Simulation Game - 3

Household Number: 29
Members:

Kalpit Raj (21 JSGP), Rujvesh Reddy (21 JSGP), Hima Varshini (21 JSGP)

Rural Economics presented us with a captivating simulation game, plunging us into the intricacies of a rural
environment. This game allowed us to concentrate on the decision-making procedures of a small-scale farmer
household. Additionally, we encountered the impact of substantial farmers and the interference of the
government. We wish to provide a summary of the occurrences within the game prior to sharing our personal
experiences.

The Given Factors: Household Profile, Roles, and Circumstances

Our household was a carpenter family and it comprised of 12 members, including six adults and six children. Of
the adults, there were four male aged 59, 52, 32, 29. The remaining two female adults aged 29 and 27, each
generating one full Family Labor Unit (FLU). Regarding the children, there were three male children aged 14,
12,8 and three female children aged 15,7, and 4. The three younger child, two female (7,4) and one male (8) was
not able to contribute to production, while the others aged 15,14,12 contributed half an FLU to the workforce.
Consequently, we started with a total of 7.5 FLUs in the first year.

In addition to the human resources, we were allocated one bullock, producing 20 Bullock Power Units (BPUs).
Our household also possessed one cow, which were of alternating even and odd years of age, ensuring that our
milk production remained consistent in the subsequent years. Furthermore, we were allotted 1 acre of land and
started with a cash amount of 1600 rupees. Our family also lacked any irrigation facilities such as a pump or a
well. Given the large number of members to feed and the limited workforce and resources, it can be inferred that
our family was not affluent or resource abundant. Our assets and finances were significantly constrained,
reflecting the challenges of a household with more dependents and fewer contributors. However, being the
carpenter family, gave us a special position in the economy. We were given 9 APU, which we tried to utilise it
to the full potent to survive through the upcoming years.

First Year
In the initial year, the focus was primarily on sustaining the family's needs by generating sufficient resources to
endure both optimal and suboptimal scenarios but at the same time producing Agricultural Ploughing Units
(APU) that are the wooden agriculture plough, each giving 3 units. Since, we were the sole carpenter family in
the village, having a monopoly over the necessity resource provided us with an upper hand in trade. However,
this also meant a surplus supply of the APU can cause distress to our household which suggested a judicious
economic approach. First, we focused on the cultivation and harvesting of crops vital for the survival of the
family, livestock, and the anticipation of securing food grains for the years to follow. Given the limited cash and
allocated resources, the family opted to cultivate ordinary maize on one acres of land with pesticides and no
irrigation since we did not have enough money. We decided to loan some money from the bankers in order to
buy seeds and pesticides by putting over non milking cow as the collateral. However, despite our please, the
bankers refused to accept the cow as a collateral, so we had to put our land at stake to borrow 6,000 cash from
the bank at a 11% interest rate. Upon receiving the money, we purchased pesticides, and seeds. We did not have
enough money to afford fertilisers either and the bankers were closed by the time we found people to loan us
some money for fertilisers. The family, grappling with financial constraints and substantial land, drafted the
following:

Requirement
Maize 2700 kg
Maize Straw 3600 kg
Milk 600 kg
These calculations considered the consumption requirements of each household member and the animals.

The household initiated its first transaction by selling 10 BPUs to another household for a total of Rs.500/-. The
biggest strength our family had was FLU’s. We decided to wait till the price of FLUs to shoot up and when the
scarcity for the labour is generated, we wanted to give out FLUs at the best price which later turned to be the
grave mistake. We were only able to sell 4 Flus’ out of 7.5 and we only made Rs.3,500. As anticipated all the
households turned to ours for APU’s but given the limited number of ploughs that we could sell we sold them at
a price of 2,500 for each plough. Fortunately, the absence of drought and pest infestations allowed operations to
proceed under the best-case scenario assumptions, but we only made 1080 maize grain against the sustenance
requirement of 2700. The expenditure on pesticides proved to be unwarranted. With the help of the little money,
we had from selling the ploughs and FLUS’s we tried to meet our survival needs at the lowest possible prices.
However, despite our best efforts and bargains, we were only able to acquire 2,000 maize, 2,400 maize straw
and 400 milk, falling short to meet the basic requirements. Which costed us the lives of two children in our
family aged 7 and 4 both being female. This led us to a case of uncertainty and extreme loss with a sense of guilt
that we couldn’t help the family survive. Since none of the group members have failed to meet the consumption
requirements earlier, we had no clue about the implications it held in the coming years.

