Emily Badger: Promise of the 'sharing economy' is what it could do for the poor

Bikeshare systems are a cheap alternative to transit that could save low-income workers a lot of money. But many cities have struggled to lure low-income riders. Photo / Getty

Opinion

The sharing economy often feels like a place full of well-off millennials, digital natives who have smartphones, credit cards and reliable Internet connections. You need a certain amount of online savvy to rent a spare room on the Internet, not too mention the extra income to use Uber instead of the bus.

Then there's the cultural barrier to entry that's a little harder to define: You have to be cool with sharing an apartment or loaning a tool to someone you met on the Internet.

This picture of who's doing the sharing in the sharing economy today makes this argument from New York University's Samuel Fraiberger and Arun Sundararajan provocative: In the long run, they argue in a new paper, the people who stand to benefit the most from new peer-to-peer rental marketplaces for everything from cars to gadgets are low-income consumers.

They repeatedly found that result in a model they developed, using data from the car-rental service Getaround, to test how the sharing economy will change ownership patterns and asset prices, and who these marketplaces will benefit as they expand.

"We highlight this finding because it speaks to what may eventually be the true promise of the sharing economy," they write, "as a force that democratises access to a higher standard of living."

This argument makes economic sense, in theory. Any time you create a rental alternative for goods that previously had to be owned, that benefits people who couldn't afford to buy those goods before. This applies not just to cars, but to vacations, blenders, designers dresses, tools, plumbing equipment.

Now people who couldn't afford a $300 monthly car payment might be able to spend $15 here or there to ride in another person's car or rent one to run weekly errands. Now people who'd never have the money to buy a drill have more options to rent one instead.

Will upper-income consumers still be as eager to share (or rent) their homes, cars and possessions when these marketplaces expand to include more low-income users?

Until now, these were goods accessed primarily through ownership. And if you couldn't afford to own them, you simply didn't use them at all. Peer-to-peer marketplaces where people pay less to use these things only occasionally could fundamentally change that dynamic.

Fraiberger and Sundararajan additionally argue that lower-income consumers who now own, say, a costly car, will be able to shift to renting one instead. They'll probably make that shift from owning to renting at higher rates than upper-income consumers for whom the savings wouldn't be as valuable.

Lower-income consumers also stand to gain the most from renting out their goods on these platforms. The ability to make extra income off expensive items makes those items less expensive. And this effect is more powerful if you're low-income: If you're a waitress, an extra $20 from renting your car probably means more to you than if you're a lawyer. In fact, perhaps $20 here and there will enable you to trade up from a used car to a new one.

"One of the reasons why I have found the sharing economy a really appealing topic," Sundararajan says, "is because I think that it creates this opportunity for people to be able to get stuff and experience stuff that they wouldn't otherwise be able to afford."

He's had this experience himself in Uber Black cars. "I wasn't the kind of person who went around everywhere in black cars," he says. "It felt good, it felt like I was living someone else's life. You press a button and a town car rolls up and takes you where you want to go. I've heard this from people on Rent the Runaway, or from people who take better vacations because they can now afford them with Airbnb."

It's not clear, however, that the people who stand to benefit the most from the sharing economy in an economic model will actually gain those benefits in the real world. There's not a lot of evidence right now that lower-income consumers are using these platforms in large numbers.

In fact, there's some evidence of the opposite. Bikeshare systems are a great example of a cheap alternative to transit that could save low-income workers a lot of money. But many cities have struggled to lure low-income riders.

Part of the barrier is logistical; you have to have a credit card and a smartphone to access many of these platforms today. But another piece may be cultural. A lot of survey data suggests that lower-income people are less trusting of their neighbours or society in general than the upper-income. And trust is a key prerequisite in any marketplace where people lend and borrow possessions with strangers.

It's also worth asking this awkward question: Will upper-income consumers still be as eager to share (or rent) their homes, cars and possessions when these marketplaces expand to include more low-income users? Does this kind of sharing work today, in other words, because most people aren't sharing across socioeconomic lines?

Badger is a reporter covering urban policy. She was previously a staff writer at The Atlantic Cities.