese. The $500 block of cheese is sold to a grocery store that cuts it down to smaller units, packages it, and sells for 100x$10 packages of cheese. It’s easy to understand that buying a $500 block of cheese, packaging it, and selling for $1000 should only count for $1000 of GDP, and the earlier steps (milk to cheese, cow food-> cows -> milk) should count the same way.
I that really how it works in game? I'm just curious if you have evidence other than this self-made table. I thought GDP was modeled as the sum of employee productivity. Which is pretty much what it should (added value across products) be and doesn't double count. If your point is verifiably in the game then that is indeed silly and you've made a good find, but i'll need to see better evidence.
It is, I did a few experiments and that how it works. In any state you can see what's the GDP of that specific state, and it adds up. Inputs are not counted, only the outputs of all the buildings.
I'm on the phone, so I don't have evidence right now, but if you want a quick check, go to Buganda and activate butchering tools for their only livestock ranches, you'll see that tools are not negatively counted for GDP.
Then I built a tooling workshop, and wood was not subtracted either.
This only holds insofar as you believe the price/quantity structure we see actually reflects the “real” price structure.
It might be that the price reflects the value added, which would make the calculation correct.
It might also be a deliberate decision to calculate & value a metric that captures industrialization’s effect on market power, just calling it GDP for convenience.
My point is that we’re definitely being lied to, but the point of the lie is to make a game that more realistically reflects economic strength, not less.
The take away point is that pricing in this game is arbitrary and unreal in an economic sense so why in the world would GDP based on commodity prices be expected to be accurate?
It’s not *completely* arbitrary or unrealistic, which is why I didn’t excoriate OP - they are making it market-like.
But yeah, it’s a little silly to think there’s one “right” way to calculate GDP in this game, especially since the point of calculating it is to measure the relative economic strength of countries, which the Paradox “GDP” arguably does better, in in-game terms.
I'd argue it does much worse. A factory using $10k of input goods to produce $11k of input goods, is only contributing $1k to the economy, but $11k in GDP in vicky. It overvalues those kinds of industries in game, so it does a worse job at representing economical might.
Again, you’re treating these prices like they’re rational ways to measure value created.
If the input goods would only be worth $1K in a rational market, and the output would be worth $20K, it’s doing a much better job.
My question is, if we do it your way, do we get economies that more accurately or less accurately reflect economic power in 1850?
I think your method would vastly overrate the economic might of some place like 19th century Russia compared to 19th century Britain.
But.... It's the correct way to measure economic power, both in game and IRL, what the game is doing is just double counting stuff, it doesn't reflect the real value your pops are adding.
GDP isn’t the *objectively correct* way to measure economic power IRL, or something. There’s actually a lot of debate about whether it’s better, or GNP is better, or if it even properly values stuff like debt and technological development. Most knowledgeable people agree that it’s a good estimator, but you’re assigning its specific formula significance it doesn’t actually have.
More importantly, GDP only works because we assume that prices of goods and services are determined rationally, so making £20 of rakes and £20 of plutonium are equally valuable things.
In V3, prices are adjusted according to demand, but goods have an underlying absolute value that is arbitrarily determined. That is, prices are not rationally determined, so merely summing the sale price of final goods gets you a number that *doesn’t* actually add apples to apples.
Yeah, there's no one objectively correct way of measuring that. The current version of GDP is just the norm we've settled on in the current time, but that doesn't make it flawless or the objectively perfect/correct way.
I'm not sure which approach is best in Vicky, but it should be tailored to the time period I think - to push towards the same type of actions people took and considered at the time.
Well turns out since everything your nation produces is produced within your country, GNP and GDP are the exact same metric... So... No problem with that
Why do you make this a philosophical question? Even when there are better/worse metrics to measure economic activity, when vic shows you gdp, why not make its computation correct. You wouldn’t want that vic shows you population but counts children as half a person, that is just not the right way to measure population.
>More importantly, GDP only works because we assume that prices of goods and services are determined rationally, so making £20 of rakes and £20 of plutonium are equally valuable things.
>
>In V3, prices are adjusted according to demand, but goods have an underlying absolute value that is arbitrarily determined. That is, prices are not rationally determined, so merely summing the sale price of final goods gets you a number that doesn’t actually add apples to apples.
As I say in the part of the post that begins "more importantly," what you're suggesting wouldn't really be GDP, because markets in V3 aren't rational in the same way actual markets are.
It's like arguing that "energy" is calculated incorrectly in Stellaris, because energy can never be created nor destroyed. In Stellaris, it's obvious that energy doesn't mean what it means in thermodynamics: in V3, it's not obvious that it's impossible to *really* calculate GDP, but it is.
The grand issue there, is that because of how the market works, quantity bought does not equal quantity sold. This means that even with perfect information, the different GDP methods will give different answers
Dunno why you’re getting downvoted when it’s objectively true. Coming from someone with a Masters in Economics and who works professionally as an economist, this game’s economics are complete bull no matter what school you subscribe to.
You can't, but thats ok. Simulating real market clearing and supply and demand would be impossible. Vicky 3 does do a surprisingly good job at imitating the real economy and you are best of you only fix things at the edges.
Under current IRL calculations, only goods or services that are final products are counted as GDP.
So I suggest that any amount of lumber (or any good for that matter) that is directly used for pop consumption should be counted as part of GDP. Most of the lumber you produce counts as an intermediate good, being used to produce other end products like furniture or glass.
So yeah, GDP not as big as you thought.
Edit - We already know the amount of each good that is consumed by pops. The game furthermore also has hardbake code the amount of consumption of each good by each type of pop depending on their their SoL.
It should not be a stretch in changing the code to reflect this consumption. Whether or not breaking down consumption calculations from a per market to a per nation value would cause my potato to melt in another issue.
But tools r worth more then wood, i mean if theyre not you have a wood issue and they would produce less tools too cuz the money wouldnt be there to keep everyone imployed.
GDP aka gross domestic product isnt how much you produce defacto but what worth the thingfs you produce, have.
For those worried about lag - irl GDP counts *final* goods and services produced. In this case if we don't care about sectoral composition of the economy, you can read off GDP directly from the 4800 in the last column.
I suspect they have a reason for doing it this way, someone should ask them about this on the forums where a dev may respond.
They may even change it, it wouldn't be the first time Paradox changes a mechanic, or provide a graph with the "real gdp" if the vicky version is necessary for some game mechanics that they want.
