Measuring the economic impact of the Sharing Economy

Thoughts on a large and hard-to-measure economy.

This post originally appeared in Tim O’Reilly’s Google+ feed.

While at our Strata Conference, I stopped by John Furrier’s Cube for an interview. We talked about a lot of things, but this is probably the first public airing of some ideas I’ve been thinking a lot about lately, namely how we can best measure the economic impact of what Lisa Gansky calls the sharing economy.

I start with a paper I read in the ’70s, Steve Baer’s “Clothesline Paradox,” which pointed out that when people hang their clothes on the line rather than putting them in the dryer, that reduction in demand doesn’t go on our energy books as a credit to the renewables column, it just disappears from our accounting.

The same is true of open source software, or, for that matter, of most of the products of what Clay Shirky calls “cognitive surplus.”

This discussion is important in many contexts. For example, when talking about SOPA/PIPA, the movie industry talked about economic impact while the Internet industry talked about freedom. Yet it’s quite clear to me that there is a new economy of content that is quite possibly larger than the old one, but just not as well measured, because we measure value captured, not value created for users.

In other fields, we celebrate lower prices for consumers and expansion of demand, but here, paradoxically, we are ignoring it, as well as ignoring the many real economic transactions that do occur. I intend to pull together some people to change that.

The full interview is available in the following video.

See comments and join the conversation about this topic at Google+.

  • Though your comments may not have applied directly to Open Education Week, thanks for making them during this week which recognizes that education *is* the essence of sharing, especially from the adults called teachers to the children called students.

    Open Educational Resources can become the essence of the education community’s “cognitive surplus.” The key element for educators is becoming comfortable sharing beyond the classroom walls. It won’t hurt if school administrators encourage it, too.

  • The gap between “value captured” vs. “value created” is where current economic methods fail woefully when trying to describe emerging digital / sharing economic realities.

    The heart of the problem, in my opinion, is a disconnect between yesterday’s geo-politically biased scarcity based economics, versus today’s digitally enabled global perspective and abundance (hence sharing) economics. The yardstick for measuring the former (i.e. money), does not work so well in measuring the latter (i.e. value).

    A change in perspective (and economic yardstick) is long overdue.