The Sharing Economy: For Better or for Worse?

With the rise of the Internet and always-on smartphones, new opportunities for connecting people together became possible. This allows platforms such as Airbnb and Uber (classical mentions) to become very efficient as the coordination of  service providers and users, is easy and cost efficient. The rise of the sharing economy has been fast over the last few years and has caused all sorts of issues, good and bad. One of my New Technology 2016 students, Gunnhildur Finnsdóttir, wrote a paper on this topic:

“My thesis is that, for better or for worse, the sharing economy is going to grow even further and be more and more integrated into out lives so the effects of it so far are likely to be magnified in the near future. The main focus of this research is to examine these effects of the sharing economy on individuals and societies.”

One point she makes is the importance of local. While traditional accommodations can be friendly, visiting a host in their home can be more like staying with someone you know. One reason is that the payment is actually never between the guest and host, as it is taken care of by the platform. Gunnhildur writes:

“And this is at the heart of the appeal of the sharing economy, the transactions it organizes are more than simply exchanging a service for cash, they are framed like acts of neighborly kindness or making new friends in a strange city. This emotional value is combined with the resources of a multinational corporation that has access to a lot of user data and infinite ways of processing it to create a very powerful mixture.”

One point made in the paper is about a major trend that is happening in the connected worlds: the end of ownership. This is about understanding a fundamental shift in the way people behave. Gunnhildur quotes Brian Chesky, CEO and co-founder of Airbnb:

“People still want to show off, but in the future I think what they’re going to want to show off is their Instagram feed, their photos, the places they’ve gone, the experiences they’ve had. That has become the new bling. It’s not the car you have; it’s the places you go and the experiences you have. I think in the future, people will own whatever they want responsibility for. And I think what they’re going to want responsibility for the most is their reputation, their friendships, their relationships, and the experiences they’ve had”

The paper also contains a section describing the sharing economy in Iceland. This small country has been experiencing a travel boom in the past few years.

“The number of travellers who used Airbnb to find accommodation in Iceland in 2015 grew by 152% from the previous year while the traditional hotel business saw a growth of 18%”

If you want to understand the sharing economy – the good and the bad, and how it works in Iceland, check Gunnhildur’s paper out:

The Sharing Economy: For Better or for Worse?