Thursday, June 2, 2011

Verisimilitude: Getting Economies Right

Reading thuRsday

I've enjoyed Harry Potter along with a substantial number of the other residents of this planet. And I've dutifully paid my Potter-tax by purchasing both the books and the movies. However, part way through I found that I enjoyed Rowling's mix of magic and muggles more if I thought about it less.

To say that parts of the wizarding world doesn't quite ring true is laughably like straining at a gnat and swallowing a camel because, in an objective sense, none of it is true (oh, and as long as I'm crushing your dreams, the Easter Bunny isn't real either). But there it is.

What's my problem?

The wizard economy.

So we have wizard gold. And some families have more of it than others. Aside, though, from the obvious parallels to the economic disparities in the world of our ordinary experience (i.e., wizard who aren't independently wealthy have jobs--apparently all at the Ministry of Magic) we don't see the wizard economy in action. And because the ability to do magic appears to be wholly unrelated to the size of one's account at Gringott's, we don't get anything more than an anecdotal sense (Weasleys vs. Malfoys) of what it means for witches and wizards to be rich or poor.

Of course, J.K. Rowling never set out to do an economic study. And a staggering number of people have enjoyed the stories as they stand.

The point I want to make with this example is that a little more attention to these questions could have improved the verisimilitude of the economic dimension of the  stories.

And why does that matter?

Because knowing what things cost increases the tension and ratchets up the stakes.

So how do you get economies right?

If I knew the answer to that question I'd set aside writing and take over the Federal Reserve.

Remember, our goal here is not something objectively correct. Rather, we're shooting for right enough to give the story a greater degree of verisimilitude.

Economies are networks in which actors take inputs and transform them into higher-value outputs they can exchange with other actors. A trader, for example, buys low at the source and adds value by transporting the goods to a market where relative scarcity allows them to sell high.

If you only have time to read one book to learn about real world economies, I recommend Jared Diamond's Collapse. Studying the way something falls apart is a great way to get a sense of how it works and how it fails.

Image: Michelle Meiklejohn /

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