Measuring the Sharing Economy

By Laura Boudreau

This past Sunday, my roommate picked up her pink mustache and headed to work. Since quitting her job to return to graduate school, she has signed up as a driver for Lyft, the ride-sharing company that puts those trademark mustaches on cars to let customers know their rides have arrived. 

Lyft lets individuals augment their income by using their own cars on their own schedules to taxi people. It’s one of many sharing companies that allow individuals to turn their time or underutilized assets into extra income. I would argue that these companies can also promote more socially and environmentally responsible behavior and even help tackle urgent social needs.

Many sharing companies were established in part with the idea of making more efficient use of natural resources and energy. Zipcar, which helped bring car-sharing to the U.S., wanted to take cars off the road, reduce traffic congestion, and quell pollution.  Alta Bicycle Share, which installs and operates bike-sharing programs, aims at similar goals by making it easy for people in cities to ride by bicycle rather than in cars.   Feastly, which allows cooks to reach a wide network of people interested in top-notch homemade meals, builds community by bringing locals together around the table.

The sharing economy can engender community at the local and global levels, which is essential to social and economic well-being as the world’s growing population continues to strain natural resources and social safety nets. Consider Airbnb, which allows travelers to book lodging, from couches to castles, directly from homeowners. Airbnb hosts started an emergency-shelter movement after Hurricane Sandy by posting their homes for free to storm victims. Since then, Airbnb has formalized its role as a platform that connects disaster victims with emergency housing.

But traditional metrics for gauging business success don’t capture the social and environmental dividends from sharing. If we’re serious about moving toward a more equitable and environmentally sustainable economy, we should do better at quantifying a firms’ triple bottom lines.  The more we know about the social and environmental impacts of firms’ operations, the easier it is to reward companies that perform well or tax those that perform poorly.

 We have voluntary examples of these metrics in the private sector, such as when industry groups set social and environmental codes of conduct and reporting requirements. But public policy can push companies to go further. As Professor David Vogel described in his post on corporate America and carbon, for example, a tax on fossil fuels could efficiently and effectively contribute toward mitigating the risks associated with climate change.

Yes, it’s difficult to quantify social and environmental costs and benefits.  What is the environmental benefit of swapping or trading a TV, instead of purchasing a new one?

But where those benefits can be quantified, the results are often encouraging. After Alta Bicycle Share quantified the public health benefits of bike-sharing in cities such as Washington, D.C., other cities launched similar programs. In D.C., bike-sharing users can also quantify the benefits of their own trips in terms of calories burned and reduced CO2 emissions. In my last 200 trips on bikeshare before moving out of D.C., I rode 204 miles, burned 10,200 calories, and saved 138.6 pounds of C02 that would have been emitted if I had been driving. That kind of user-level feedback can provide powerful encouragement for socially and environmentally responsible behavior.

The sharing economy is a harbinger of a future in which socially and environmentally responsible business is a norm. But to get there, we need better metrics for social and environmental impact and stronger policies for appropriately rewarding or taxing these impacts.      

 Laura Boudreau is a Ph.D. candidate at Berkeley-Haas.

 

 


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