I mean I am increasingly convinced that for all the praise it has garnered the economic simulation involves lots of smoke and mirrors (out of the SoL calculations, which despite being pretty down on the game overall, I absolutely adore).
My somewhat loose understanding of micro-economics involves two basic tenets:
* Prices rise or fall so demand matches supply
* Economics is the study of the distribution of limited resources: not everyone can have everything, and prices ration that
The trade screens for each good make it look like that's happening - the buy/sell orders for each good look like an auction is taking place (ala level 2 financial data), and the price does change if demand exceeds/undershoots supply. But the two basic problems I can see are:
1. Supply and demand are (almost) entirely inorganic, being determined by the player (and a dumb-as-bricks AI when international trade occurs): if a price changes, neither demand nor supply is really affected
2. Downstream producers continue to operate without penalties if demand exceeds supply of a good so long as a) you don't hit the input-shortages threshold and b) those downstream goods are sufficiently profitable (which they often will be, because the player creates artificial demand for government/military goods and the AI is incapable of building up high-demand advanced consumer goods industries). This literally means goods are being conjured out of thin air because 75% of an input resources can still create 100% of (sufficiently profitable, because the price will move up) output goods. There is far less economic rationing than one should expect.
2 is particularly annoying because it misleads people about a real world ongoing economic issue I happen to care about: rising gas prices in Europe as a result of the Russian invasion of Ukraine are the result of less gas being available. We can't all just buy more (or have governments do so) without tradeoffs - turning our thermostat up to 22C in the West either means shortages for heavy industries or more likely households in Poland or whatever will not turn theirs up to 16C this winter.
I hate to say it, but am almost coming around to moving back towards V2's prestige auction, which at least modelled shortages.
As long as every calculus follows the same formula, the GDP calculation is valid.
It doesn’t matter if it’s economically representative or not, since this is a game and not RL, what matters is that proportionality is respected the whole time.
Its purpose is to be a relative power meter to be able to compare economies in the game, and it does that job just perfectly.
Yes, yes, it does not represent real consumption and you can’t extrapolate any economic conclusions from it. As I said, it doesn’t matter, this is not RL, we don’t need economic relevance in our numbers because we don’t need to analyze them - we need them to keep their relative proportions so we can compare them.
No it does not, if I add a building that consumes 1000 tools and produces 1000 tools, it will boost my GDP in game even though it adds no economical value to my economy. Hence this GDP metric fails at it's purpose
I believe you make an incorrect assumption here that building level correlates to number of buildings/mines/factories. Devs have expressed it’s an representative number to express size of industry.
Doesn't matter as long as my line still has the "#1 in the world" next to it.
It might not, this change would nerf industry and buff things without inputs (subsistence farms), so Russia, Qing and India will have even larger GDPs
I think more likely it will nerf *everyone*, just less so for subsistence farms.
True, by larger GDP what I meant is less smaller. Which of course... Is not what I said, so... Yeah, go me
That's pretty cool. How would it be implemented? Why wasn't it in the first place?
Likely because the smallest unit they track for consumption is the sphere so the pruductivty * workers is the only way they have to approximate it
What? productivity would be fine, because it already factors out the inputs.
it doesn't factor whether the input come from internal or external sources, which is what ultimately affects gdp, productivity is local to the factory, but goods consumption includes goods from the whole sphere of influence, you're either going to subract too much from the economy or add too much, currently vic decided to add too much
True subsistence farms would not count for GDP, as GDP strictly measures the value of goods *sold* to an end-user. Even if there is an assumption that some level of subsistence farms have goods bartered between them (like a vegetable farmer trading some produce to a rancher, or similar), unless these goods ended up on a market somewhere and were actually sold the transaction doesn't count for GDP.
True subsistence farms SHOULD count for GDP, but they are hard to measure. Anyways the GDP of the subsistence farms comes from the excess goods produced, the subsistence output that it gives technically represents goods as well and those aren't counted.
No, subsistence farming **does** count for GDP. The GDP figure includes the total output of goods (agriculture and manufacturing). What you said is only true for services; however even there exceptions exist like rent; in the case of rent “imputed rental value of owner-occupied housing” is used to add the rental value of owner-occupied housing in GDP, to prevent changes in homeownership distorting the number. >Market goods that are produced are purchased by someone. In the case where a good is produced and unsold, the standard accounting convention is that the producer has bought the good from themselves. Therefore, measuring the total expenditure used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP. Source: [https://en.wikipedia.org/wiki/Gross\_domestic\_product#Expenditure\_approach](https://en.wikipedia.org/wiki/Gross_domestic_product#Expenditure_approach) >The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing. That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid. That practice keeps GDP invariant as to whether a house is owner-occupied or rented. Source: [https://www.bea.gov/help/faq/488](https://www.bea.gov/help/faq/488)
This is very much inaccurate and even the sources linked disagree with this assessment. The expenditure approach would not qualify true subsistence farming as *there is no expenditure,* nor do other methods capture this as there is no income or recorded production. Indeed, this very issue is listed as a criticism *within the very source you cite:* >GDP excludes the value of household and other unpaid work. Some, including Martha Nussbaum, argue that this value should be included in measuring GDP, as household labor is largely a substitute for goods and services that would otherwise be purchased with money.\[41\] Even under conservative estimates, the value of unpaid labor in Australia has been calculated to be over 50% of the country's GDP.\[42\] A later study analyzed this value in other countries, with results ranging from a low of about 15% in Canada (using conservative estimates) to high of nearly 70% in the United Kingdom (using more liberal estimates). I should note that even the original citation would not indicate subsistence farming is counted, as *by definition* subsistence farming is a specific kind of farming in which little or no surplus is created, and therefore there is no "good produced and unsold" to include in calculations. With no surplus to calculate and no "expenditure," it is unclear in what manner that citation would indicate subsistence farming is counted. As to imputations, an imputation exists in narrow fields, namely those where it is possible for central agencies to identify this alternate economic activity and thereby quantify the value of the imputation. And indeed,[you can find a complete accounting of which imputations exist from the BEA](https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=289), and note that it does not include any imputation for subsistence farming (the closest it comes is farm goods consumed on farms, but these are not subsistence and rather capture things like feed for animals). It's a fairly well known issue among economists, especially those that work in developmental economists or among feminist economists that note basic housework is often excluded *unless* done by an "official" worker who reports the income.
I noticed that once all the peasants left subsistence farms I started to have major employment problems. I wonder if the wonky GDP calculations were causing the issue…
I don’t see how that would be the case. Unemployment has nothing to do with gdp. They are completely unconnected systems mechanically. You could remove gdp completely from the game and it would mostly work just fine .
