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

[Egodeus]

What if several other countries set up trade routes from your market? I'm under the impression that 6 countries could still import 10 each from you.

Nope, it's a market wide limit that simply get's then split between the different routes.

I've run into it several times with playing with the maximum exports applied mod (or actually a personal version of it, I already had a personal fix mod that I simply modified to do the same thing) It does cause some weird behavious if one route is really profitable and the other isn't but the AI still wants to open the export route, as the limit gets split between them evenly, even if the new route will in no situations grow to spend it's limit.

 

[MathyM]

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.

Not sure if the base prices in the game even allow for a situation in which a factory adds negative value to an input good. From the UI, it seems that no good can cost more than 1.75 times its base price. Also, if you only have 40 Coal available, out of a required 100, you’re in a shortage, so the amount of tools produced is reduced. The calculations might have to be adjusted in this case.

 

[GrafKeks]

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.

This assume the base price being equal though(for inputs and outputs), depending on the range for the base prices, there can exist goods where the -33% good still generates more cash. Unless you are talking only in relative terms then ignore this.

 

[shoebird]

For GDP calc, substract the input price from the output price (and it's a lot more in line with GDP), that's just a huge vector, hence GPU work.

I shudder at the thougt of what this would do to performance.

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.

Isn’t the necessary value already calculated by the game. After all we have a productivity value for each building that is (output value- input value)/number of workers.

 

[SchwarzKatze]

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.

Please read my post above. The output of the logging camp and the input of the tool factory are two separate matters when it comes to calculating GDP, and there's no need for them to add up:

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

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.

In your example your tool factory is adding negative value to the resource it consumes. If your "factory" creates products that are worth less than the sum of its parts then its contribution to GDP should be negative

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

 

[TerraSlayer]

That equality won't hold in vic 3 because buy and sell orders don't have to match. Your pops can consume 60 liquor while you only produce 30 liquor. You could even export 60 liquor while only producing 30.

This is actually false. If you yourself only produce 30 liquor. You cannot export more than you produce. If you import 30 liquor, and produce 30 liquor, you can't export 60 liquor, only 30.

 

[PedroLuiz]

That would also mean that the economic growth in game is way underestimated, as many players can get to overinflated 1B gdp by 1870-1880 while real life British Isles managed that by 1860 iirc

 

[durbal]

That would also mean that the economic growth in game is way underestimated, as many players can get to overinflated 1B gdp by 1870-1880 while real life British Isles managed that by 1860 iirc

Yeah, but that's because base prices of goods are arbitrary. Comparing GDP from the game to real life doesn't make much sense. For example, how much does 1 iron cost? It's a weird question.

 

[PedroLuiz]

Yeah, but that's because base prices of goods are arbitrary. Comparing GDP from the game to real life doesn't make much sense. For example, how much does 1 iron cost? It's a weird question.

i mean, they should at least be in the same ballpark shouldn't they? Britain has a 200M GDP ingame while having a 1B GDP irl can create a lot of wrong assumptions in some people's heads

 

[Victor1234]

It's interesting that despite getting the definition of GDP and pointing out that it's not accurately portrayed in the game because intermediate production is counted, nobody has mentioned that there are actually 3 ways to calculate GDP in the real world. I've seen the expenditure (first one and shown below) approach used most often but even that doesn't seem to be reflected in the game if it's only counting goods produced since services are supposed to be counted too.

GDP = C + I + G +NX

Where,

• C = All private consumption/ consumer spending in the economy. It includes durable goods, nondurable goods, and services.
• I = All of a country’s investment in capital equipment, housing, etc.
• G = All of the country’s government spending. It includes the salaries of government employees, construction, maintenance, etc.
• NX= Net country exports – Net country imports

GDP Formula

Formula to Calculate GDP GDP is Gross Domestic Product and is an indicator to measure economic health. The formula to calculate GDP is of three types:

www.wallstreetmojo.com

Edit: To make this formula a bit easier to understand, I'll use Victoria 1&2 concepts as examples since I haven't played 3.

C is when your POPs spend on life needs/goods
I is the capitalist POPs saving/investing in railroads and factories
G is when you build a fort or naval base
NX is obviously net trade

 

[durbal]

It's interesting that despite getting the definition of GDP and pointing out that it's not accurately portrayed in the game because intermediate production is counted, nobody has mentioned that there are actually 3 ways to calculate GDP in the real world. I've seen the expenditure (first one and shown below) approach used most often but even that doesn't seem to be reflected in the game if it's only counting goods produced since services are supposed to be counted too.

