This episode was produced by UIC communication students Ashley Thinnes ‘15 and Madeline Miller ‘15. Ashley and Madeline discuss ride-sharing as an example of the sharing economy and interrogate the question of why we partake in it. Paula Pohlhammer was the guest on the show, she is a licensed Counselor Clinical Professional and an affiliate at the Family Institute at Northwestern institute.
This podcast is a class exercise and it does not represent the views and opinions of the University of Illinois at Chicago or any of its departments.
Produced: Spring 2015
Transcript
[MUSIC: InfoNation theme music and intro] Welcome to InfoNation, UIC’s very own podcast created by students, for students. At InfoNation we discover how media, information and communication are created, governed, and used. Produced by upper level students in the department of Communication, InfoNation brings academic research to help make sense of our increasingly mediated society. We go to the library so you don’t have to!
[ASHLEY THINNES] The Sharing Economy. Ever heard about it? Let’s talk about it.
[MADELINE MILLER] So, Uber, Airbnb, Lyft, TaskRabbit…all these companies were born and exist only within the sharing economy. Most of us use them daily, glad to escape the days of having to hail expensive cabs or rent overpriced hotel rooms.
[AT] But what are these companies, really?…More than just an app, that’s for sure.
[MM] Yeah, I mean industries participating in this thing called “the sharing economy”, are advocating a different approach to consumerism….Basically that the access to resources is more important than the ownership of resources.
[AT] Sounds like a fancy way of saying, “sharing is caring”.
[MM] Haha, I guess so.
[AT] So when did this become “a thing,” though? I mean I learned it in Kindergarten, and I use Uber all the time, but it seemed to just like spring up like an magical angel releasing us from the hell that is having to hail a cab.
[MM] Well, the sharing economy’s ideology isn’t necessarily a recent concept. People have been sharing resources a long time before Uber and Airbnb allowed us to do so in a large format.
What you’re seeing is more a surge in accessibility. Radical technological advances and the growth of web 2.0 allowed us to have more accessible technology. Then more people got connected. Once we got connected, opportunities for collaboration increased. And with collaboration comes sharing…so bam! Mass amounts of people were able to share mass amounts of resources.
[AT] So basically these businesses exist on a digital platform and function primarily through user’s distribution of resource contributions?
[MM] You got it. So, register for Uber as a driver, and you share your car with a consumer in need. Register for Uber as a consumer, and you share your money with a driver in need. All Uber does is facilitate these transactions.
[AT] How many companies are there like that though? I mean, you named a few, but certainly not enough to validate being called a whole “economy”.
[MM] Actually it’s quite the booming business… In 2013, Forbes estimated that the revenue flowing through the sharing economy and into people’s pockets would exceed $3.5 billion, holding a total value of $26 billion.
[MM] Going past that current revenue, “investors regard the sharing economy as the new ‘mega-trend’, with researchers citing predicted profits will double within the next 12 months. That means this economy can potentially grow to over $110 billion in profit revenue in the coming years.
[AT] But let’s stop and let’s get a little more specific than just the whole sharing economy in general. Let’s talk about what we know. In our experience, ride-sharing is one of the most popular industries within this untraditional economy. So we went out and talked to a few people about their personal motivations behind using companies like Uber and Sidecar, and we found out what they had to say.
[ANONYMOUS 1] I use Uber the same way I advocate the CTA, because it promotes environmental stability because, I mean, it’s car-sharing–I mean, it helps out the environment just a little bit.
[AT] So, there’s the sustainability factor.
[MM] What do you mean sustainability factor?
[AT] Well, if we’re still looking at the ridesharing industry, with companies like Uber and Sidecar, the environment is benefiting quite a bit from these companies. A big majority of users split rides, making the service double up as a carpooling agent.
[MM] The University of California recently reported carpoolers can lower CO2 and hydrocarbons by up to 220,000 tons each year.
[AT] Oh geez and with The Union of Concerned Scientists recently reporting that “Our personal vehicles are a major cause of global warming…cars and trucks account for nearly one-fifth of all emissions in the U.S., emitting around 24 pounds of carbon dioxide and other global-warming gases for every gallon of gas.” This service is starting to sound pretty beneficial to mother earth.
[MM] I mean, us millennials especially must be loving the “green” aspect of companies like Uber…Researchers at University of Indiana recently reported our generation is emerging as core supporters of green products and services, and I guess the sharing economy is helping us to “go green”.
[AT] Hmm… Yeah but I recently read in the Journal of Information Science and Technology that sustainability might only be an important factor for those people whom ecological consumption was already important to… I mean, I’m no poster child for the recycling company, and I certainly don’t think about all the gas that’s being saved by my excessive Uber habit.
[MM] True. The University of Zurich, recently reported how the “crowding-out” phenomenon might be at play within the sharing economy, advocating extrinsic motivations start overshadowing the initial intrinsic motivations.
[AT] Speak english. What do you mean by these intrinsic/extrinsic motivations?
[MM] Well, when researchers have studied motivation behind specific behaviors, they found that behavior is influenced by two dimensions: intrinsic and extrinsic motivations. Intrinsic basically meaning natural and essential, and extrinsic meaning the opposite… unnatural or unessential.