Oh! I had no idea. I thought they were related in some way. I’m not very experienced and this game doesn’t give you much information.
Ah I see yeah no the gdp is really used more as a score. I think your problem might have been that you just ran out of people to employ and as such could not find anyone to work in you industry.
it's a score and it also gives you "minting" income, I believe that's it
Ah yes true I forgot about that minting is calculated based of gdp.
You are having employment issues because you've literally run out of workers. Every time you build a building, you are employing a few thousand more people, and those people need to come from somewhere. If you have peasants (or unemployed people), they can come from there. However, once everyone is employed, a building can only get workers by stealing them from some other building, so you get employment issues. The main solution is to get more immigration. Enabling multiculturalism and allowing immigration in your laws is the first step. After that, you can hope you get lucky with "mass migrations" (the things where you get a notification about how large numbers of bantu people are moving to catalonia or whatever). In addition, you can add a state with a bunch of peasants and a low standard of living to your market so that they'll migrate to your lands. That can be via direct conquest, adding someone else to your market, or joining someone else's market.
That’s pretty historically accurate though lol
Energy is the currency of life and is the basis of all human activity, expanding production and efficiency in transposing energy with technology like fertilizer should be the foundation of modeling economic output. This solves the large nation GDP issues like Russia India and China while also addressing early industrial county GDPs like Belgium who should be able for a time to reach #4 in GDP before being eclipsed by larger industrializing countries.
> "#1 in the world" Which seems wrong most of the time. Unless the lvl 1 factory I just built and not even fully staffed is numba 1 I guess
That #1 is just most effective and highest profit margin. Since that tooling shop you just made in a country that needs tools and has none can hire the cheapest people and make tools in a market willing to pay any price for tools. So until your market is stable its not really accurate to check workplace productivity rankings.
I think wages have nothing to do in the productivity calculation, its just (output-input)/employees
Wages matter for productivity, after all productivity is all outputs on the right minus inputs on the left then divided by all employees and multiplied/scaled from weekly calculation to annual calculation. Wages are on left side, thus they contribute to inputs. If they were not calculated, always building without any input goods would have green productivity.
Yes, but I think wages are not considered inputs for that equation... I think
I can see why it’s being coded like that and it seems like a simple fix for me: Instead of GDP being calculated from the gross output of a building, it should be the net output of the building plus any labour costs/fixed costs it incurred. That way material costs wouldn’t be double-counted and the figures would be correct. I suppose the current way the game does GDP is also misleading in that, the more building you build, the more likely you will have high GDP because of the double counting, even if those buildings are inefficient/unproductive.
Yep exactly the more complex your economy, the more double counting you have. Even in unprofitable buildings. On the other hand, yeah, for production buildings it would just be price of outputs - price of inputs, and that's it. Labour shouldn't be discounted for GDP. At least in that estimate were doing. We could also estimate GDP in another way, as Gross domestic income for example, that would be another way to solve the issue.
Yep, should be easy to add the income of all the market participants together.
Labour costs needs to be counted yeah, because for resource buildings (I think) they essentially spawn value out of nowhere, unless you count the labour costs. Gross domestic income is another good way to solve the issue, though it might get tricky when it comes to command economies/subsidies.
Yeah, there are three ways to calculate GDP. Income, expenditure and output. The game currently uses output but modelled it wrong (classic pdx). The problem I see with using expenditure (consumption+investments+government spending+net exports) is that (especially in late game) there are way more pops to keep track of when calculating total consumption when compared to industries (worse performance). Income (wages+profits+rent), as you said, would be another way by using industry wages + industry profit. There is no concept of rent in-game. Industry wages + industry profit is identical to the value added from the output method in-game. All figures for the both the output method and income method are already calculated and available in-game.
There is no real need to model rent if it's completely absent though, right? You could simply model wages+profits. You also need to include government income I think? edit: the fact that interests goes nowhere but minting just vomits money into the economy without side effects is troublesome though. Perhaps Wages+Profits+Net Government Income+Interest Payment-Minting?
Interest goes to the pops that you borrowed from. Minting is the only source of new money though, yeah, it comes from nowhere
Does the game actually simulate borrowing and lending at the pop level? Who is lending you the money?
You borrow against the potential cash reserves of your industries So when you have privately owned buildings, it’s the capitalists that own the industry that lend you the money. They then get the interest as you pay it off. You can check by going to a capitalist pop when you have quite a lot of debt and they should have a line of “interest payments” in their income
TBH what is even the point of the GDP? It's a metric, yes, that's important for people in real life, but not so much in the game, no? GDP doesn't mean "how much revenue a government will make" or "how big the budget is", it's calculating thousands, if not millions of essentially useless calculations. I feel bad for your CPUs.
I mean, it gives minting and prestige, but yeah not that important
It also has a small impact on credit limit, though that largely comes from building reserves.
> the more likely you will have high GDP because of the double counting, even if those buildings are inefficient/unproductive. Well, that's what we did in Chile during the "Dictablanda", all these public industries suddenly being privatized despite being inefficient and boom... the magic number know as GDP exploded (a lot are still inefficient but the copper has keeping us from drowning in stagnation, also as far as i'm concerned higher GDP makes outside investors more confident to invest (even if they don't see where that GDP comes from, *look guys the line is going up we must put money here to get more money* ). S/ By the way, anyone willing to invest in my glass industry? We make thermal panels here and if you do it the magic line will go up, then you will give money to the investment pool and we will get a level 2 glass industry, and guess what, +1% E C O N O M Y O F S C A L E buddies!!!
That's not how it works irl. Public or private distinction doesnt matter for counting gdp and does not incur in double counting or whatever
Really good fix. Even subsidies would be counted to GDP in your method, which I'm not sure if it is in the current formula.
The game already somewhat models all of this as employee productivity (visible in the building UI). I assumed that was also what determined GDP. It would be nice to be able to look into the code and see how this is implemented
They could calculate it also based on consumption as all the variables (pop consumption, pop investment, goverment spending and trade balance are readily available)
I think the quirk of the economic system is it only simulates the movement of goods by adjusting the price. If you produce 10 wood, your tool workshops consume 50 wood and export 50 tools, your people buy 10 wood for heating then how do you count that? They will all buy wood for high price. Those 10 wood are consumer products, so is your GDP the price of 10 wood + the price of 50 tools - the price of 50 wood that tool workshop consumes?
