The game's miscalculation of GDP and the side effects of it

[Broetchenholer]

That answers my question though. You mean the interaction with the open-market.

Is negative supply's market-valie added to GDP, if not there's a good likelihood you'd get GDP added if you reduce the lack of supply, as the lack indicates that the value is above market-price. Although the negative supply is at least indirectly added due to allowing for using it as an input. Negative supply might be quite beneficial in the current system then. Haven't viewed it that way, although it really shouldn't be.

I do absolutely agree here, but positive is highly contextual and dependent on a ton of variables.


Whether reducing a deficit is good or bad as a choice is absolutely dependent on the environment and alternative choices, if it's always good that hints towards a very constrained and undynamic design. Although it isn't in the current build anyway, just most of the time, unless one reached a shortage then it becomes critical quickly. But a shortage is different from a deficit and then again it depends on environment and alternatives as well.

I do agree that what can be done as a simple vector operation doesn't belong on a cpu(usually with a big it depends), I don't think players get confused by substraction though.

Is over-inudstrializatiom an MP-Meta already? Given how much more you can mint it likely should be.

What is overindustrialization for you? As far as i can tell, there are very few limits on the capabilities of the player to just stack more industry, because in the current state of the game, every AI market needs goods that you can provide and you will always get more people that need jobs. As long as you acquire new provinces, there is no limit to your growth. In MP, the difference is probably, that you cannot play quite as aggressive with your economic growth, because you have to keep your military up and that is a big chunk of money that you are not using for building profitable industries.

 

[GrafKeks]

This would be true if your GDP was the only indicator of economic health. Some positive decisions you make will impact SoL, state budget, state income, investment pool, etc.. And some positive decisions you make will increase your GDP. It’s not all about making that single line go up.

The line must go up.

The factories grow.

Not everything has to/should impact GDP that's quite true as well. You can't mint SoL.

 

[GrafKeks]

What is overindustrialization for you? As far as i can tell, there are very few limits on the capabilities of the player to just stack more industry, because in the current state of the game, every AI market needs goods that you can provide and you will always get more people that need jobs. As long as you acquire new provinces, there is no limit to your growth. In MP, the difference is probably, that you cannot play quite as aggressive with your economic growth, because you have to keep your military up and that is a big chunk of money that you are not using for building profitable industries.

Subset of overproduction, the game doesn't model it too well unfortunately.

 

[Majokarp]

This is so stupid. This means, your GDP can be in the billions and still your economy can literally die the next day. There are cases where your SOL is so high, that industries without certain automation levels are not productive anymore. So you could have the richest population of the world, with an industry that is producing enough goods to meet the complete demand of that population, and then this industry could die, because the expenditure for its workers is too high to make the goods profitable. And at the same time, this industry would give you a high GDP because, despite currently in the process of dying, it's still producing goods, so all is fine. and then, when it has spend all it's cash reserves, suddenly your gdp drops like a stone because the industry will now try to lose employees, which will raise the price of the good as less of the good is produced and therefore demand starts to exceed supply. Which means, in such cases we would see waves of GDP crashes, followed by SOL crashes. I think the GDP calculation is really not that important if you want realism compared to the glaring problems that can arise if you try to create a world where everyone pays the same for goods despite earning very different amounts of money.

Dude I was asking how the system work, not making a statement on how it should be.

Once again, as far as I understand, it's computed at the level of the factory : Price is the local price (generally your market price, but it's modified when your state has a low market access), and Quantity is the output of the factory. Then it's summed up at the state level then at the nation level.
Production value of my tools factory is 11.0K (183*60.1).
Tools contribution to the "GDP" in Götaland state is 11.0K.
GDP of the state is 2.25 - total GDP is 8.53, so Götaland' contribution is 26.4% of the total.

And this is how it is, thanks Hermithill

I've done a very simplystic model to represent the effects of this system in thre different kind of economies A, B and C where A has a fully integrated supply chain, B is a final good producer and C is a raw material producer, to keep it simpler I kept prices fixed, however it would be interesting to include price variability in the model has it might make significant changes.

