The Sharing Economy

Thu, 27 Nov 2014

About a month ago, I was lucky enough to attend the launch of a new report into the sharing economy, “Design for Sharing” by Ann Light and Clodagh Miskelly (which I’ve now read). It was a thought provoking talk and report, and my view of the subject has been broadened, so this blog post is the result - if you’re interested in learning more you can download the report at http://designforsharing.com/about/.

The Sharing Economy is something that I am interested in, and I had listened to quite a few interviews and podcasts on companies like TaskRabbit, airbnb and Uber, which are often described as being exemplars of the sharing economy.

The report calls us to think about activities that are being shared or could be shared, in a broader way than many (including me) had been thinking.  This makes sense to me, and I propose assessing activities through three key questions:

• Does it improve resource utilisation for the two parties?
  Are the parties, together, better off. For example, if one person doesn’t need to buy a vehicle, or another can sell something, I generally consider that a good thing. I believe that TaskRabbit, AirBnB and Uber all fit into this category, but then so does my job, me buying vegetables from the supermarket, or the vast majority of things that go on in the economy. On the other hand, if I lend you a book that you then feel obliged to read, that may not improve resource utilisation.


• What is the wider impact (i.e. externalities)?
  When assessing an activity, our natural inclination is to think short term, tangible costs/benefits, and to focus on the main parties, but we do need to consider wider costs and benefits - whether to ourselves in the future or to society and the planet, for example, sharing goods may reduce environmental burden of producing new ones.I generally think I make an effort to keep wider impacts in mind, but I clearly hadn’t done enough as this was the area where I learned the most from the talk and report. Appreciating the ways that relationships and trust and communities can be affected by the type of activities should have been obvious to me, but wasn’t. We also need to keep in mind issues of access and fairness - if we create a marketplace that some people can’t access, that is going to create wider problems in our society.


• Do both parties benefit?
  Assuming the activity is voluntary (for example, I wouldn’t want to promote theft) I’d look at if both parties intended to be tangibly better off. Market economics would tell us that we’d obviously want this to be the case, but thinking about it, often this forms the distinction between sharing/gifting and renting/selling, and I know some people believe that market transactions are inherently damaging. I’m inclined not to view one approach being better, but can see that it could well affect wider impact.

Now we have those questions, we can think about how best to structure activities to optimise resource allocation and promote positive wider impact. I don't believe there is a one-size-fits-all approach, and invariably there will be a combination of market-based and not-for-profit approaches.

The report made a particularly valid point that markets look after themselves, and when setting up economics, we are often too quick to jump to a market system. We would do well to consciously remind ourselves of opportunities for sharing/gifting, as these are less likely to happen without conscious effort and drive, or what the authors call ‘Designing for Sharing’.

 
An aside: technology
Sharing has been going on forever, but technology obviously does offer opportunities to identify opportunities for sharing (or other forms of resource optimisation), or for reducing risk. While these can enable more sharing to occur, this can reduce the wider benefit. For example, by anonymising sharing and removing the need for trust to be developed, you are likely to reduce the relationship/community development benefits.