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The unforeseen consequences of sharing
Posted on June 23, 2020

Many people have experience of sharing, either informally with neighbours, or via participation on popular sharing economy platforms. Especially in times of economic instability sharing provides opportunity to reduce spending on the purchase of goods. And there are many reasons to share, including wanting to consume less and reduce environmental impact. However, new research finds that shared products are thrown away and replaced faster, and sold for a lower price, than products that are used by the owner solely. Sharing may have sustainable and financial drawbacks.

Consumers are sharing products more and more. Both through business platform networks, such as cars through Zipcar and homes via Airbnb, and at an individual level, for example a lawnmower shared between neighbours. There are many perks of sharing. Purchase volume and consumer spending is reduced. Consumers don’t have to buy all items that they would like to use but can use one that belongs to someone else. This means that people can spend less in the short-term and borrow something that they might not use on a regular basis. Sharing isn’t only attractive for your money management, it is also considered an environmentally friendly activity. With more sharing, fewer products are needed to service the same number of people and demand for production inputs is reduced.

Is sharing too rose-tinted?

Sharing is therefore assumed to be sustainable. But is this view too rose-tinted? New research by behavioural scientists Laura Straeter (TFI & ING) and Jessica Exton (ING) emphasizes that the sustainable outcomes of sharing products at the individual level will be less than anticipated. This is because owners of shared products are likely to throw away or replace them faster and accept a lower resale price.

There are many types of sharing arrangements that differ to each other and the traditional form of sole ownership. Shared single ownership is where one person owns an item and lets others use it, while joint shared ownership involves many people each owning a portion of the item, with all partial owners having access to use it. In both arrangements, the study finds owners are likely to throw away or replace a shared item earlier and accept a lower resale price than one that is individually owned and used.

Why do we throw away shared items more easily?

When items are shared with others, they are perceived differently. Owners can start to view them as dirty and ‘contaminated’1. An item even need not be physically altered for an owner to develop this sense of product contamination2. This difference in perception, due to the fact an item is shared instead of privately owned, leads owners to treat their possession differently. It makes them more willing to throw away, dispose of or resell the item.

Interestingly, this outcome is evoked by shared usage and not by the fact that for some sharing arrangements people share ownership as well as use. The intention of an owner to throw away or replace an item faster is similar across different sharing arrangements. This can be explained by the sense of possession attachment that owners develop both when the item is solely or jointly owned. Owners are attached to and identify with a possession, even if they own only a portion of it3. As a consequence, the decision to throw away or replace a shared item faster is not changed when it is partially owned.

“The act of friendly sharing may lead to unforeseen costs”

Although the sustainable nature of sharing attracts many consumers, this ING research identifies flow-on effects of sharing that suggest the sharing economy may not be as environmentally friendly as anticipated. It seems that the reduction in environmental impact may be smaller than expected. When products are shared, they are considered to be more ‘contaminated’, which drives decisions to throw them away or replace them earlier than items used and owned by only one person. These decisions also have financial drawbacks. Owners are not only willing to sell the item for a lower price, they may also increase their spending. When items are thrown away earlier, they need to be replaced more often. Therefore, the act of friendly sharing may lead to unforeseen costs.

Is the sharing economy doomed? Not necessarily! Awareness amongst consumers could potentially help counter the unsustainable decisions regarding shared items. Informing them about their biased decisions might have them rethink the value of a shared good. Also, when it comes to the development of sustainable sharing-based initiatives, the findings should not be overlooked. It could be that some products are better to share than others. For example, products with clear objective indicators of obsolescence might cancel out the influence of the subjective perception of contamination. This could hint towards the development of an objective system that communicates usage and deterioration. Nonetheless, new research is needed to understand how such objective cues to contamination are perceived.

The study "The double-edged sword of the sharing economy: How sharing ownership and usage influences sustainable consumption" is part of this year's Behavioural Economics Guide.

References

  • 1. Rozin, P., Millman, L., & Nemeroff, C. (1986). Operation of the laws of sympathetic magic in disgust and other domains. Journal of Personality and Social Psychology, 50, 703-712.
  • 2. Argo, J. J., Dahl, D. W., & Morales, A. C. (2006). Consumer contamination: How consumers react to products touched by others. Journal of Marketing, 70, 81-94.
  • 3. Belk. R. (2010). Sharing. Journal of Consumer Research, 36, 715-734.