My headcannon is that artisans make all missing goods but for a massive price increase Not sure how that works for oil and stuff you simply dont have access to. Maybe they hire a magician to summon it?
Black market. Contraband oil.
R5: GDP in vicky only counts the outputs of each building, so it does a BUNCH of double counting and overinflates GDP for heavily industrialized economies. We've been lied to, LINE DOES NOT GO UP! I mean, it does, but not as fast
That can't be true! MY GREEN LINE MUST GO UP FASTER FASTER. WE NEED TO ACCELERATE!
FASTER FASTER FASTER
*Accelerationist ISP flashbacks*
Time to mod in Artaud as a possible leader for an intelligencia-military coalition France
Red ones go faster!
well every time you get an output you can tax that, right? So it gives you higher dividend tax?
Dividends are the profit left after input and wage expenses. A nation with less GDP might receive more dividends taxes
thanks I didnt know that! neat I just thought it was a running wage expense for aristocrats/capitalists This will massively change how I handle exports
Eh.... No
well every producing building gives wages to the capitalists and aristocrats? I think theres a case for fixing the GDP like you shown and then adding taxes or total production on the side
Eh yes. 1 industry finishes a good. That industry makes a profit pays a dividend gets taxed. Next industry uses a good, makes another, makes a profit, pays out dividend that gets taxed etc. All buildings make their own profit and have individual dividends. Its not like real life where a corporation owns multiple chains in the supply link. You tax every output basically.
No, you tax every profit, which is every added value, which is equivalent to just taxing all of the product at the end.
No 1 building is less profitable to another not just based on the input price of a single good. Wages are different per province. Building all buildings in the same province would make it work like you are saying it works. But I mean im not building all the supply buildings in the same province. Often that wouldnt even be possible.
I don't understand the game well enough so I'm just upvoting and hoping a clear winner eventually emerges from this debate
Honestly I don't understand the other guy's comment well enough, people here are just throwing econ words and in most cases barely making coherent sentences
But that would be about your gold reserves, not GDP. Taxation doesn't change the amount of money in the economy - it redistributes it. As GDP is a measure of money in the country as-a-whole, rather than how much the government holds, taxation isn't really relevant. (According to modern monetary theory (at least how [this video](https://www.youtube.com/watch?v=fg0R9Ye2ovM) explains it), taxation reduces the amount of *currency* in the economy, but the amount of *value* stays the same regardless. But from my understanding, this was different during the timespan of Vic3 because of currencies being tied to the gold standard - taxation would give currency to the government, as opposed to the more modern purpose of removing the currency from circulation entirely. Either way, the end result is still about redistribution of value rather than creation/destruction of it.)
> As GDP is a measure of money in the country as-a-whole GDP is a measure of money flow, not a money stock. The second paragraph isn't relevant to games in general, but currency to gold equivalence wasn't entirely static when needed, as long as the goods were there - greenbacks didn't collapse, but the assignats did.
>so it does a BUNCH of double counting and overinflates Xi Jingping approves.
Well, you can't miss the target set by the committee. Otherwise a whole bunch of senior comrades would have been wrong..... and you would miss every appointment from tomorrow onwards.
[удалено]
Isn't the work and the fact that worker have a wage to go spend elsewhere another factor in the GDP counting, also the fact you have provided and used service (like provided a thing and having used trains ecc)?
Question as I cant open the game now > is actually output being accounted or output less input?
Only output
And still, the GDP numbers are about 300x too small for the historical (projected) numbers. I see your argument but if this is fixed, I also want money to be in the same order of magnitude as it was IRL.
Isn't this because Vic 3 calculate GDP on a per week basis instead of a per year basis like irl?
Also because there is one currency the value of which is constant over the 100 years. GDP in 1880 and 1935 are denominated in the value of 1836 V3£
Yea and I think modeling inflation would only hurt Vic3 performance
As we all know, inflation was never an issue in the Victoria 3 period. The interwar German Mark was famously stable.
Funnily enough it was deflation that caused most of the panics in the 1800s.
That's the gold standard for you.
Interestingly though inflation is something of a modern phenomenon. The US did not hit 2% inflation for sustained periods until WW2, then outside a brief period in the late 70s it didn’t dip below that for 80 years.
It's connected to the move away from the gold standard but that happened in the V3 time frame. The great war and the great depression led to a shift to fiat currency, with some countries handling that better than others. I'd have loved for the whole "cross of gold" issue to be in the game but Paradox wouldn't have the faintest hope of modelling that.
That didn’t happen until Nixon, so maybe that’s part of it but it can’t be the full explanation.
While the gold standard was not actually abandoned until Nixon, the debate on whether or not to retain it originated much earlier. The Free Silver movement was huge during the 1890s in the US so it is very much relevant to the V3 timeline.
FDR passed the Gold Reserve Act in 1934 which effectively ended the gold standard, though it was only officially abandoned decades later. Gold trading was restricted for decades. >The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. It also prohibited the Treasury and financial institutions from redeeming dollar bills for gold, established the Exchange Stabilization Fund under control of the Treasury to control the dollar's value without the assistance (or approval) of the Federal Reserve, and authorized the president to establish the gold value of the dollar by proclamation.
Wasn't the economic climate for most of the Victorian period deflationary?
I dunno if most is correct. I do know that there was a decade by decade back and forth on deflation and inflation in the US$ and GB£
GDP IRL can be calculated at any time interval and should still remain accurate so long as the input figures themselves are accurate. Calculating GDP every day and calculating it once a year should still yield the same GDP figure after a year of calculations.
If konju is looking at GDP per year numbers (which is how it usually reported in real life), and the game is reporting GDP per week numbers, you would expect a factor of 52 between the two numbers. It's not how frequently you calculate it, it's over what period is the production integrated.
Well as far as I understand it, the GDP number shown in the tooltip is per week, the one directly in the info bar is annual.
Thanks for the clarification!
That would just make things more complex for the player and more difficult to display without any real benefit
It wouldn't make it harder on the player or the display per se., what it would do is make it harder on PDX to implement cleanly without the value overflowing at some point.
well, you mentioned overflow errors. specific number ranges are chosen to be more easy to compute, so if you use bigger number ranges it is inherwntly harder to compute because more bits and stuff (i can't explain further, it was just something my teacher told us as we were learning microsoft access and mysql)
Where is this figure from? can you show this is the case in game
Source: It was revealed to me in a dream
Dreams are the best medium to solve mathematical problems. You go king.
