One of Adam Smith’s mantras describes self-interest as an ingredient for the wealth of nations. Acts of selfishness creates an economy conducive to trading goods and services in exchange for money. UPS’s very own Shelby Senaga, a senior studying Economics and Business, explored a different dimension to this self-interest story in her thesis. Shelby’s research explored the phenomenon of collaborative consumption (CC), which creates commercial value through the power of sharing rather than ownership. Shelby and I sit down to chat about the concept behind CC and its growing popularity.
HR: So what exactly is the idea behind CC?
SS: CC describes how individuals profit from underutilized assets. In other words, you can get profit for stuff you own, but you don’t use. This could range from temporarily renting out an unoccupied room in your apartment, lending your skills to someone in need, or giving rides to people who don’t have cars themselves. It’s different from typical services because CC is all about peer to peer transactions facilitated over the internet.
HR: CC is a fairly new concept in economics. What has helped its emergence?
SS: The internet has not only enables people to find solutions for their problems, but to advertise their own goods and services ready for employment. The availability of information has helped facilitate trading, exchanging, and renting that otherwise wouldn’t have take place.
HR: What types of business are capitalizing on this concept of CC?
SS: My thesis focused on Airbnb, which allows homeowners to rent out their space for vacationers at a cheaper price than typical accommodation options (Shelby used this all the time during her travels in Europe!). Other businesses I found that profit from CC include Lyft (yup, the pink mustache cars), Task Rabbit, and Rent the Runway.
HR: What was the coolest thing you learned in your research?
SS: Because I focused on Airbnb, I did a lot of comparison between Airbnb lodging options and hotels. I came to the conclusion these two accommodation alternatives weren’t perfect substitutes. A hotel guest is different from an Airbnb guest in that they prioritize luxury, location, and premier customer service. Airbnb guests are a different variety, not only desiring a lower price point but appreciate informal hospitality, local knowledge of the area, and diverse living options (you can stay in a Treehouse or Castle in some places!).
HR: Anything else you’d like to tell Sound Economics readers about CC?
SS: If you want to learn more about CC, check out Rachel Botsman’s TED Talk about collaborative consumption. She also has a book about her research on Collaborative Consumption called, What’s Mine is Yours: The Rise of Collaborative Consumption.