Economic and Social Realities of the Sharing Economy

The benefits may go well beyond your budget.

Apr 6, 2014 at 1:00PM

Thinking outside the box with personal finances has changed quite a bit in just the past decade. Think about such thinking for a minute.

Outside box, circa 2004: Plant your own vegetable garden; invest in an espresso machine instead of daily latte; ride share; brown-bag lunch; online coupons.

Outside box, 2014: Who wants to rent out my car, parking space, spare room, clothes, or brainpower?

It's hardly news to most folks that we're in the midst of a business model revolution, known as the sharing economy, which stands to benefit everyone. Thanks to the entrepreneurial mind-set brought about by recessionary hard times and technological advances, entities such as Airbnb, TaskRabbit, and Snapgoods have popped up to provide services using things people already own, whether that be a car, a home, or the clothes in their closet. In a sharing economy, anyone can become a service provider and earn extra cash as, say, a taxi service, a hotel, or a home cleaner.

Not only is it a money saver, but, as you'll see later, it's making us better people. (No, really, it's true.)

More folks are jumping on the "sharing" bandwagon as either a service provider or user, which explains why market strategists, including those at the brokerage firm ConvergEx Group, projected $3.5 billion in revenue last year with the potential to blow up to as much as $110 billion in coming years.

In a note to clients reported last year by Business Insider, ConvergEx Group stated, "Americans of every demographic are flocking to services like Airbnb, TaskRabbit, and Bag Borrow or Steal for one overwhelming reason: Renting and sharing allow us to live the life we want without spending beyond our means."

"This is just the tip of the iceberg," Philip Auerswald, associate professor of public policy at George Mason University, said this past January, as reported by The Atlantic, in explaining the sharing economy's implications at a House Committee on Small Business hearing -- the first time the U.S. Congress peered into the sharing economy. He said we're in the midst of an important shift in how people work and create value for the broader economy.

Low or no cash flow may be the main driver here, but don't discount the trendiness factor.

According to a study done by the Helsinki Institute for Information Technology, collaborative consumption "has been regarded as a mode of consumption that engages especially environmentally and ecologically conscious consumers."

The current generation who experienced the recent economic collapse can relate to those who survived the Great Depression through price and efficiency-consciousness, only folks today have the added benefit of tools connecting owners of transportation, space, and services to those who need it.

A real social network
A somewhat ironic side benefit of this trend is that the sharing economy, whose very existence is made possible by technical achievements and reliance on mobile devices that birthed online social "communities" that are anything but, is helping people truly connect in meaningful ways.

Using someone's lived-in space through Airbnb, as opposed to the typically antiseptic hotel experience, is making travel a more rich and authentic experience. Offering up an unused vehicle or even the parking space that contains it can often become the "starter drug" into a life of more environmental awareness.

Whereas so-called social communities foster the idea of people connecting while separated by devices, a sharing economy is actually connecting people, all the while helping to slim finances and turn existing resources into income.

One could take the stance that a sharing economy is bad for friendships. A recent article in Forbes theorized that people would become more likely to open up their homes and other properties to complete strangers at the expense of an out-of-town friend in need of a place to crash, which helps prove the point here.

The connectivity provided by these sharing applications allows people from different walks of life to connect who otherwise wouldn't have "shared" anything, much less a home space, pair of shoes, or lawnmower.

So the next time you consider a foray into the sharing economy, remember the benefits may go beyond your personal budget ledger.

Jim Staats is a technical support analyst at, the leading, free and secure service that helps consumers simplify and organize all of their bills and household accounts in one place online or via the four-star-plus customer-rated mobile apps. He has a bachelor's degree in industrial technology from California Polytechnic State University at San Luis Obispo. Wedged between stints supporting products at firms including Intuit and Sybase, Jim worked as a journalist reporting on real estate, business, technology and other issues for print and online publications.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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