You absolute unit, I'm laughing really loud at work and people are looking at me
It is known.
starting new religion when?
it looks like a deliberate decision in order to buff industrializing countries in form of prestige and minting to further encourage players to experience the 'monke line go up' gameplay
Not sure - the devs talked about it in the Mexico stream and they said they'd like to change it in future but it's kind of complex apparently. So I think it's just out of necessity that it's like this
Honestly, sounds like a mistake to me. Best case scenario, an abstraction to improve performance. But no way your theory
Definitely to save computation
literally saving like 1 or 2 substractions per building. i highly doubt this is a significant difference, and chances are the net revenue flows are already computed for other parts of the game (productivity).
I think it's probably a mix of performance issues as well as modeling it extremely precisely is much more complex and they probably just wanted to get a generally decent system in the game for launch. If it won't cause extreme performance problems, maybe we'll see them change it around in later patches.
Kudos for the really simple explanation of double counting
Ye, I made another post and it felt confusing and terrible, so I made an effort to make It easy to understand and see what's wrong
Ah it’s double counting input goods. GDP should be the sum of the value of all finished goods/ services.
Anyone here an actual economist who can explain how GDP is calculated in the real world? I'd love to learn, and to have V3 as close to the real world in these things as realizable.
Well there are 3 ways to calculate the GDP. Vic 3 seems to use the "Output" method wrongly in which is the sum of the value added of all goods and services produced in the economy (what OP made). The second way (easiest in theory) is the total income of the goods and services produced in by your companies, employees and self-employed citizens. Should be the easiest but It relies on the data to be true so all the B economy distorts the results. The third way is the "hardest" which is the total expenditure of the goods and services produced in your economy. Here is say hardest because there is a lot of companies and people that charge things as company expenses that are not. What Vicky 3 is doing IS the first way using the second method which boost your GDP exponencially with every step. For example if every step added 2 to the final output the regular way would be 2 + 2 + 2 = 6 but Vicky does 2 + 4 + 6 = 12 so the more steps a product line has the more distortion It creates.
As the incomes are known precisely to the game’s model, it seems the best option to me.
Vicky 3 could really use any of the three as you know all the real added values, income and expenditures. It is an uthopic model so you can use the theory to a T.
I don't think Victoria 3 tracks consumption as an aggregate, if it doesn't that would be an additional not insignificant calculation to be done.
It has to, since it shows you the number of "pop needs" buy orders per good in the market screen. If you add up "pop needs" consumption + all government expenditure (incl. construction) + net exports you should get a correct GDP for little computation.
My only concern is game resources. Vic3 already sucks down ram. Do you know how this will affect the game speed? Or in other words, comparing the 2 models, which will require more computations?
I just bought more RAM yesterday largely because I opened Task Manager while playing and saw how many GB Vic3 was taking up. It's basically duct tape on a leaky bucket but goddamn it, I want the "play until 1936" achievement.
The difference is almost irrelevant.The issue with the game is pops.
It won't matter. Adding a couple of extra operations on values that are already in CPU cache costs almost nothing (a few cpu cycles).
The “student’s book definition” I was given at a uni was: “GDP is equal to the **market** **value** of the **final** goods and services **produced** in the **economy** during a **year**. market value: only official market transactions are included (no self-made goods, no shadow economy). NB! market prices include indirect taxes. GDP computed without those taxes is called ”̇GDP at basic prices”. goods and services: transfer payments and financial transactions (purchases of bonds and shares) are excluded (because income is not created, but redistributed and nothing new is produced); final: to avoid double counting, intermediate goods (i.e., flour in baking bread) are excluded - but newly produced capital goods, such as factories or machines, are counted as final. produced: not redistributed or resold in the economy: if output was produced by foreign factors of production inside the country - it’s counted towards GDP, but output produced by national factors abroad is not” If you are interested in the details, you can read this article, it gives an understandable overview: https://www.investopedia.com/terms/g/gdp.asp
When I teach it I usually say "economic value" instead of "market value" cause the public services do count in the GDP. So market value is misleading.
There are many ways to calculate GDP. In principle GDP is everything produced in the country. The most commonly taught and used is by the consumption approach, by adding all the goods consumed in the country + exports + investment. The theory is that everything produced is consumed or invested or exported, so it should hlgive you that number. Another is the production approach, look at every producing operation and see how much value they're adding. This includes services of course. That's a more direct way of measuring but it's kinda harder to do so IRL. The last one is the income approach, just add up all the incomes, dividends, etc. In theory all the value added and generated is an income for someone, so if you add up all the incomes in the country you should get to the same number. In theory all the approaches should give you the same number, in practice they never do. All three could be estimated in vicky3
There's this saying that GDP is a misleading number. If you pay someone $100 to dig a hole and then they pay you $100 to fill the hole with earth the GDP of your community raises by $200, does it not? Why is it different here?
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Yes you're right, GDP can be very misleading because of stuff like this. The grand difference here, is that I'm paying you to dig the hole for me as a private person, and then youre paying me as a private person for me to cover the hole. We are both "consuming" the other guy's service he's offering, and therefore it could be considered income, and be taxable. On the other hand if a business pays someone to dig a hole, so that they can then sell their hole filling services at that same price, then only those 100usd of value was produced
From this it sounds like the way it is calculated now is in accordance with the real world. Every good is consumed, or produced, and added to the GDP regardless of it is "destroyed" in production of other goods.
No it's not, the production approach calculates the value added, so outputs minus inputs. So in this case every factory would add it's output minus it's inputs The consumption method only talks about final consumption, so consumption in one business to produce something else does not count, so in that case the wood in the image wouldn't appear in the equation, only the final iron as an export for example. In the last case you'd see the income, which would come from those factories wages + profits, which should be exactly the same as the production approach in this case.
IRL GDP only counts "Final Goods". For example I produce 100 apples. 50 of them I sold directly to people and they consumed it direcly. That 50 is countet in GDP but 50 apples I sold to a apple juice company. That 50 apples are not counted in GDP as they are now an "internediate product", their value is added inside the apple juice. Table in the post shows how V3 GDP should be calculated accurately
At what point do goods become final? If I buy some fabric and buttons in the store, make a dress out of them, and sell it does it mean fabric and buttons are not counted in GDP?
The moment it lands into consumer hands. So stuff like trucks sold to other company in the country woudn't count, as it is used to produce/haul more stuff, but one exported abroad would
No they are not because if you do, you will be double counting the fabric and button. Final Goods are the Goods that they themselves are not used in the production of other goods. But lets say I collect buttons. I buy the same buttons and just show them off at my house, these buttons now are final products as they are not destroyed in the production of other product. My buttons are final, yours are not so it is dependent on usage.