These economies all run on Wood (W) worth 25 £ Iron (I) worth 25 £ and Tools (T) worth 150 £, I and W both require T as an input (quantity produced and required=1 for ease of calculation)

1) Current GDP calculation
A= W + I + T = 200
B= T=150
C= W+I = 50

2) GDP subtracting input goods

A= T = 150
B= T = 150
C= W+I = 50

3) GDP subtracting input goods and import

A= T = 150
B= T-(W+I) =100
C= W+I = 50

From this we could try and make some deductions, mainly:

1) The best way to increase your GDP is focusing on a single supply chain, and fully integrate it in your economy
2) Playing a raw material producer country is bad, at least in terms of your GDP
3) Diversifying your economy is not good, just focus on a production line (construction might be the best out there since you are both increasing your gdp and your building capacity at the same time)
4) An increase in consumption cannot be taken in consideration by the current system, at least until it does not limit your production capability

 

[Meanmanturbo]

I first saw this issue pointed out on a thread on Reddit (shudder). GDP calculation is supposed to only factor in the value of finished goods, but instead V3 treats all outputs as finished goods even if they act as an input in another factory. So a coal mine makes $50 of coal all of which goes into an iron mine which makes $100 of iron all of which goes into a steel mill which makes $200 worth of steel all of which goes into a shipyard which makes $400 of ships -- to use a simple example.

In the real world this amount to a GDP of $400 (i.e. only the market value of the finished goods).

In V3 this amount to a GDP of $50 + $100 + $200 + $400 = $750.

Ok, but it's just a number used in ranking and everyone uses the same formula so it doesn't matter, right? Well, no. There are at least two side effects I could think of from this miscalculation:

1. Industrialization greatly inflates GDP and allows a much higher credit limit than is possible otherwise. By using the same amount of construction points (or trowel mana if you wanna call it that), if it's used for industrialization you can effectively keep raising your credit limit to keep building because of the much higher GDP increases under this miscalculation. If you were to use the same construction points on resources, agriculture, etc. your GDP won't raise as much and you'll hit the credit limit much sooner.

2. Prestige/ranking calculations, diplomacy, etc. Industrialized nations will simply have an inflated GDP and will benefit from that inflated number in all those calculations that use it. Constructing basic resources for immediate consumption/trade or short chains is simply worse than longer chains for the same amount of workers/construction points.

Very good point.
But my main thought is that do you really want more calculations for tracking production flows to slow the game down even more?

 

[Meanmanturbo]

I read the OP, which basically says “this is a problem because it favors industrialized nations.” Then I read that this is WAD, and think “I’m not surprised, this is a game about how industrialized nations were favored by history.”

In Victoria 2 btw production of raw resources counted exactly zero towards your great power ranking; only factories “counted” as far as your economy. Vic3 seems to have a more restrained skewing technique. I really think the outcome of giving an advantage to nations with a lot of factories pumping out industrial goods is intended and very consistent with the theme of the game and the period.

I do get the annoyance with the technical term GDP being misused. GDP also has a neatness to it and is a more faithful representation of an economy’s size. But this is a game about industrialization. Maybe as others said the term can be changed to something like “Total Domestic Product.” The words mean the same thing but it has no technical definition so paradox can give it their own. I’m not sure if this brings more or less clarity though. GDP may be technically inaccurate but everyone knows roughly what it means, and it works in the game in the expected way.

At the time, before gdp was standardized as a measurment, you often counted steel production for comparing nations development and economic power.

 

[durbal]

Very good point.
But my main thought is that do you really want more calculations for tracking production flows to slow the game down even more?

I don't think it would slow the game down very much.

Ideally we could have the best of both worlds.

Besides, right now it seems like performance problems aren't due to calculations so much as weird engine issues. A lot of the performance problems go away when you're not looking at the zoomed-in map for whatever reason.

 

[Don_Quigleone]

I think the way GDP should be calculated is that the game produces the GDP for each building (IE, the value a building produces before salaries or dividends are paid) and then just add them all together. For performance, maybe only recalculate once a month, or once every 6 months.