[AT] Ok, I’m listening.
[MM] An intrinsic motivation would be like what we just talked about…performing an action or behavior because you enjoy the activity itself. Like taking Uber to save gas. Or as some believe…
[ANONYMOUS 2] I like Uber because it provides me such a great experience and you get to meet great people and it provides a new opportunity.
[AT] So, as you just heard, apparently people like the enjoyment or social gain. I mean, so like the interactionist aspect of businesses like Uber? You get to meet strangers and have random conversations!
[MM] That journal I mentioned earlier did find that enjoyment of participation is the strongest determinant of participation. This “enjoyment” is experienced simply because the process is fun and provides a meaningful way to interact with other members of the community. Researchers and robots also call these benefits “social capital”, which differs from other forms of capital which are based on assets or individuals. Social capital exists in relationships between individuals and in individuals’ connections with their communities .
[AT] Can we just refer to that as “emotional money” from now on?
[MM] haha, okay.
[AT] In my experience, cab drivers offer little to no emotional money. Most have an angry disposition…and if you use a credit card to pay…oh my god.
[AT] Speaking of money….I’m assuming behavior influenced by physical assets would then be named extrinsic motivation?
[MM] Yep! And within the Sharing Economy, researchers relate this concept to the industry’s convenience factor and also the economic gain that is received in the sharing economy’s transactions.
[AT] We talking about saving me money?
[MM] Yep. Here’s what some of the people we interviewed said about ridesharing economic benefits…
[AT] So, what do you think about the sharing economy?
[ANONYMOUS 3] It’s a lot more affordable, as opposed to either a taxi or a regular hotel room.
[ANONYMOUS 4] Uber is real cheap and I really like Uber.
[AT] You know, it’s interesting, after hearing everything that everyone had to say about economic motivations, I read something by Eckhardt that said consumers in the sharing economy consumers are more interested in cost-effectiveness and convenience more than they are in forming relationships with the company or other consumers.
[MM] Haha that’s true. I’m usually too drunk to talk when I’m Ubering. Just want to save that money so I can blow it on a burrito instead. Chipotle is my life!
[AT] Yeah but even if it’s working for the wrong reasons, I guess it’s still working, right? These companies offer deals and specials that are difficult to pass up, encouraging people to try and continue using their services.
[MM] Difficult to pass up, indeed. Business Insider did a study comparing Uber and Taxi rates in 30 major US studies…Want to know how much ridesharing is really saving? A bunch. Research showed a taxi is often two times the cost of an Uber. So if you took a taxi and the ride cost you $20, the Uber would most likely cost you $10.
[AT] That’s interesting, I also read that Chicago is the lowest costing rideshare city in America, too.
[MM] Oh, really?
[AT] So, Hey, Us! Chicago, cheapest Uber city in America.
[MM] That’s amazing.
[AT] But, besides that, Uber’s rates include a tip so I’m sure the price difference is even larger.
[MM] That tip policy is also just so much easier. I don’t want to have to deal with judging someone’s behavior and using that judgement to reward them with an undisclosed amount of money. And it’s always really abstract–like if they open my door, or if they help me get my luggage from the trunk, then I’m expected to pay an extra tip, or anything else that happens I’m expected to pay…it’s really confusing sometimes.
[AT] Plus, because it’s through an app or digital platform, money transactions are easily recorded. So you can see where your money’s going.
[AT] In general, ride sharing’s convenience factor is like simply out of control… Technology allowed this easily installable app to deliver a car anywhere you happen to be. It’s not even just like limited to Uber, the same applies to Airbnb, like crowdfunding and everything.
[MM] True. When you vacation, Uber’s there. When you get lost, Uber’s there. When you get drunk and can’t find a cab, Uber is there. Basically anywhere your phone is…Uber’s THERE.
[AT] Not just Uber, like all of these sharing economy industries are wherever you want to be and that’s amazing and I think that’s a huge part of why people are doing this. And just going back specifically to Uber, their company specifically advertises that 56 countries are now providing their services.
[MM] That’s crazy…56 countries of convenience and awesome.
[AT] And if the first encounter goes well, between the consumer and their like first experience within the sharing economy, they are more likely to try more services and continue using that same service. So really the extrinsic and intrinsic motivations go hand in hand.
[AT] Speaking of psychology jargon, we knew that there had to be more psychological motivations behind this. The growth we talked about earlier didn’t happen overnight, but it did happen for a reason. We wanted to have a more holistic reasoning and a better grasp and understand why it’s happening. Well, we talked to an expert on psychology to get a more academic grasp of consumerist motivation behind participating in the sharing economy. Here’s what Paula Pohlhammer had to say about possible psychological influences and factors that are propelling the growth of the sharing economy.
[MM] Alright, so the first question is, what is your name and educational background?
[PAULA POHLHAMMER] My name is Paula Pohlhammer and my educational background is I got a Bachelors of Arts in Theatre Art, with an emphasis on costume design. In 1996 I went back to school and got a Master’s in marital and family therapy at the Family Institute at Northwestern University. I obtained that degree in 1998.