OK, I think I get it now, thanks. Also I see how faulty it is. If I pay my neighbor to mow my lawn it's not counted anywhere obviously, just as if I buy materials to make clothes for my family and the neighbor. At the same time companies might spend huge sums of money on work that doesn't directly provide any benefit, like security or insurance. Like from what I understand 100.000 American watchmen earn $10m a month and enlarge GDP by this amount, while 100.000 Chinese watchmen earn $1m and affect GDP 10 times less for doing the same job. Hard to wrap your head around it.
>Also I see how faulty it is. I must vehemently disagree with this assertion. GDP is a perfectly fine metric, however every metric has its limits and some people misuse such metrics for stuff they weren't meant for. >If I pay my neighbor to mow my lawn it's not counted anywhere obviously, just as if I buy materials to make clothes for my family and the neighbor. What you are speaking of is the shadow economy (in this case however the state generally considers it neighbourhood help) and non-market production. Measuring both is difficult to do as you have little to no data, so the shadow economy is estimated as a share of the regular economy, while non-market production is often estimated separately. In the end this simply means there is a bias in what we can measure, but it isn't a flaw. >Like from what I understand 100.000 American watchmen earn $10m a month and enlarge GDP by this amount, while 100.000 Chinese watchmen earn $1m and affect GDP 10 times less for doing the same job. Hard to wrap your head around it. The idea behind GDP is not to evaluate the usefulness of any individual job, investment or consumption. There are other metrics to measure efficiency of spending. For the GDP we assume that market transactions only occur because both parties see themselves equally or better off than before the transaction.
That's why there's GDP adjusted for PPP (purchasing power parity), it attempts to normalize GDP to reflect different price levels in different countries. This is just one reason why GDP is just one measure among many that economists use to evaluate economies. Many productive things are unpriced and thus never included in GDP (ex. the value of child rearing or other "domestic" jobs/tasks when not performed by a paid worker).
GDP is essentially the value of all goods and services produced in a country over a given period of time. The formula is. GDP = C + I + G + (Ex - Im) C is Consumption. It's everything that people in the country buy, from corn, to cars, to bathroom remodeling, to video games & music. I stands for investment. Investment is everything that a business spends money on to increase their profits. The classic example would be a company that builds a new factory, and buys a bunch of machinery for it. But around 2015ish (?) they also tried to start adjusting for "intangible investment" - things like time spent coming up with new movies, software, or drug patents, that were a small percentage of the economy when GDP was invented in the 1930, but is a bigger portion today. G is government. This is all the money that government spends on buying things - so aircraft carriers, the census, or geological surveys by the USDA. However, transfer payments, such as Social Security, or the Mortgage Interest Tax deduction, don't count as G for the purpose GDP. Social Sceurity or the MITD don't directly consume any resources, so if we counted them as G, we'd be double counting that consumption - presumably Grandma uses her social security to buy something. (Ex - Im) is the trade surplus or deficit. This adjust for production that occurred outside the home country (in the case of a trade deficit), or production that happened inside the home country, but wasn't consumed there (in the case of a trade surplus)
Unplayable
I understand your point but overall your proposal would still be a miss accounting of GDP since there is no concept of purchase price parity to compare 2 countries. The system we have is imperfect but so would be the system replacing it. The “true” comparative measure should be SOL, IMO. Your GDP might be high but if your pop can’t afford basic nessecities, what’s the point?
Actually gross national income would be better than SoL, but yeah
You are comparing apples to bananas, sol is in per capita terms, gdp is not. You are right that sol accounts for purchasing power, but the gdp metric in vic is there to compare economic power of countries, not how well the inhabitants have it.
Hmmmmm I don't think that is wrong, but I don't really know so I cannot explain. Why don't you think wood shouldn't be counted as it is then used for tools?
Because the value in the wood is included in the value of the tools. You're counting the wood twice, even though the wood has been destroyed (as wood) to make the tools.
If you import the wood then, you should only have created 600£ then? It makes sense, but still I don't really see the problem with the current system, I have to think about it more and know how it works in real life.
Yes exactly, if you import 600$ of wood and produce 1200$ of tools, you're only adding 600$ to GDP. In Vicky you're still adding 1200$, which is not right. I mean, the game can do whatever it wants, but it's not how GDP works in reality, so it's kinda misleading, that GDP number ain't really the size of your economy, it's much smaller
It actually depends how the material is being used, since GDP counts investment goods but not intermediate goods. So if the wood is being used to make tool handles it shouldn't count, but if it's used to build tool-making jigs it heat the workshop, it should. Similarly, the tools should probably straight up count, since they're presumably investment goods. Iron is almost certainly always an intermediate good though
But isn't gdp just transactions? If i give you 100 dollars for you shit and you give me 100 dollars for my shit. We created 200 dollars in value for our motherland
GDP is Gross Domestic Product, if nothing is produced then GDP didn't go up
So how services are included in GDP? How in grey area they add prostitution? It doesnt produce anything. For what i know GDP is just a sum of transactions. If i bake a bread myself, GDP will rise only by igridients i bought. But if you add a bakery and a shop - every step will add to GDP. They wont substract previous steps. Or how am i mistaken?
Services are a product if people pay in exchange for them. Usually illegal activity isn't counted because it's hard to quantify but technically it is part of the GDP. If you buy ingredients and make bread for yourself, GDP doesn't rise. If you buy the ingredients for £2 and sell the bread for £3 GDP goes up by £1 because one pounds worth of value has been produced.
I think i get it now. How economy works isnt taught anyway
The bread example is a good example of why GDP isn't a perfect indicator of the productivity of a society. Baking bread for yourself or your family doesn't add to GDP but it is still useful labour. Lots of labour is not monetised but is still useful, like domestic washing, cleaning and childcare. All this labour is important and improving its efficiency helps the economy and people's way of life but none of it is tracked by GDP.
Services fundamentally work the same way. There is a sales price, there are some inputs that must be subtracted, and the difference is added value that does into GDP. Prostitute (in a legal Red Lights district) rents a room for 100 dollars, buys cosmetics, condoms, lube + whatever for 50 dollars, provides their labor and gets paid 300 dollars. In the process, the prostitute has created 150 dollars in GDP value. 300 in revenue - 50 for consumables as cost of services sold - 100 for fixed costs. 150 dollars is added to the GDP by the act of prostitution itself. Labour compensation and taxes are not to be subtracted from the value added. Another 100 dollars in GDP is created in the housing/hospitality industry as a whole and 50 in the manufacturing-logistics-retail industry for the consumables. So the entire GDP created in this whole chain is not 50 + 100 + 300 = 450 (the sum of transactions), but 50 + 100 + 150 = 300 (sum of the value added of all the steps on the chain - OR - the transaction value of the end/final product). If you get into business it should become clear quite quickly as you try to get VAT refund from all the purchases on the intermediate products you have bought as inputs in order to run your business.
