Newsmaker: Economist explains move to virtual world

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What changes to the Gaia economy do you anticipate?
Boskin: I think we have to analyze it first and take a look at what would make sense. But the supply and demand inside the economy, any high-quality economist would analyze that quite similarly.

How hands-on are you going to be?
Boskin: We have a graduate student now who's working on the detailed data who'll be doing some of that. So, I will be giving some overall advice and guidance and overseeing some analysis. It's not meant to be a role that takes a large fraction of my time but there will be times when I'm spending a fair amount of time on it.

You'll be continuing on the Hoover Institution and at Stanford?
Boskin: Yeah. This is not a full-time job.

Can you talk a little bit about the kinds of activity that go on and some of the more popular things people do in Gaia?
Boskin: Well there are a variety of auctions. People create items and auction them. There are people creating banks and lending. People are coming to borrow money from the banks to start a restaurant, things of that sort.

There are a variety of games people are playing and they are buying and selling various things and there is clothing and accessories for their avatars, furnishings for their virtual homes. So there are a lot of analogues to what goes on in real-world economic activity going on inside Gaia.

Why is it important to have someone with your background come and take over this economy?
Boskin: I think take over the economy is not quite the right word. I think that I'm going be providing analysis, guidance to the management team and some of the creative people at times, and I think the idea is to anticipate things that may come up that could improve and enrich the site rather than to be running the economy.

Is the thought that with your experience, you can make a better experience for the end users?
Boskin: That's the desire. This is, above all, supposed to be a fun, interesting, entertaining, valuable, virtual experience for people. The economy is part of that. It's not the whole thing. People are on this for lots of reasons, the social networking obviously, and we want to make sure that the economy part is the best experience it can be, that it grows appropriately and that we anticipate problems and head them off. And that we develop new things that people will find interesting and valuable.

What do you anticipate will be the biggest challenges?
Boskin: I think the economy is basically doing OK. The site is growing so rapidly, the number of transactions is growing so rapidly, the number of things people are doing is growing so rapidly, that we've got to take a look at this array and try to anticipate some of the issues that come up. For example, there are something like seven banks that people have opened up to loan people virtual money, and interest rates are not all the same. In the real world, interest rates across banks tend to be only slightly different, so do we develop some mechanism to provide greater transparency about prices? That will be valuable for our consumers and borrowers in this economy. It would be useful to know they can get something for less.

What do you say to people who don't really understand this whole idea of a virtual economy? How do you explain it to them when someone asks, "You're going to be doing what?"
Boskin: Well, there is a very real phenomenon going on here. It happens to be in the virtual world, but it's a real phenomenon. Millions of people are spending their valuable time and using their skill to inhabit these places.

That is economically fascinating in many dimensions and, you know, if I can help them understand it a little better and help them constructively build it and make it even more interesting and fun for their users, then that'll be great.

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THANK GOD this does not included Second Life!

This must be a dream! Nothing about Second life? Looks like companies are staying away from Linden Lab and their badly porrly don`t VR world!