Relationship Between Second Life and the U.S. Economy

Relationship Between Second Life and the U.S. Economy

Rosemarie Reynolds (Embry-Riddle Aeronautical University, USA), Yusuke Ishikawa (Embry-Riddle Aeronautical University, USA) and Amanda Macchiarella (Embry-Riddle Aeronautical University, USA)
DOI: 10.4018/978-1-61520-611-7.ch009


Second Life is a virtual world designed to be a free, laissez-faire market economy in which Linden Dollars are used to buy and sell goods and services. This study investigated the relationship between the economies of Second Life and the United States, using financial data collected from Linden Lab and the Federal Reserve. Partial correlation analyses were computed between two pairs of economic measures, and our results indicated that there was a significant relationship between the two economies.
Chapter Preview


Research indicates that some motivators for online game playing are flow experience (cognitive absorption), imaginative responses such as fantasy and escapism, and emotional responses such as enjoyment and emotional involvement (Ducheneaut & Moore, 2004; Holsapple & Wu, 2007; Hsu & Lu, 2004; Hsu & Lu, 2007; Koo, 2009; Yee, 2006). However, the social affiliation aspect of games appears to be one of the primary motivators; in fact, Kim, Oh, and Lee (2005) found that the social characteristics of online games were more crucial to online game success than technological ones.

One aspect of online gaming, virtual worlds, is aimed directly at this need for social affiliation. These computer-generated virtual worlds may represent fantasy worlds or simulate the real world, but in either case, the virtual world allows users to interact with each other through their avatars.

One of the more successful online games is Second Life, created by Linden Lab in 2003 as an international multiplayer online game. In the U.S. alone, Second Life has been played for over 14 million hours (Linden Lab, 2009), and Wagner (2008) suggests that Linden Labs makes between 40 and 50 million a year in profit.

Second Life includes many realistic aspects of real life, including some aspects of real-world physics that need not apply to virtual worlds (Clavering & Nicols, 2007; Mennecke, McNeill, Ganis, Roche, Bray, & Konsynski, 2008). The game centers on commerce, the sale and resale of goods, and the advancement of its virtual economy; there are no set objectives designed into the game (Miano, 2007; Pollitzer, 2007). Virtual characters known as Residents run businesses, own land, travel, and buy and sell goods and services with the Linden Dollar. Users retain all intellectual property rights for objects they create, and can control whether a buyer will be able to resell, edit, or create copies of objects they sell (Clavering & Nicols, 2007; Seto, 2008). This key inclusion has enabled Second Life’s economy to exhibit traits similar to real countries’ economies, for, as Ondrejka (2008) pointed out, “… property rights are a key enabler of innovation and therefore per capita economic growth” (p. 237).

Key Terms in this Chapter

Consensual hallucination: In William Gibson’s book, Neuromancer, he refers to cyberspace as a consensual hallucination that is “a graphic representation of data abstracted from banks of every computer in the human system.” The phrase is often used to describe virtual reality or cyberspace.

Telehealth: Health-related services delivered via telecommunications.

Second Life: An online role-playing game centered on commerce.

Avatar: The figure or image developed by a computer user to represent themselves online.

MMORPG (Massively multiplayer online role-playing game): Role-playing game in which players interact in an online virtual world.

Residents: Virtual characters (avatars) in the Second Life game that run businesses, own land, travel, and buy and sell goods and services.

Flow experience: First proposed by Mihály Csíkszentmihályi, flow is a mental state characterized by total immersion, focus, and involvement in a task.

Marginal production costs: The change in total production costs caused by increasing production by a single unit.

Machinima: Movies made using nothing but computer-generated animations, tools and cameras.

Complete Chapter List

Search this Book: