The difference between sharing a hedge cutters and sharing an apartment

The more I read, the harder I find it to put clear boundaries around what is part of the collaborative economy and what isn’t. In my previous posts, I’ve cited some criteria which can be used to differentiate such as the desire to build relationships between people. In this post, I’ll give a few more to get us a step closer.

The need to appreciate the importance of depreciation

Lets take two scenarios:

Mrs 3houses lives in her house in Louvain-La-Neuve and has two apartments in Brussels as investments.

Mr Greenfingers owns a hedgecutters, a lawnmower, a power drill and lots of others tools for gardening, DIY etc…

Mrs 3Houses Mr Greenfingers

What have they got in common?

  • Both own something which they don’t need to use all of the time
  • Both have spent money in acquiring those things and they would like to recuperate some of those costs
  • Both would like to rent those things to other people rather than have them idle

So far, both could be candidates for P2P platforms such as Peerby or Airbnb.

So what’s different?

  • In the case of Mrs 3Houses, she owns more than she needs and has bought the additional apartments as investments. For Mr. Greenfingers, he bought the tools because he needed them and not as investments. He uses them himself when they are not rented out.
  • His tools depreciate in value year after year whereas there is a high probability that Mrs 3houses apartments will appreciate in value
  • If I rent a hedge cutters from Mr Greenfingers, I’m re-using something which he does not need to use very often and in doing so, am contributing to sharing the cost of ownership. For the apartment I rent on Airbnb etc…, my rent is contributing towards the costs of maintenance and probably towards paying off the loan but I do not benefit from the upside. She gets to share the cost of ownership and keep sole access to the appreciated value.

Sharing things which depreciate in value contributes to shared ownership. Sharing things which appreciate in value is ultimately more about business than it is about collaboration.

Re-use rather than reproduce

That brings me to the second point. Imagine that Mr. Greenfingers cut hedges for a living as he was a professional gardener. In that scenario, the hedge cutters could be considered an investment and as part of his business, he would probably declare it as a professional expense. More importantly, he would be using it a lot of the time. I own a hedge cutters and I use it twice a year so probably a total of 7-10 hrs a year. I have owned it for 5 years now. That means that I have used it about 0,008% of the time I have owned it (35 out of 43,800 hrs). I think I paid about 80 euros for it so that means about 2euro/hr so far ….. Imagine that I could lend that to my neighbours who also need it a couple of times a year and not necessarily on the same two days as me. That would increase its usage over its lifetime.

It would also mean that those neighbours would not necessarily need to go out and buy their own one. That would have the knock-on benefit of reducing overall consumption and ultimately waste.

In the case of Mrs 3Houses, of course she can also increase usage but that is something she probably does already by renting out her apartments. In the case of Airbnb, many people are choosing to rent this way as they can earn more in doing so than in having a full-time tenant. People have been renting apartments for centuries whereas the level of ownership of everyday tools is very high when compared to their actual usage.

I believe that the desire to re-use existing resources is a key component of the collaborative economy. Shared re-usage could be considered a form of collaboration. Moving from long-term rental to short-term rental for tourists is not.

This video is a funny illustration of how things can be reused:

Business or Pleasure?

This brings me to the last point. Why do people want to share? Uber is actually a good example to look at. Imagine that I drive to Brussels every morning and so does my neighbour. We both take our own cars, both leave at more or less the same time and both sit in traffic. That is where the idea of car sharing came from. The driver (forgive the pun) was not about me becoming a pseudo taxi driver but about reducing traffic, pollution etc… and increasing collaboration between people.

Uber have opened the door to a different kind of car sharing. They have transformed car sharing into a competitive business. In the case of other forms of car sharing such as BlaBlaCar, its more about people who intend to do a journey anyway, offering the possibility to share costs with others. With Uber, people make journeys they wouldn’t ordinarily do as a means of earning money which in many cases they don’t declare.

I’m not suggesting that making money and collaboration are mutually exclusive. The platforms need to make money or they couldn’t provide the service but the money they earn should not be disproportionate to the benefits the other actors in the business make such as the driver and passenger.


2 responses to “The difference between sharing a hedge cutters and sharing an apartment

  1. Thanks, David – you made me think. There are several fine lines between the collaborative economy and “everyday life”, that could probably do with further useful analysis. At the top of my list is the worrying prospect of monetising good citizenship… the line between lending your hedgecutters as an economic transaction, with all the risks entailed, versus a friendly gesture, is porous and vague. Defining it requires a lot of etiquette, derived from a lot of transactions… that implies a slow ramp-up, which platform investors dont like much. Another “fine line” separates convenience from efficiency… you own hedgecutters because for a comparatively small outlay, you can use them whenever you like. Students of the late John Nash would argue that you would only agree to lend them under three conditions – one, that the reward for lending them was of material value to you, two, that you were sure that lending them would not expose you to material risk, liability or inconvenience, and three, that lending them would not erode the economic and social value of the hedgecutter market. Ignoring for a moment that you’d put your hedgecutters up for lending more as an experimental exercise than for the pure economic or social value of the transaction, we’re looking really at big-ticket and scarce (and therefore low-transaction-volume) items as the realistic opportunity (which is already serviced by a number of age-old models). Instinctively, I find it easy to make a case for collaboration – but not a monetised one. I fear that the collaborative economy may be a contradiction in terms.
    But… to be fair, 60 years ago, I would have been one of the people saying that the last thing the human race needs is a proliferation of computers and phones…


    • It is true that money is awkward in the new economy. Are people collaborating to help others, to contribute to common good such as waste reduction or purely as a new source of income? As you know Andrew, you can borrow my hedge cutters any day of the week though if you want to borrow my car, I may consider some form of financial transaction … given how you drive

      Liked by 1 person

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