This would be the easiest way to deal with taking the cost of inputs into account, and it's not like we need to have GDP recalculated minute by minute.

 

[Broetchenholer]

Dude I was asking how the system work, not making a statement on how it should be.

And this is how it is, thanks Hermithill

I've done a very simplystic model to represent the effects of this system in thre different kind of economies A, B and C where A has a fully integrated supply chain, B is a final good producer and C is a raw material producer, to keep it simpler I kept prices fixed, however it would be interesting to include price variability in the model has it might make significant changes.

These economies all run on Wood (W) worth 25 £ Iron (I) worth 25 £ and Tools (T) worth 150 £, I and W both require T as an input (quantity produced and required=1 for ease of calculation)

1) Current GDP calculation
A= W + I + T = 200
B= T=150
C= W+I = 50

2) GDP subtracting input goods

A= T = 150
B= T = 150
C= W+I = 50

3) GDP subtracting input goods and import

A= T = 150
B= T-(W+I) =100
C= W+I = 50

From this we could try and make some deductions, mainly:

1) The best way to increase your GDP is focusing on a single supply chain, and fully integrate it in your economy
2) Playing a raw material producer country is bad, at least in terms of your GDP
3) Diversifying your economy is not good, just focus on a production line (construction might be the best out there since you are both increasing your gdp and your building capacity at the same time)
4) An increase in consumption cannot be taken in consideration by the current system, at least until it does not limit your production capability

Sorry wasn't calling your post stupid, just the Realisation of how GdP interacts with the prices of goods.

 

[Amtep]

Subtracting inputs isn't straightforward. Suppose you produce 60 coal and your steel mill consumes 100 coal to make its steel. This is possible in vic3 world; the extra 40 coal come out of nowhere.

So if you then subtract the value of 100 coal from the GDP, you're actually subtracting more coal than you made, which creates the odd result that if coal is expensive your GDP goes down. But if you subtract only the value of 60 coal, then you're counting the value of that extra 40 coal as extra production, even though no one produced it.

I don't see a way to square this, so maybe not subtracting inputs at all is a reasonable solution.

 

[SchwarzKatze]

Subtracting inputs isn't straightforward. Suppose you produce 60 coal and your steel mill consumes 100 coal to make its steel. This is possible in vic3 world; the extra 40 coal come out of nowhere.

So if you then subtract the value of 100 coal from the GDP, you're actually subtracting more coal than you made, which creates the odd result that if coal is expensive your GDP goes down. But if you subtract only the value of 60 coal, then you're counting the value of that extra 40 coal as extra production, even though no one produced it.

I don't see a way to square this, so maybe not subtracting inputs at all is a reasonable solution.

I don't see what's wrong with this. Your steel factory is still paying for 100 coal to manufacture steel, so it's perfectly reasonable to deduct that.

The mine's contribution to GDP and the steel mill's contribution to GDP are independent matters. The mine's contribution is the price of coal it extracted, and the steel mill's contribution is the value it added to its raw material inputs. We aren't deducting the coal from the mine's output, we are deducting the coal from the steel mill's input, and there's no reason they have to add up

GDP is the sum of Gross Value Added of every individual industry (plus subsidies minus tax, but I don't think the game take them into account): https://en.wikipedia.org/wiki/Gross_value_added

 

[PedroLuiz]

You can't mint SoL.

high government wages disagree with you

 

[PedroLuiz]

Very good point.
But my main thought is that do you really want more calculations for tracking production flows to slow the game down even more?

most of the CPU is doing absolutely nothing but wait for the actual process causing problems so yes

 

[PedroLuiz]

Subtracting inputs isn't straightforward. Suppose you produce 60 coal and your steel mill consumes 100 coal to make its steel. This is possible in vic3 world; the extra 40 coal come out of nowhere.

So if you then subtract the value of 100 coal from the GDP, you're actually subtracting more coal than you made, which creates the odd result that if coal is expensive your GDP goes down. But if you subtract only the value of 60 coal, then you're counting the value of that extra 40 coal as extra production, even though no one produced it.