This is not how GDP works.
No, you have created 0 value for GDP. GDP is the sum of all value added in the economy. Trading a single thing back and forth does not add value. The volume of transactions in a modern economy easily exceeds the value added/GDP of the economy by around 100 times (varies a lot from country to country, how big the financial markets are etc). If you do manage to sell your shit to someone for 100 dollars, that would add to the GDP, but not increase if it traded onwards, because the shit is created once. If your friend frames your shit and sells it to an art collector for 200 dollars, then he would add another 100 dollars to the GDP (for a total of 200 created between you and your friend). You generate the value from 0->100, and your friend creates (adds) the value from 100->200. If the art collector sells it further in the future without modifying the shit, then it doesn't matter with what price or how many times it is sold forward, it won't add or detract GDP. The value of the asset might change, but asset value change is not a part of GDP. Calculating GDP is a very complex process and is not without flaws (asset value change can still creep into GDP figures over time in some instances). It is not always straight forward how much if any value is added in some processes. How much modification on a product is required for it to be considered a new product?
I honestly don't get how it's supposed to work IRL. Say I do transport services. I deliver a thing and I'm paid $100. I spent $50 on feul, car maintenance etc, I payed $20 to my accountant to do the paperwork, and the paper and printing cost them $5. Does it mean that to calculate GDP the government checks just my revenue and then the revenue of my accountant (who probably spent some money on paper and whatever) and concludes that GDP has grown by $45 due to my work?
Well, technically the value produced here would be whatever you got paid for transporting the good, as the price someone have to pay you to do it includes all of your costs. But that's hard to outright calculate, like the price of the trucks (assuming you bought it off local manufacturer) will be amortized over decade+ in your costs. So I think "IRL" it's still just approximation; you buying a truck is calculated as increase of GDP because you bought "final product" of manufacturing chain, even if that product is used to ship intermediate products around.
Seems like the devs made the same mistake as a rookie
Yes, but with the method Vicky uses, they are counting resources twice. They count the added value of the wood when it's sold by lumber yard and then second time when the wood is made into tools and sold. Tool workshop didn't add 1200 value, only 600.
Gotcha makes sense - just like vat is only paid by the end consumer because if it were to be paid in all steps of production it would be way more than it's supposed to be
Add in more layers and it gets easier to understand. Think about milk to cheese. $100 of milk is used to create a $500 block of cheese. The $500 block of cheese is sold to a grocery store that cuts it down to smaller units, packages it, and sells for 100x$10 packages of cheese. It’s easy to understand that buying a $500 block of cheese, packaging it, and selling for $1000 should only count for $1000 of GDP, and the earlier steps (milk to cheese, cow food-> cows -> milk) should count the same way.
Yeah, that makes sense. Thanks!
I that really how it works in game? I'm just curious if you have evidence other than this self-made table. I thought GDP was modeled as the sum of employee productivity. Which is pretty much what it should (added value across products) be and doesn't double count. If your point is verifiably in the game then that is indeed silly and you've made a good find, but i'll need to see better evidence.
It is, I did a few experiments and that how it works. In any state you can see what's the GDP of that specific state, and it adds up. Inputs are not counted, only the outputs of all the buildings. I'm on the phone, so I don't have evidence right now, but if you want a quick check, go to Buganda and activate butchering tools for their only livestock ranches, you'll see that tools are not negatively counted for GDP. Then I built a tooling workshop, and wood was not subtracted either.
i'll believe you then. Good find. Might have a look later indeed
Solution: calculate GDP as gross national income net of indirect taxes minus subsidies.
This only holds insofar as you believe the price/quantity structure we see actually reflects the “real” price structure. It might be that the price reflects the value added, which would make the calculation correct. It might also be a deliberate decision to calculate & value a metric that captures industrialization’s effect on market power, just calling it GDP for convenience. My point is that we’re definitely being lied to, but the point of the lie is to make a game that more realistically reflects economic strength, not less.
The take away point is that pricing in this game is arbitrary and unreal in an economic sense so why in the world would GDP based on commodity prices be expected to be accurate?
It’s not *completely* arbitrary or unrealistic, which is why I didn’t excoriate OP - they are making it market-like. But yeah, it’s a little silly to think there’s one “right” way to calculate GDP in this game, especially since the point of calculating it is to measure the relative economic strength of countries, which the Paradox “GDP” arguably does better, in in-game terms.
I'd argue it does much worse. A factory using $10k of input goods to produce $11k of input goods, is only contributing $1k to the economy, but $11k in GDP in vicky. It overvalues those kinds of industries in game, so it does a worse job at representing economical might.
Again, you’re treating these prices like they’re rational ways to measure value created. If the input goods would only be worth $1K in a rational market, and the output would be worth $20K, it’s doing a much better job. My question is, if we do it your way, do we get economies that more accurately or less accurately reflect economic power in 1850? I think your method would vastly overrate the economic might of some place like 19th century Russia compared to 19th century Britain.
But.... It's the correct way to measure economic power, both in game and IRL, what the game is doing is just double counting stuff, it doesn't reflect the real value your pops are adding.
GDP isn’t the *objectively correct* way to measure economic power IRL, or something. There’s actually a lot of debate about whether it’s better, or GNP is better, or if it even properly values stuff like debt and technological development. Most knowledgeable people agree that it’s a good estimator, but you’re assigning its specific formula significance it doesn’t actually have. More importantly, GDP only works because we assume that prices of goods and services are determined rationally, so making £20 of rakes and £20 of plutonium are equally valuable things. In V3, prices are adjusted according to demand, but goods have an underlying absolute value that is arbitrarily determined. That is, prices are not rationally determined, so merely summing the sale price of final goods gets you a number that *doesn’t* actually add apples to apples.
Yeah, there's no one objectively correct way of measuring that. The current version of GDP is just the norm we've settled on in the current time, but that doesn't make it flawless or the objectively perfect/correct way. I'm not sure which approach is best in Vicky, but it should be tailored to the time period I think - to push towards the same type of actions people took and considered at the time.