Second Year
In the subsequent year, still gutted at the loss of two children in the family, we tried to focus solely on the
survival and not profits and tactics. But given the limited resources, the loan that we had to repay and the costs
that we need to meet in order to start cultivating again, we felt stuck not knowing how to strategize a plan. That
is when the government proved to be extremely helpful. Being the only carpenter family in the village we were
given 3,000 kg maize, Rs.16,000 cash and 900kg milk and 2000 maize straw by the government. The loss in our
family had led us to a situation that held serious implications for the rest of the village: We could not produce
ploughs in year 2. Although there was a surplus of cash, it was not substantial. The decision was made to not
cultivate anything during the year 2 since whatever the government provided was meeting our consumption. Our
cow was milking this year so we decided that we can lease it out for 1200 rupees since we are not producing any
crop in year 2. In this year the 15-year-old boy turned into an adult resulting in a family of 7 adults and 3
children. Given the assets at hand, the family’s situation was as follows:

Requirement Government provision

Maize 2850 4500kg
Maize Straw 2,400 2000 kg
Milk 400 kg 1500kg

Thus, at the end of the second year, having not produced anything the family carried forward a surplus of 965kg
milk, 1330kg maize and 16,000 cash.
Third Year

In the beginning of the third year, with ample amount of cash in our hands and surplus amount of maize, maize
straw and milk, the decision was made not to produce anything. In this year, one child of age 15 turned 16 which
increased our FLU. The consumption requirement of the family including cattle is listed as follows:

Requirement
Maize 3000
Maize Straw 3600
Milk 280

With all requirements of the family in place, our eyes turned towards making more profits. With our position as
the sole carpenter family in the village came with the liberty and authority of producing APU’s. We immediately
rushed towards the trader and bought a carpenter licence for Rs. 780. Using up 4 FLU’s, which was the
requirement for the carpenter family to produce APU’s, we produced 36APU’s in total which made our
household the highest owner of APU’s in the whole village. This situation made us to easily influence the
demand in the village which skyrocketed our profits later.

UNDERSTANDING RURAL ECONOMY (Inferences from the game)

As economics students, we were able to draw some insights from our coursework and see the pragmatic
applications of it throughout the game. It was interesting to know that economics is so deeply rooted in
livelihood that we find it in almost every sphere. The following are some of the major incisive observations and
experiences we were able to take away from the game.

Importance of Economic Planning: Whether it is large scale economy or household level economy, planning
is essential for efficiency. At micro level it enables the families to allocate the resources wisely ensuring
necessities and overall household welfare. It was important for us to keep track of savings, investments and
loans taken, to estimate the produce and predict the risks. There were also times when a lack of communication
and proper planning amongst the group led to situations where we had to incur losses and settle for lower prices
for our produce. It is also important that we plan our strategies as to ‘at what hour do we sell our produce’ ‘when
to think about profits and when to aim to at least get back the minimum return on our investment’. Economic
planning prepared us to be ready for the worse situations, fostering self-reliance in our household.

Specialization of labour as economic leverage: The foundational aspect of economics where distinct
individuals are allotted certain tasks based on skill and expertise, in turn maximizing productivity and economic
output is something that became more prominent in game 3. This approach, deeply rooted in the theories of
Adam Smith, proved to be a catalyst for economic growth and a bulwark against the homogenizing pressures of
a globalized economy. With the introduction of APU’S and PU’s it became more evident that specializing in
certain skills can benefit you in the long run. Given the limited number of families that are specialized in pottery
and carpentry and the demand for them from almost every household in the village, makes it profitable and
gives them a special advantage over others. We personally being a carpenter family and having a potter family
living on the other side of our household got to experience what it values it holds to specialise in a skill.

Economic Elasticity in the Face of Loss: The second year's losses were a crucible, testing our economic
elasticity. The principles of Keynesian economics taught us the value of agility in economic planning and the
necessity of government intervention during downturns. Our response to these losses—strategic diversification
and communal pooling of resources—exemplified the adaptive strategies essential for rural economies to
bounce back from adversity.