I don't see a way to square this, so maybe not subtracting inputs at all is a reasonable solution.

the mines will produce 100 coals worth even if they produce 60 units of coal

 

[hamcannon]

Dude I was asking how the system work, not making a statement on how it should be.

And this is how it is, thanks Hermithill

I've done a very simplystic model to represent the effects of this system in thre different kind of economies A, B and C where A has a fully integrated supply chain, B is a final good producer and C is a raw material producer, to keep it simpler I kept prices fixed, however it would be interesting to include price variability in the model has it might make significant changes.

These economies all run on Wood (W) worth 25 £ Iron (I) worth 25 £ and Tools (T) worth 150 £, I and W both require T as an input (quantity produced and required=1 for ease of calculation)

1) Current GDP calculation
A= W + I + T = 200
B= T=150
C= W+I = 50

2) GDP subtracting input goods

A= T = 150
B= T = 150
C= W+I = 50

3) GDP subtracting input goods and import

A= T = 150
B= T-(W+I) =100
C= W+I = 50

From this we could try and make some deductions, mainly:

1) The best way to increase your GDP is focusing on a single supply chain, and fully integrate it in your economy
2) Playing a raw material producer country is bad, at least in terms of your GDP
3) Diversifying your economy is not good, just focus on a production line (construction might be the best out there since you are both increasing your gdp and your building capacity at the same time)
4) An increase in consumption cannot be taken in consideration by the current system, at least until it does not limit your production capability

The problem with over-specialization is that the market isn't balanced - production surpluses sell goods to market gremlins who mint cash for your pops and buildings, while shortfalls burn cash the same way. Shortages are more efficient to fix per worker, because prices are higher, which recycles more cash back into your economy faster.

For example, if one good is +33% price and another is -33%, a sell order for the first good gets double the cash generation from extra sell orders. More cash means more taxes, higher GDP for government minting, higher credit limit, more demand that increases productivity and allows more buildings to get built, etc.

 

[Majokarp]

The problem with over-specialization is that the market isn't balanced - production surpluses sell goods to market gremlins who mint cash for your pops and buildings, while shortfalls burn cash the same way. Shortages are more efficient to fix per worker, because prices are higher, which recycles more cash back into your economy faster.

For example, if one good is +33% price and another is -33%, a sell order for the first good gets double the cash generation from extra sell orders. More cash means more taxes, higher GDP for government minting, higher credit limit, more demand that increases productivity and allows more buildings to get built, etc.

Correct me if I'm wrong but what you are saying is that it is more productive to increase production of a good that is more expensive on the market, which is a pretty reasonable thing to say; however, if you consider the supply chain of tools for example it is a closed loop as tools are themselves an input good for wood and iron, if you build more tools your demand (and therefore prices) for wood and iron goes up, then you build iron and wood and your demand (and prices) for tools goes up, if you reach an equilibrium and are not able to influence prices through trade, then you can build furniture to create an unbalance (as they require wood at start, then tools with lathes), later you include coal and steel in the cycle and so on.
You are sticking with a single supply chain and still going after a good return on investment in relation to price, in fact your action in that supply chain is what drives up demand/prices in the first place.

 

[benis1996]

What's the issue? And why so much obsession with input goods substraction? Just add together all the wages and dividends and substract subsidies. There is no issue.

The thing is that it will really just change the number on screen, Minting and max credit as % of GDP should be adjusted to remain balanced (increased so that absolute numbers remain where they are now).

Okay, in the real world, as I pointed out before, summing income should result in the same as summing production. In the game it isn't clear this is going to be the case as there are some random sources/sinks of money in the game.

Summing production is the obvious solution. Total the value of all goods produced and subtract the value of input goods. The point made by some that summing income is "more simple" is nonsense; a computer/the game can easily sum up and display the value of production. This should be very close to the sum of income but I personally am not confident it will be exactly the same given some of the random sources/sinks of money in the game (e.g. minting, interest, etc.).