GDP Formula

Formula to Calculate GDP GDP is Gross Domestic Product and is an indicator to measure economic health. The formula to calculate GDP is of three types:

www.wallstreetmojo.com

Edit: To make this formula a bit easier to understand, I'll use Victoria 1&2 concepts as examples since I haven't played 3.

C is when your POPs spend on life needs/goods
I is the capitalist POPs saving/investing in railroads and factories
G is when you build a fort or naval base
NX is obviously net trade

Services are goods in the game though.

 

[benis1996]

Honestly, it's going to be really difficult to compare GDP in game with GDP in real life. As long as the relative GDP between countries is somewhat realistic as well as the growth rates I'll be happy.

 

[benis1996]

Let's keep this thread going so they actually fix it...

 

[Eretrios]

So imagine you have an industry where $1 million of cattle yields $1.1 million of beef which in turn yields $1.2 million of steak.

In real life this industry contributes $1.2 million to GDP because only the final product is counted

In the game this industry contributes $3.3 million to GDP because every step is counted

Even if you increase the margin and change the number of $1 million, $2 million, and $3 million, you still end up with $3 million vs $6 million.

For an even more extreme example, imagine a "busy work" industry where each step only increases the product value relative to the raw material by 1%. Starting with $100 of raw material, you get $110 of product after 10 steps.

In real life this yields of $110 of GDP, and doubling the original resource harvesting building instead of building 10 steps of factories will most likely make more GDP instead

In the game this yields 100 + 101 + ... + 110 = $1055 of GDP which beats harvesting more resources hands down.

Hell you can even make industries that do nothing to the raw resource and your GDP still increases.

With this faulty logic, the length of the supply chain almost singlehandedly determines the GDP of an industry, even though in real life it has zero bearing on it.

And GDP in this game determines your credit limit and minting income so it is very important.

In your example:

For roughly the same quantity of workers :
A country which only produces raw materials will produce 10 x step 1 and have a result of 1000$
A country with the complete 10 steps production line will have a result 1055$

Still not see the issue.

 

[benis1996]

In your example:

For roughly the same quantity of workers :
A country which only produces raw materials will produce 10 x step 1 and have a result of 1000$
A country with the complete 10 steps production line will have a result 1055$

Still not see the issue.

UGGGHH this is not how it works at all. Let's assume each worker contributes 1 production. In his example, he has 100 workers on the first step, and 1 worker on each additional step (for step n, he purchases 100+n-1 godods and 1 worker and sells it for 100+n). Thus he has a total of 110 workers. If he moves all of those workers to the first step, he does not produce 1000 of the initial good! He produces 110. 110<<<<1055.

 

[hamburgertrain]

I don't know why you guys think this is a economy simulating game, its an economy-political train simulating game... Abstract the warfare and abstract the economy and be happy with Ctrl clicking buildings on the menu and look at the pretty trains on the map as "GDP mana" go up. /s

But seriously, 140hrs on the game and wanting to love it but there are some serious flaws like numerous typo's in defines and overflow calculations that can't be ignored. Seems to be a serious cash flow problem in the game with no implementation of inflation, and people who don't understand the problem with GDP being correct are missing the issue of how a proper economic model is affected by numerous indirect effects.

Just one minor point, consistent inflation wasn't a thing till after the games time frame. Instead there'd be periods of inflation followed by periods of deflation which is actually modeled fairly well in the game through average prices going up and down

 

[benis1996]

Just one minor point, consistent inflation wasn't a thing till after the games time frame. Instead there'd be periods of inflation followed by periods of deflation which is actually modeled fairly well in the game through average prices going up and down

Honestly, I'm fine with ignoring inflation in the game. But yeah they really need to fix GDP and trade.

 

[hamburgertrain]

In your example:

For roughly the same quantity of workers :
A country which only produces raw materials will produce 10 x step 1 and have a result of 1000$
A country with the complete 10 steps production line will have a result 1055$

Still not see the issue.

To be a little fair to paradox, real GDP also has similar gamey issues. One could create whatever GDP one wants by simple buying and selling a single item back and forth for a dollar until you achieve the GDP number you want

 

[PedroLuiz]

To be a little fair to paradox, real GDP also has similar gamey issues. One could create whatever GDP one wants by simple buying and selling a single item back and forth for a dollar until you achieve the GDP number you want

it's that shit-eating example you are thinking of too right?

 

[hamburgertrain]

Honestly, I'm fine with ignoring inflation in the game. But yeah they really need to fix GDP and trade.

Yeah I think they should fix the GDP calculation and infinite trade loops, but Inflation isn't ignored in the game, it's actually implemented in game quite well.

Inflation as we know it didn't exist until the Bretton Woods agreement if I'm not mistaken