Cattle as Integral Members of the Rural Household: The simulation game instilled in us a profound sense of
kinship with our cattle, transcending their economic value and elevating them to the status of household
members. This emotional bond with livestock is a reflection of the deep-rooted connection between rural
families and their animals, which is often overlooked in traditional economic models. The cattle were not
merely assets but were integral to our daily lives, providing not just milk and labour but also companionship and
comfort. This relationship highlighted the concept of 'social capital' within rural economies, where the well-
being of each living asset contributes to the overall health and sustainability of the household. Recognizing
cattle as part of the family unit also underscores the importance of humane and ethical treatment of animals,
which in turn can influence productivity and the economic output of the household.

Mental Health as an Economic Variable: The game brought to the forefront the critical yet often ignored
aspect of mental health in economic productivity. The psychological toll of financial strain on farmers was
palpable, and it became clear that mental well-being is not just a social concern but an economic variable. By
integrating mental health support into our economic model, we not only improved the quality of life but also
enhanced the overall productivity of the community.

Risk Management and Socioeconomic Flexibility: The vicissitudes of the second year compelled us to
embrace risk management. The game demonstrated that economic theories must be flexible enough to account
for the unpredictable elements of rural life. By adopting a multifaceted approach to income and crop
diversification, we embodied the principles of portfolio theory, spreading risk to stabilize our economic
standing.
Government intervention: We studied a lot about the importance of government expenditure and interventions
in the economy, but this game really underscored the need for it. The 2nd year of this game was one of the worst
years that any one of our group members have experienced. Not being able to meet consumption needs came
with a lot of financial constraints and also a sense of guilt and helplessness. Our household lost two family
members in year 2 and it was hard not to go back into the spiral of not meeting the consumption again. It didn’t
occur to us in the least if there is something that could be done to get us out of that place. The primal instinct of
survival did not let us think beyond the household. We thought it was a long shot that the government would aid
us in this process but to our surprise, we received a lot more than what we anticipated. The government has not
only provided us with food to meet our sustenance but also some money to go further. We understood the very
visible role that government plays in the lives of rural households in comparison with the indirect role played in
our regular lives.

Sustainability and Ecological Economics: The game reinforced the importance of sustainable practices. By
aligning our agricultural strategies with the principles of ecological economics, we not only ensured long-term
viability but also addressed the ethical imperative of stewardship over the environment. This approach
underscored the interconnectedness of economic health and ecological balance.

Differences in Consumption and production patterns: We find that, landlords and poor farmers exhibit stark
differences in consumption and production patterns. Landlords, with access to more resources and capital,
typically have diversified production, involving high-value, market-oriented crops like cotton, and often employ
advanced agricultural practices, enhancing productivity. We see that they are involved in partnerships and deals
with other landlords. Their consumption patterns are characterized by a higher standard of living. Conversely,
poor farmers, constrained by limited resources, primarily focus on subsistence farming, producing staple foods
with lower market value and often using traditional farming methods, resulting in lower yields. Their
consumption is predominantly frugal, prioritizing basic needs and necessities, with limited access to diverse or
luxury goods, reflecting the disparities in wealth and access within the rural economy.

Socioeconomic conditions: Dowry culture in India, originating from tradition, has transformed into a
contentious practice. Initially designed to ensure financial security for brides, it now frequently entails excessive
demands from the groom's side. Despite being prohibited by law since 1961, dowry continues to persist due to
entrenched societal norms. As economics students, we vehemently oppose dowry and its associated gender
inequality, particularly regarding women's education and financial independence. In the game, we found
ourselves in a challenging situation where we had to almost compromise on a family member. Even though we
are against dowry in every possible way, we were able to see the other perspectives of it which serves as lifeline
to financially distressed situations of many families. Issues like child marriage, dowry seemed like lifelines.
Many such socio-economic issues are overlooked from a family maker’s point of view. And these conditions are
usually taken advantage of to survive and to further economic growth.