Seriously, the devs need to just SUBTRACT INPUT GOOD VALUES

 

[CrabHelmet]

I don't think it is as simple as just subtracting inputs. In real life GDP, when you consume 100 units of wood to produce 50 units of tools, an actual logging camp somewhere had to produce that 100 units of wood. If the logging camp only produced 80 units of wood, you'd only be able to use 80 units of wood as an input.

V3 doesn't work like that. If the logging camp produces 80 units of wood and your tool factory needs to consume 100 units of wood, your tool factory still gets 100 units of wood from... somewhere.

This can have consequences. In game, a logging camp introduces 80 * p_1 to game GDP where p_1 is the price of a unit of wood (I'm ignoring wages for simplicity); the tool factory introduces 50 * p_2 to game GDP where p_2 is the price of a unit of tools. If you subtract input for calculations of game GDP, though, the tool factory would introduce (50 * p_2) - (100 * p_1). Add the tool factory and the logging camp together and game GDP would be (50 * p_2) - (20 * p_1). For certain ratios of p_1 to p_2, the tool factory would produce negative game GDP.

This can happen even if producing those tools made your game country better off. So players could be making better economies but being "rewarded" with lower game GDP.

 

[benis1996]

Subtracting inputs isn't straightforward. Suppose you produce 60 coal and your steel mill consumes 100 coal to make its steel. This is possible in vic3 world; the extra 40 coal come out of nowhere.

So if you then subtract the value of 100 coal from the GDP, you're actually subtracting more coal than you made, which creates the odd result that if coal is expensive your GDP goes down. But if you subtract only the value of 60 coal, then you're counting the value of that extra 40 coal as extra production, even though no one produced it.

I don't see a way to square this, so maybe not subtracting inputs at all is a reasonable solution.

This is wrong. It does not matter if you made the input or not. The goal is to measure added value. You consumed 100 coal and paid for it; it has to be subtracted.

This is not hard people. If you have a factory producing 100 steel at a price of 100 each and consuming 100 coal at a price of 50, you contributed 50*100 to the economy. NOT 100*100. If you produced the 100 coal at a price of 50, your total contribution is 100*100 (not 50*100+100*100... in this case you double count the value given to the coal). Summing income here would also work, but idoes not make the problem any simpler (sum the income of the workers/capitalists in both industries).

Let's imagine you don't produce the coal and only produce 50 of it. Yes, 50 coal appeared out of thin air (it's how the game works), but you still only produced 100*100-100*50=50*100 in value! You did not produce more value or less value because the coal "didnt exist".

 

[benis1996]

I don't think it is as simple as just subtracting inputs. In real life GDP, when you consume 100 units of wood to produce 50 units of tools, an actual logging camp somewhere had to produce that 100 units of wood. If the logging camp only produced 80 units of wood, you'd only be able to use 80 units of wood as an input.

V3 doesn't work like that. If the logging camp produces 80 units of wood and your tool factory needs to consume 100 units of wood, your tool factory still gets 100 units of wood from... somewhere.

This can have consequences. In game, a logging camp introduces 80 * p_1 to game GDP where p_1 is the price of a unit of wood (I'm ignoring wages for simplicity); the tool factory introduces 50 * p_2 to game GDP where p_2 is the price of a unit of tools. If you subtract input for calculations of game GDP, though, the tool factory would introduce (50 * p_2) - (100 * p_1). Add the tool factory and the logging camp together and game GDP would be (50 * p_2) - (20 * p_1). For certain ratios of p_1 to p_2, the tool factory would produce negative game GDP.

This can happen even if producing those tools made your game country better off. So players could be making better economies but being "rewarded" with lower game GDP.

Again, it does not matter if you produced the input or not. What matters is how much value you add through the factory. In your example 50p1-20p2 would always be positive since if p2>p1, the tool factory would be making negative profit. Even if you produce no wood at all, as long as the tool factory is profitable, GDP is positive.

If I buy a rolex and chop it up and sell it for scrap metal, I am obviously not contributing to GDP. It's the same here. If your factory is consuming more inputs than it produces (and we arent even considering wages yet) it should not contribute to GDP at all! this is how it should work.