[MM] Perfect. So, I know Daniel Kahneman and Amos Tversky have done a lot of research on the influence and rationale of decision making, can you explain to us a few of them?
[PP] They took some former theories that were able to predict how people make decisions using mathematical equations. But, what these mathematical equations didn’t take into consideration was that people’s minds work differently and people are influenced by the way the brain works. I was thinking about a lot of my work is about the effect of anxiety on cognition. So, what they’re really saying is that these are certain concepts, like availability, representativeness, loss-aversion, and framing that are all mechanisms in the brain that change the way you interpret information or data. So, I think what’s interesting is that when you’re talking about making a decision when there’s uncertainty and risk, you’re going to be anxious. You’re going to be influenced by the way information is presented to you. Information can be presented as two sides of the same point–positive, negative–you stand to gain, you stand to lose–which are you going to choose? Framing, availability, what’s the most recent information that you have, the thing you most remember, most of us will think about, you know, what did I just hear about an Uber doing? Or, what did I just hear a friend telling me about using Uber? So, I think that they identify that people make decisions not just based on probability, but also based on the way the emotional structure of the brain affects how they think. Does that make sense?
[MM] Yes it does, perfect. So then when thinking about the dynamic and influence of choice, what do you think is propelling the sharing economy’s success?
[PP] I was identifying that all three of them do.
[MM] Availability, representativeness, and framing? Yeah.
[PP] Yeah, all three. So, people see potential gains, and then they see their opportunity to minimize loss, the losses would be money, so they see that okay they can save money if they do an Airbnb or if they use Uber. They see some intangible gains like supporting an economy that isn’t about putting money in corporate pockets or municipality pockets. The fees that cab drivers charge are mostly related to the licensing fees that they have to pay to the city in order to be able to rent a cab. Unfortunately that’s not going in their pocket, but I think that consumers now are thinking about the end game–who’s going to ultimately get this money? So they see that as an intangible gain, not just for themselves, but for society. I also think that people like the idea of getting something a little closer to what they actually need rather than just here’s what we’re presenting–we’re presenting a big building with hotel rooms and they’re all the same. They think about well, I don’t need a pool, but I would like a kitchen, or I would like several bedrooms, or really I just need to sleep on someone’s couch. Or, you know, what do I need for this trip? That can be really empowering. I think information technology presents the framing for which they see it, and you know, a little familiar and safer because think about, like, Uber drivers, young people use information technology and so you have Uber drivers carrying around a smartphone with an app. You’re more likely to think about that relates to the representativeness–that sort of like this person is like me, I’m young, I have my smartphone here, all I have to do is get an app, and someone else who is young who has their smartphone with them, so it feels a little safer. People are connecting on the same kind of format. The way they see the risk involved is lower because everyone is sort of checked out–there still is this entity out there evaluating do you get good reviews? are you worthy of being an Uber driver? are you worthy of being listed on Airbnb? or a lift driver? or those kinds of things.
[MM] Perfect, so when speaking of the dynamic and influence of choice, what do you think is derailing participation within competing industries? So, like, cabs or hotels that are in the traditional economy?
[PP] The traditional economy, so you’re saying, what is derailing the traditional economy from participating the way the sharing economy is? Is that what your question is?
[MM] Yes, so, what do you think is otherwise causing people to move to these kinds of economies rather than the traditional economy?
[PP] I think there’s still going to be a market for people who want everything to be the same and very predictable. For instance, a business traveler and major corporations that are getting hotel rooms for business travelers are going to want the sameness, the homogeneity, the predictability. They will pay for that. They will pay extra for that. I think cabs, unfortunately, aren’t positioned well to handle the competition from places like Uber and Lyft–they’re kind of stuck because they’re pretty restricted, they don’t have the freedom to maybe just get a call directly from somebody, they have to stick to certain neighborhoods, like they have to stick to downtown or to the airport because they aren’t going to make any money if they vary that pretty rigid route too much. I think for them, a lot of it is just the licensing fees. I think they’re still heavily regulated. Does that answer your question?
[MM] Yes. So, are you a consumer in the sharing economy? Why or why not do you use these?
[PP] Yeah! That’s a really good question. I have really given it serious consideration–one, I have a pretty decent guest suite in my apartment and I have thought about listing it on Airbnb, and I haven’t made the move just because I’m not sure I want to take on the work that would be involved. So for being a provider in the sharing economy that’s where I’m at. I do like the idea of resources that are idle being put into the use in the community in general. I looked into Airbnb for my own personal travel and it didn’t work out–I think I would have been fine with it, but it didn’t work out for my travel companions, so we ended up staying at hotels. I haven’t really needed any car transportation or anything like that, I’m pretty well situated there. So, I haven’t really–I think it’s exciting and it’s really nice to see consumers empowering themselves, deciding that they don’t have to go through big name companies–we can do this ourselves and start it up.
[MM] Perfect, well that’s it, so thank you for being here today.
[AT] So, listeners, we’re interested in your opinion. Are you a consumer in this budding economy? What is your opinion of its provided benefits? Tweet us your answer or any questions @shareiscareUIC.
[MM] Until next time, listeners–keep calm and learn on.
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