Vicious cycle of poverty: The vicious cycle of poverty in a rural economy is a heartrending reality where
limited resources and low-income lead to inadequate access to investment, banking, and opportunities,
perpetuating a cycle of impoverishment. This cycle is self-reinforcing, with each year in the game inheriting the
constraints and deprivations of the previous one, stifling potential and entrenching households in a relentless
loop of destitution. Having known about this cycle, we were afraid that we might get stuck in a loop after seeing
the way our second year was turning out to be. But one great deal was where we sold an FLU which is usually
priced around 700 in the market, at a high price of 6,000, this also taught us another lesson: landlords might not
always strike the best deals for themselves, and they are in a big need for labor. With this lesson in mind, we
thought of selling the FLU at a similar price to a landlord in the upcoming year too, however we sold it for 700
to one of our neighbours because they were experiencing what we once did in year 2. We didn’t want to be
ungrateful. We understand what it is to be stuck in a loop of poverty. The lack of means to break free from this
cycle accentuates the despair and hopelessness that shadow the lives of those trapped within it.
Interconnectedness of economy: Recognizing the importance of maintaining positive relationships within the
community, we eventually decided to proceed with the lease. We understood that fostering good relations with
everyone played a pivotal role in gaining a competitive edge in trade. In this simulation game, the theme of
interconnectedness emerged as a central element. Every facet of the rural community was intricately linked,
spanning agriculture, banking, resource management, and trade. It became evident that choices made in one
sector had far-reaching consequences throughout the entire ecosystem. For example, investing in enhanced
agricultural practices not only improved crop yields but also boosted incomes for both farmers and local
businesses. This simulation highlighted that social, cultural, and health aspects of the economy weren't merely
correlated; they were deeply interdependent. The intricate web of these activities underscored the delicate
equilibrium necessary for nurturing a prosperous rural economy, where each decision had implications not only
for individual prosperity but also for the holistic well-being of the entire rural community.

The Trader's Influence: The role of the trader in our simulation was pivotal, acting as a conduit for goods and
services within the economy. The trader's ability to influence both the availability and price of goods highlighted
the critical function of market intermediaries in rural settings. This dynamic served as a practical lesson in
market economics, demonstrating how traders can facilitate the flow of goods and act as price setters within the
community, thereby impacting the local economy's efficiency and equity.

Bank's Role and Benevolent measures: The bank emerged as a cornerstone institution in our simulated rural
economy. Its willingness to allow us to continue using our land as collateral while still enabling us to cultivate it
was a testament to the potential of financial institutions to exercise compassion and understanding. This
flexibility provided by the bank was crucial in allowing us to overcome the challenges of the second year,
illustrating how adaptive financial products and services can significantly enhance the capacity for rural
economic growth and stability.

Pricing System Dynamics: The pricing system within the game was a complex interplay of supply and demand,
cost of production, and market power. It was a direct reflection of how pricing mechanisms work in real-world
economies, with prices acting as signals that guide the allocation of resources and the decisions of producers and
consumers. Understanding and navigating this system was essential for our economic survival and growth, and
it underscored the importance of market literacy in rural economies.

Economic Power and Social Equity in Negotiations: The game also shed light on the stark realities of social
stratification and its impact on economic negotiations. Despite our efforts to distribute economic opportunities
equitably, such as selling plough units to families from lower castes, the entrenched social hierarchy often
dictated the negotiation power. This aspect of the game was a sobering reminder of the persistent inequalities
that can pervade rural economies, where economic power is not distributed solely based on merit or need but is
often influenced by longstanding social structures.

Conscious Efforts Toward Inclusivity: In response to the observed disparities in negotiation power, we made
conscious efforts to be more inclusive. By ensuring that at least one lower-caste family received plough units,
we attempted to level the playing field and provide more equitable access to economic resources. This action
was not just a strategic economic decision but also a moral stance, reflecting our understanding that a
sustainable and resilient rural economy is one that fosters inclusivity and diminishes social inequities.

In conclusion, our journey through the rural economy stimulation game has been an enlightening experience
offering valuable insights into the intricacies of the rural economy. This game has emphasized that economic
choices are not just about numbers, they carry profound emotional implications. It reinforced the importance of
adaptability in the face of adversity and the significance of maintaining strong community ties. This served as a
valuable lesson in the complexities and nuances of real-world rural economies reminding us that success is not
just measure in profits but in the wellbeing and the resilience of the entire community.