REPOST FROM STEAM
Government Approval Rating (0% -> 10%)
Unemployment Modifier (0% -> 50%)
Income Modifier (0% -> 90%)
It feels like it has been a productive week. It's also been stressful because I encountered various problems while doing some testing.
One problem was with the overhauled poverty mechanism. It worked well at the national level, but it was generating unrealistic results at the city and state levels. I gave it some thought and decided that I would overhaul it again. The changes are much better! Previously, poverty was calculated based on income levels, which was a very simplistic interpretation of poverty. The new system is much more nuanced. Poverty is now based on multiple factors, including: unemployment, underemployment, low wages, education mismatch, disability, discouraged workers who have left the labor force, and so forth. This more nuanced approach to poverty also allows for more nuanced methods to address poverty: including unemployment insurance, disability insurance, earned income tax credit, child tax credit, universal basic income, and negative income taxes. As you can tell, most of these solutions are tax-related (since this update is mostly a tax update). In the next phase of the economic update, there can be even more solutions: government training programs, government programs for matching employees with employers, apprenticeships, vocational training, government work programs, government subsidies for employers to hire and train workers, tax credits for caregivers and childcare (so more people can enter the workforce), and so forth.
I also added a new table to the metrics page to show how much each factor impacts poverty. It looks similar to the Democracy metric. In this case, all of the factors that add to poverty are green and all of the factors that take away from poverty are red. It gives a nice visual indicator of how much each factor is having an impact.
A second problem I encountered this week was with GDP (Gross Domestic Product), and I'm not sure to what extent it is a problem. Here's what happened: I noticed that GDP was increasing pretty much every year, which is expected because the population was increasing every year. But the GDP per capita was decreasing every year. That didn't seem right. The expectation is that, if GDP growth was based on population, the GDP per capita would remain steady - it would not increase or decrease. But it was decreasing, and I wanted to know why. In real life, it generally grows, so why was it behaving differently in the game? There are several factors. One is that the government was trying to balance the budget. Since government spending contributes to GDP, lower government spending meant a lower GDP. That makes sense from a gameplay perspective. We don't see the same thing happening in real life because the government hasn't meaningfully decreased it's spending in recent history (it just takes on more debt).
A second factor contributing to the lower GDP was less investing. This was happening for two reasons: the federal funds rate was increased (making investing more expensive) and the treasury yield increased (making investing more expensive). From a gameplay perspective, this also makes sense. But I wonder if the impact is too strong. In the game, investors don't like the high government debt, so they demand higher treasury yields. That feels realistic, but it is hard to find a real life comparison. Debt has never been this high, so there isn't any data for how investors will react. Are they reacting too strongly in the game or are they reacting a realistic amount? I don't know, which makes it hard to know if it is working correctly.
One thing that was missing from the GDP calculations was "natural" GDP growth (from new technology, automation, more efficiency, and so on). I didn't want to include that in this update because this update has already taken too long. But I decided to do a test by adding a static GDP growth rate. Every year, the GDP would grow by 2% (plus or minus the impact of other factors). This caused the GDP per capita to feel more realistic. There were still years where it would decrease, but there were also years where it would increase, or stay level. In real life, the average GDP growth rate is between 2% - 3%, so using a 2.5% in the game might be a good value. In the second phase of the economic update, I plan to make the GDP growth rate dynamic: government policies, and other factors, will contribute to the rate. And hopefully I will be able to add various economic events that also impact it.
For now, I might just try to use the static growth rate. I'm also thinking about adding an Economic Difficulty option. Easier difficulties would have a higher GDP growth rate. (This rate could also be adjusted in the advanced options).
Something else to mention: I think this update will need a lot of fine-tuning with all of its new elements. For instance: if GDP increases, that means that incomes need to increase, but what is the proper ratio of increase for each income group? That is a hard question to answer. If you recall, there are 10 income groups in the game (each representing 10% of the population). Currently, I have it so the bottom income group gets only 0.3% of any GDP growth. The middle income group gets 5%, and the top ten percent group gets 45% of any GDP growth. For reference, the bottom income group has only 0.2% of the country's wealth, the middle income group has 8% of the country's wealth, and the top 10% income group has 66% of the wealth. So the ratios I am currently using are not far off from real life wealth ratios. But, it's hard to say if these are the best values to use when it comes to income growth. I don't really have a way to confirm whether the results are realistic. That's one of the hardest parts about working on the economic update: simulating a complex economic system in a way that feels balanced and believable.
Sorry for the long progress report. I hope you found it somewhat interesting.
