Blogs | July 15, 2015

Will joining the sharing economy boost my income?

Bruce asks: I have a car that I only use occasionally. Can I use the “sharing economy” to help me earn some extra income?

Ian answers: Bruce, sharing could increase your earnings. Unfortunately, I don’t think it is likely to replace your regular source of income.In the sharing economy, individuals choose to lend something to another person, perhaps for money but we’re not talking about traditional sharing and renting. The sharing economy means the boom in sharing helped along by new digital services hosted on the internet. Examples may include Uber or Airbnb.

Using a computer or mobile phone can make it easier to find potential customers.This ability for you to make money from a personal possession is what differentiates the sharing economy from traditional rentals – such as rental-car companies like Hertz or Avis. EasyCar's CarClub – where people can list their own cars for hire – is a “sharing economy” alternative.

How much money could you make?
Sharers in the new-style sharing economy typically earn only a small amount – and don’t forget that tax may need to be declared and paid on any earnings.Costs such as extra insurance can eat into the profit, as can organising the arrangements.Consider the cost of your time as well.

The 2015 ING International Survey on the Sharing Economy found median earnings across Europe of only €300 a year. A few people did earn considerably more, however, pushing the average to €2,500. ING Netherlands research confirms that the bigger amounts are only made by a small proportion of sharers – with 90% receiving only a few euros a year.

Of people in the US supplementing their income with freelance work, including sharing, 39% earn less than a quarter of their household income this way, and 19% from a quarter to a half. That’s according to a report cited by Bloomberg. A study of car sharing in the US found that lower income groups could benefit most, in economic terms.

When sharing goes bad
Legal issues where you live and plan to operate may change the sort of sharing that’s permitted.This might restrict the potential benefits of participation. Some legal details may be unresolved, so be careful. Just as if you were starting up your own business, it is important to do your own research.

New York cracked down on Airbnb hosts last year, arguing that many violate zoning rules and other regulations. So it is crucial to check out all the risks – ensure adequate cover for any mishap. Accidents and mistakes do happen. This 2013 article explains some potential traps with car sharing.

It can be tempting to argue that we will only share items with trustworthy people – but research shows that even trust in those we know well can be misplacedConfirmation bias can also play a role, blinding us to potential disadvantages. We may also be driven by emotion more than usual if there is a chance to make extra money.

What to share
People not only share cars but journeys planned in their own cars, their driveways, rooms in their house or the whole house, and consumer items such as gardening equipment, cameras or even clothing.

The most commonly shared items according to the 2015 ING report were cars, with holiday accommodation a close second.

More sharing to come
Sharing represents only a small part of the economy but is set to grow as people become more aware of sharing economy websites and applications.Meanwhile, concerns about safety and insurance are being put to the test through the experiences of others. 

A 2014 report by consultancy PwC suggests income from sharing could go from $15 billion in 2013 to $335 billion by 2025. In the 2015 ING survey on the sharing economy, nearly a third of respondents said they intend to increase participation in the sharing economy over the next 12 months.

Unlocking the benefits
Unless you are determined and treat lending your possessions like a business, it is unlikely you will make much money from sharing. A 2014 UK government-sponsored report on unlocking the sharing economy definitely sees potential in the “sharing” trend, from transport to hospitality and for self-employment. The report, written by sharing economy lobbyist and Love Home Swap director Debbie Wosskow, also offers several snapshots of individual experiences with the sharing economy, and talks about how concerns might be addressed. If you wish, give sharing a try but you may find it a hassle, taking more time to organise than you realised. That’s fine.

Possibly you may save more by sharing what others have made available via the sharing economy – perhaps using a service like EasyCar’s CarClub instead of owning a car, or calling a rideshare driver to take you to the airport.

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Ian Bright
Ian Bright

Senior economist at ING
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45 blogs

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