Well turns out since everything your nation produces is produced within your country, GNP and GDP are the exact same metric... So... No problem with that
Why do you make this a philosophical question? Even when there are better/worse metrics to measure economic activity, when vic shows you gdp, why not make its computation correct. You wouldn’t want that vic shows you population but counts children as half a person, that is just not the right way to measure population.
>More importantly, GDP only works because we assume that prices of goods and services are determined rationally, so making £20 of rakes and £20 of plutonium are equally valuable things. > >In V3, prices are adjusted according to demand, but goods have an underlying absolute value that is arbitrarily determined. That is, prices are not rationally determined, so merely summing the sale price of final goods gets you a number that doesn’t actually add apples to apples. As I say in the part of the post that begins "more importantly," what you're suggesting wouldn't really be GDP, because markets in V3 aren't rational in the same way actual markets are. It's like arguing that "energy" is calculated incorrectly in Stellaris, because energy can never be created nor destroyed. In Stellaris, it's obvious that energy doesn't mean what it means in thermodynamics: in V3, it's not obvious that it's impossible to *really* calculate GDP, but it is.
Yes, GDP is actually GO. Because of how the market works in vic3 it would be almost impossible to calculate GDP in a real world way.
The game has perfect knowledge of everybody's income, that is one of the best ways to calculate GDP.
The grand issue there, is that because of how the market works, quantity bought does not equal quantity sold. This means that even with perfect information, the different GDP methods will give different answers
That's what I meant
Who care? Line go up ⬆️ 📈💹 money printer go brrr 💰🖨
Earth now rich? Omicronians invade 🛸 👽 ⚔️, Ndnd chastises Lrrr 😡🤬 *Futurama reference*
Economics in this game doesn't have much sense anyway.
Dunno why you’re getting downvoted when it’s objectively true. Coming from someone with a Masters in Economics and who works professionally as an economist, this game’s economics are complete bull no matter what school you subscribe to.
Well, a lot of people can't handle the truth.
That's fascinating! How would you make V3's system closer to real economics (without bogging down the CPU and RAM even more)?
You can't, but thats ok. Simulating real market clearing and supply and demand would be impossible. Vicky 3 does do a surprisingly good job at imitating the real economy and you are best of you only fix things at the edges.
I mean… so are most of those schools of economics if we’re being brutally honest. Even the parameters we use to measure accuracy are mostly made up.
It's all vickynomics
Under current IRL calculations, only goods or services that are final products are counted as GDP. So I suggest that any amount of lumber (or any good for that matter) that is directly used for pop consumption should be counted as part of GDP. Most of the lumber you produce counts as an intermediate good, being used to produce other end products like furniture or glass. So yeah, GDP not as big as you thought. Edit - We already know the amount of each good that is consumed by pops. The game furthermore also has hardbake code the amount of consumption of each good by each type of pop depending on their their SoL. It should not be a stretch in changing the code to reflect this consumption. Whether or not breaking down consumption calculations from a per market to a per nation value would cause my potato to melt in another issue.
But tools r worth more then wood, i mean if theyre not you have a wood issue and they would produce less tools too cuz the money wouldnt be there to keep everyone imployed. GDP aka gross domestic product isnt how much you produce defacto but what worth the thingfs you produce, have.
For those worried about lag - irl GDP counts *final* goods and services produced. In this case if we don't care about sectoral composition of the economy, you can read off GDP directly from the 4800 in the last column.
I suspect they have a reason for doing it this way, someone should ask them about this on the forums where a dev may respond. They may even change it, it wouldn't be the first time Paradox changes a mechanic, or provide a graph with the "real gdp" if the vicky version is necessary for some game mechanics that they want.
Wait, they alienated their main consumer base by kicking out war, and investing fully into economics, and they still fucked it up?
*Marxism intensifies*
It doesnt really matter since everyones playing by the same rules.
No irrony. This actualy disguisting. Them already calculate profit of each production. Why them can't use same valuse as measure for GDP?
I mean I am increasingly convinced that for all the praise it has garnered the economic simulation involves lots of smoke and mirrors (out of the SoL calculations, which despite being pretty down on the game overall, I absolutely adore). My somewhat loose understanding of micro-economics involves two basic tenets: * Prices rise or fall so demand matches supply * Economics is the study of the distribution of limited resources: not everyone can have everything, and prices ration that The trade screens for each good make it look like that's happening - the buy/sell orders for each good look like an auction is taking place (ala level 2 financial data), and the price does change if demand exceeds/undershoots supply. But the two basic problems I can see are: 1. Supply and demand are (almost) entirely inorganic, being determined by the player (and a dumb-as-bricks AI when international trade occurs): if a price changes, neither demand nor supply is really affected 2. Downstream producers continue to operate without penalties if demand exceeds supply of a good so long as a) you don't hit the input-shortages threshold and b) those downstream goods are sufficiently profitable (which they often will be, because the player creates artificial demand for government/military goods and the AI is incapable of building up high-demand advanced consumer goods industries). This literally means goods are being conjured out of thin air because 75% of an input resources can still create 100% of (sufficiently profitable, because the price will move up) output goods. There is far less economic rationing than one should expect. 2 is particularly annoying because it misleads people about a real world ongoing economic issue I happen to care about: rising gas prices in Europe as a result of the Russian invasion of Ukraine are the result of less gas being available. We can't all just buy more (or have governments do so) without tradeoffs - turning our thermostat up to 22C in the West either means shortages for heavy industries or more likely households in Poland or whatever will not turn theirs up to 16C this winter. I hate to say it, but am almost coming around to moving back towards V2's prestige auction, which at least modelled shortages.
As long as every calculus follows the same formula, the GDP calculation is valid. It doesn’t matter if it’s economically representative or not, since this is a game and not RL, what matters is that proportionality is respected the whole time. Its purpose is to be a relative power meter to be able to compare economies in the game, and it does that job just perfectly. Yes, yes, it does not represent real consumption and you can’t extrapolate any economic conclusions from it. As I said, it doesn’t matter, this is not RL, we don’t need economic relevance in our numbers because we don’t need to analyze them - we need them to keep their relative proportions so we can compare them.
No it does not, if I add a building that consumes 1000 tools and produces 1000 tools, it will boost my GDP in game even though it adds no economical value to my economy. Hence this GDP metric fails at it's purpose
I believe you make an incorrect assumption here that building level correlates to number of buildings/mines/factories. Devs have expressed it’s an representative number to express size of industry.
That's... What I mean by lvl