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Human Achievement of the Day: The Sharing Economy

It’s the most wonderful time of year! Human Achievement Hour is once again upon us, giving us reason to pause and consider recent innovations that have or will significantly improve the human condition. I usually like to focus on some development in medicine or environmental tech, but this year I feel compelled to highlight what may be the most significant advancement in the modern economy. What began with eBay—the digital garage sale—has now blossomed into an entire economy and a way of life. You may have heard it called the “sharing economy,” or “collaborative consumption” is actually about efficient resource allocation.

Instead of leaving rooms or homes empty and unused families can make extra money by renting them out to vacationers or business people through Airbnb or VRBO. Instead of paying to leave your car at the airport—you can now have someone pay you to use your car while you’re away. The sharing economy allows just about anyone to instantly turn his or her otherwise underused or unused resources or skills to turn a profit. The result is an economy with highly personalized goods and services that are cheaper, higher quality, and more efficient.

Collaboration allocates resources efficiently: For most people living in a city with public transportation and limited parking, it may not make sense to own a car. However, there are certain times when a car becomes necessary to run certain errands or get to locations not accessible by public transportation. Luckily, services like RelayRides and Getaround connect people who need cars with their neighbors who have cars, but aren’t using them. Spinlister and Liquid offer a similar sharing-service for bikes.

Time is also a resource, and when you’re busy preparing for a party it’s a resource that might be in short supply. Nobody likes to make that third trip to the liquor store for those few bottles they forgot to pick up. Luckily there are platforms like Klink, an alcohol delivery app operating in DC, Ann Arbor, and Central Florida. It allows customers to use their smart phone to shop local liquor stores which then deliver it (without a markup) to their door.

Similarly TaskRabbit allows you to outsource errands to qualified people in your area for an hourly rate. You can use the app to find people to help you move, clean your home, do repairs, and staff your events, among other things. Similarly, Zaarly is a peer-to-peer marketplace for services.

For those hurt by the economic downturn in 2008, services like VRBO and Airbnb provides an opportunity to rent out a room in their home—or the entire house—and to make a little extra money from a resource that would otherwise have remained unused. Customers benefit by getting lower rates, a place with “character,” or a rental in a location where hotels might not be available.

Collaboration results in a better product:  If you’ve ever been stranded somewhere, maybe late at night or in a not-so-safe neighborhood without a cab in sight, you’re probably excited that services like Uber and Lyft now exist. A private driver is no more than a button-push away. More than convenience, the existence of Uber, Lyft, and others also allows customers to pay a little more for greater comfort. For the most part, drivers with Uber get extensive background checks and are “fired” if their user-rating drops too low. From 30+ Uber experiences, I have personally never been in an Uber car with offensive odors or sounds, have never had a driver talk on his or her phone while driving, or feared for my life during the ride; all experiences I have had in traditional cabs. And while some taxicab unions have responded to the competition by trying to ban Uber and similar ride-sharing apps, some, like the Pittsburgh’s Yellow Cab Company, are competing by improving their services.

Homeowner rentals allow customers to read extensive reviews of the property and host before deciding to stay. Additionally, because most of the homes on sites like Airbnb and VRBO are the owners residence, they are cared for better than traditional hotels. For example, where a hotel might treat one room for a bed bug problem, a homeowner is more likely to treat the entire home. 

Collaboration democratizes resources: Sharing businesses not only allow people to profit from their otherwise unused resources, but it puts economic power in the hands of regular individuals instead of banks and millionaire investors. Lending Club and Mosaic are peer-to-peer loans that provide rates that are lower than credit cards for borrowers and a better interest rate than savings accounts for investors. Funding sites like Kickstarter and Indiegogo let entrepreneurs pitch their ideas to the world and collect small amounts of money from many individuals in order to get their projects off the ground.

Sharing is green: It’s hard to understate how the effect the collaborative economy can have on individuals’ ability to create a living for him or herself. In addition, collaborative consumption can also reduce waste. For example, UberPool lets people share their Uber ride, which results in a lower fare for everyone and reduced pollution/traffic. And instead of having drawers full of kitchen and home goods that you only use once or twice a year sharing apps, like Neighborgoods, allow you to borrow stuff from someone down the street instead of buying that bread maker you’ll never use again.

Whatever you want to call it, the sharing economy allows any person to not just consume goods and services, but to be creators and doers in our economy without the need to acquire a business degree. All that’s needed is a computer and the ability to tap into the basic human drive to trade.