The sharing economy is often identified with a certain hip middle-income demographic. But the biggest beneficiaries may in fact be the poor. According to a new paper from N.Y.U. researchers, it’s people living on below-average incomes who stand to gain most from sharing high-value assets.
To understand the economic impacts of peer-to-peer marketplaces, Samuel Fraiberger and Arun Sundararajan built a model where people trade car user-ship, with prices varying depending on how many people want rides. Then they added data both from the real-world car market and from Getaround, a popular ride-sharing platform operating in San Francisco and other cities. The point was to compare the “welfare effects” of sharing cars with the normal patterns of car ownership.
The researchers’ conclusion is that ride-sharing has a “disproportionately positive effect on lower-income consumers” because poorer groups are more likely to switch from owning to renting and are more likely to contribute supply and demand to a marketplace, aiding its success. “Ownership is a more significant barrier to consumption when your income or wealth is lower, and peer-to-peer rental marketplaces can facilitate inclusive and higher quality consumption, empowering ownership enabled by revenues generated from marketplace supply, and facilitating a more even distribution of consumer value,” the paper says.
Median income means someone earning roughly $50,000 a year.
The theoretical model is backed by the Getaround data, which shows greater platform use in poorer parts of San Francisco. More broadly, the research shows how encouraging sharing in cities might lead to “inclusive” growth, not just privilege higher-income groups. “Cities can view nurturing peer-to-peer platforms with being consistent with inclusive growth,” Sundararajan says in an interview. “It’s not about supporting the tech sector. It’s going to improve your economy in a way that benefits below-median consumers most.”
To promote common ownership, cities can consider putting in more parking spots for shared cars, and perhaps community spaces where people of different incomes can come together. “You could start to equalize standards of living if you allow people who have a lot of stuff to comfortably rent out things to people who don’t,” Sundararajan says.
“The opportunities to create the equivalent of infrastructure without having to build it themselves is pretty immense,” he adds. “If you encourage marketplaces where people are giving each rides, you’re enhancing infrastructure without actually having to invest in creating new assets.”