Is the Sharing Economy Actually Eco-Friendly?
0 min read
This article is part of a series on cutting edge research that has the potential to create positive social impact. While the research is inherently specific, we believe that the insights gleaned from each piece in this series are relevant to behavioral science practitioners in many different fields. As a socially conscious applied research firm, we are always looking for ways to translate science into impact. If you would like to chat with us about a potential collaboration, feel free to contact us.
Shared ownership agreements, which describe when consumers give others temporary access to their physical possessions, have recently increased in popularity.
But is sharing eco-friendly?
The idea goes that sharing allows consumers to use products without paying the full amount, thereby allowing consumers to access a wider range of products while simultaneously saving them money. Supposedly, sharing is more sustainable as well: If fewer people need to buy physical goods in order to derive some specific level of use from them, fewer resources need to be consumed to create these products, all else equal.
This view may not necessarily be as true as we might think according to research by Laura Straeter and Jessica Exton, two behavioral scientists at ING, a Dutch bank. This research study addresses the downsides of sharing-based ownership agreements from the perspective of sustainability, a key area of interest for The Decision Lab.
We reached out to Laura and Jessica to discuss their work on this study as well as the future direction of research involving applied behavioral science and sustainability.
To read more about the study, check out the Behavioural Economics Guide (page 100).
Behavioral Science, Democratized
We make 35,000 decisions each day, often in environments that aren’t conducive to making sound choices.
At TDL, we work with organizations in the public and private sectors—from new startups, to governments, to established players like the Gates Foundation—to debias decision-making and create better outcomes for everyone.
How would you describe the focus of your research?
Sharing is getting easier and more popular, particularly with online tools (Belk, 2014). Getting around using shared cars and bikes, staying in others’ homes while on holiday, and accessing tools and equipment that others own in your neighborhood is now quite normal.
Some people share because it’s easy, cheap, local, or fun. Research suggests that many also share because it is considered more sustainable than individual consumption (Böckner & Meelen, 2017; Hamari et al., 2015). Buying less should mean producing less, consuming fewer input resources, and reducing our impact on the planet (Bani & Blom, 2020). This sounds attractive to many people.
But, is sharing actually eco-friendly? Do we consume less when we share? We wanted to find out.
How would you explain your research question?
We wanted to understand whether owners treat items that they share differently to items that they use by themselves. Particularly, we wanted to know if sharing an item leads people to throw that item away or replace it faster than if they hadn’t shared it. This would provide insight into the product life cycle of shared items compared to non-shared items.
What did you think you’d find, and why?
Research has shown that a product that has been in contact with other consumers can sometimes be viewed as contaminated, even when it has objectively been unharmed (Argo et al., 2006). Feelings of disgust can consequently arise (Rozin et al., 1986; Rozin & Fallon, 1987; Argo et al, 2006).
We expected that decisions regarding shared possessions would be influenced by the owner’s perception of how contaminated a product was and that their decision regarding when to throw the item away or replace it would be affected by sharing. We anticipated that they would throw away or replace shared items earlier because they would consider them more contaminated.
The AI Governance Challenge
Moreover, we anticipated that the decision to throw away and replace shared items earlier would hold for sharing arrangements that included both one or multiple owners. Joint ownership means that multiple people both own and use a single item, and shared single ownership means one person is the sole owner of an item but shares it with others. Both types involve sharing and are different from the classic form of private ownership where the owner is the sole user.
What rough process did you follow?
We ran multiple studies. In the first study all participants read a scenario describing a situation where they had bought a lawn mower for $199 a few years ago. Depending on the condition, they were either told that they were the only owner and user of the lawn mower, the only owner who shared the lawn mower with neighbours, or jointly owned and shared the lawn mower with neighbours. After reading the scenario, everyone was asked to indicate how likely they were to replace the lawn mower in the next five years (1 = very unlikely, 9 = very likely).
In the second study, we used the example of a mountain bike and tested whether additional end of use measures – aka when people would throw the product away and how much they would sell it for – would be affected, as well as what role perceived contamination played in making these decisions. After reading a scenario, participants filled out two questions measuring perceived contamination: “How do you perceive the mountain bike?” and “How would you categorize the condition of the mountain bike?”. They then indicated how likely they were to dispose or replace the mountain bike in the next 12 months and the minimum price they would sell it for.
What did you end up finding out?
Although many assume that the sharing economy reduces environmental impact, our research suggests that this reduction may be smaller than anticipated. We found that both owners who share a privately-owned item with others or who jointly own and share an item, consider the shared item to be more contaminated. Consequently, owners are more likely to dispose of, replace, or resell (e.g. demanding a lower price) shared possessions than solely owned possessions.
How do you think this is relevant to an applied setting?
We revealed a ‘flow-on effect’ of sharing, which suggests the sharing economy may not reduce environmental impact as much as once expected. Given that being more sustainable motivates many people to start sharing, this has potential effects on participation. It may also influence decisions by policymakers and organizations. We aimed to contribute to a better understanding of the consequences of sharing-based ownership arrangements and the sharing economy as a whole.
What do you think some exciting directions are for research stemming from your study?
There is lots more to learn about the broader impact of the sharing economy. We think future research should investigate what other factors, in addition to perceived contamination, explain why we throw away or replace shared items. Also, there may be additional factors that moderate end of use decisions such as the strength of relationships between owners and users. Another factor to think about testing is how obviously the item deteriorates with use. Some products have cues of deterioration, such as miles clocking up in a car. On others, wear and tear is more difficult to spot. Obvious signs of deterioration could strengthen perceived contamination and might be something further to consider.
1. Belk, R. (2014). You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67, 1595-1600.
2. Böcker, L, & Meelen, T. (2017). Sharing for people, planet or profit? Analysing motivations for intended sharing economy participation. Environmental Innovation and Societal Transitions, 23, 28-39.
3. Hamari, J., Sjöklint, M., & Ukkonen, A. (2015). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67, 2047-2059.
4. Bani, M., & Blom, M. (2020). Rethinking the road to the circular economy. Retrieved from ING Economics Department website: https://www.ing.nl/media/ING_EBZ_rethinking-the-road-to-the-circular-economy_tcm162-186791.pdf
5. 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.
6. Rozin, P., & Fallon, A. E. (1987). A perspective on disgust. Psychological Review, 94, 23–41.
7. 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.
About the Authors
Laura Straeter is a behavioural scientist at ING. She joined ING in 2018 and has expertise in psychology and consumer behaviour. Laura holds a PhD in consumer research and marketing from the Rotterdam School of Management, Erasmus University and has a background both in marketing and economic psychology. Laura has previously lectured at Maastricht University School of Business and Economics at the graduate and undergraduate level.
Jessica Exton is a behavioural scientist with cross-sector management consulting experience. She joined ING’s International Consumer Economics team in 2018 and holds a master's degree in behavioural economics from the University of Amsterdam. Jess manages the ING International Survey, one of Europe’s largest and longest-running surveys on financial decision making and delivers insights from behavioural science to ING's retail business.
Julian is passionate about understanding human behavior by analyzing the data behind the decisions that individuals make. He is also interested in communicating social science insights to the public, particularly at the intersection of behavioral science, microeconomics, and data science. Before joining The Decision Lab, he was an economics editor at Graphite Publications, a Montreal-based publication for creative and analytical thought. He has written about various economic topics ranging from carbon pricing to the impact of political institutions on economic performance. Julian graduated from McGill University with a Bachelor of Arts in Economics and Management.