Economic lessons from game of monopoly

Monopoly, the famous board game (I learnt it too came up after the depression) has gone through a major change. The old game will continue but there is a new variant .

In the new variant, there would be no dice or bank. Instead, there is an infrared tower which will issue instructions and keep track of money. It will. make sure players stick to their rules. This is done to fight competition from  online games:

Hasbro hopes that the computerized Monopoly will appeal to a generation raised on video games amid a tough market for traditional board games, a category where sales declined 9 percent in 2010, according to the market research firm NPD Group. “How do we give them the video game and the board game with the social experience? That’s where Monopoly Live came in,” said Jane Ritson-Parsons, global brand leader for Monopoly.

With free digital games everywhere, Hasbro is hoping to revive interest among young children and preteenagers in several of its games that cost money. (The new Monopoly, available in the fall, will be about $50.) Battleship will undergo a similar digital upgrade this year, and other Hasbro games will be redesigned for 2012 and 2013, Ms. Ritson-Parsons said.

This has led to all kinds of reactions. Stepahnie Clifford of NYT says – No Dice, No Money, No Cheating. Are You Sure This Is Monopoly?. Sam Lipsyte, an author is more hopeful and looking forward to play the game.

Damon Darlin of NYT goes back to his Chicago Univ days when the game was played Milton Friedman style. He says the original game allowed to change the rules which was much fun. They played the game seriously in the Univ:

Monopoly was taken seriously in Shorey House at the University of Chicago in the late 1970s. A room was set aside as “The Monopoly Room.” But in that post-Vietnam, pre-Reagan era, all assumptions were questioned and a game our parents played was no exception. Rules were meant to be altered. The house even convened a “constitution convention” to change the official rules of the game to allow a person to build a hotel on a property without first having to own four houses. Mr. Zelenty, now a corporate lawyer in his native New Jersey, remembers holding a sign that said, “New Jersey Espouses / Hotels Without Houses.”

The other thing taken as seriously in that dorm was free-market economics or, more precisely, Milton Friedman, the University of Chicago economics professor. This was a house that frequently invited Professor Friedman and his wife, Rose, to sherry hours. House members ran a snack bar in the basement of the dormitory called Tanstafl, an abbreviation of a saying favored by Mr. Friedman, that “there ain’t no such thing as a free lunch.”

In one of the major game, they learnt useful economics lessons and went through the whole business cycle:

The precise details of our classic game are blurred by the alcohol consumed that night and the years that have passed since then, but this much is recalled. We decided that Monopoly was hostile to a free market because it restricted the number of houses or hotels one could buy. We voted that a player could buy as many hotels as a property could physically bear and rents would be raised proportionally.

But the bank soon began to run out of money. So we did what any government would do. We began printing more of it, by scribbling $500 on scraps of paper. We printed a lot of money. Prices shot up, which we all knew, even in that inebriated state, was the consequence of expanding the money supply. (After all, the great economist told us, “Inflation is always and everywhere a monetary phenomenon.”)

The inflation became so extreme that we eventually voted to alter the rules again: we’d cut the money supply. Any money we printed that came back to the bank would be taken out of circulation. A severe depression kicked in, of course. Prices plummeted and it was a race to liquidate assets. One by one the players quickly went bankrupt, and sometime around 4 that morning the game was over.

Who won has long been forgotten, but it was one of the greatest games of Monopoly ever played because we got to change the rules.

Amazing stuff. Learning economics on the Monopoly board game all in front of your eyes!!

I had some other ideas as well. The new game could also be signalling to the change in economic environment as well. After this crisis, we have moved from a free market thinking to a more regulation/institutional thinking. So you needed someone at the centre monitoring and telling you what to do. People may not like it but that is the reality. Though, Hasbro does not cite this as the reason it seems to be moving with changing times.