From Ownership To Access: What Behavioural Economists Teach Us About Sharing

From Ownership To Access: What Behavioural Economists Teach Us About Sharing

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Aristotle already knew it: “On the whole, you find wealth much more in use than in ownership”. According to the Greek philosopher, private property is a good thing, but it’s even better when people are able to use their goods along with others. Trend watchers predict a shift form ownership to usage. Those who want to promote this development should take notice of recent insights from behavioural economics. Owning but also not-owning goods strongly influence our behaviour. How is that possible? And what does this mean for car-sharing? This blog addresses these questions.

By Friso Metz, Advier

Behavioural economics

Traditionally, economists assume that people behave in a fully rational way. People make conscious choices and are continuously looking for way to maximize utility. If one is purchasing cornflakes in the supermarket, he will look at the complete supply of cornflakes and will take into account all possible aspects in order to make a choice. If you are already in supermarket A but the best cornflakes are in supermarket B, of course you will travel to supermarket B in order to purchase your cornflakes.

For ages we know that people do not always behave rationally. Behavioural economists were the ones who found strong evidence for this thesis. Moreover they proved that our irrational behaviour occurs through rather predictable patterns. By studying these patterns they are able to predict human behaviour more precisely: for example, in the way that people choose cornflakes in the supermarket.

In his book Predictably Irrational, Dan Ariely describes our irrational behaviour in a clear and often humorous way. He looks at human peculiarities, but also at the peculiarities of (not) owning goods.

We don’t want to lose what we own

According to Ariely, we fall in love with the things we own. We relate positive feelings and emotions to them and cherish positive memories. Therefore, we find it worse to lose things than not receiving things. A simple experiment makes this rather clear. During the experiment, half of the participants received a bar of Swiss chocolate, which they could keep. The other half received a coffee mug. At a certain moment, the participants were offered the opportunity to change their mug for a chocolate bar, or vice versa. Most participants however preferred to keep their brand new possession, regardless of what they had received.

It takes effort to say goodbye to things as soon as we own something. Perhaps that’s the reason why it’s so difficult to throw stuff away.

Owner’s pride

This effect is enhanced when have to put effort into something. Ariely calls this the IKEA effect. Imagine you have been working all day to build your new IKEA cupboard. It took you many frustrations, like the moment when you were at step 10 and realised that you used the wrong peg in step 5. When you are finally finished, you are proud with the results. For you, the value of your self-built cupboard is far higher than the price you paid for it, since you have put so much effort into its construction. The more effort you put into something, the stronger your owners pride will be.

Virtual ownership

Perhaps you’re dreaming of owning something. If you imagine that you already own it, you want to pay more for it. (Car) Sellers know this very well: “Please take place behind the steering wheel and imagine this beautiful car is yours”. When imagining that you own something, most possibly it won’t take long anymore until you are the proud owner.

Experiencing luxury

Luxury feels good, even if you do not really need this luxury. You were satisfied with something simple, until you discover how pleasant the increased luxury variant can be. Next, you start to imagine that you own this luxury yourself and already the thought of virtual ownership starts doing its job.

Not-owning stuff is odd too

Our human peculiarities do not only relate to owning stuff: not-owning goods also influences our behaviour. Losing something or taking a step back feels like an unbearable sacrifice but when we do not own something in the first place, we may also be able to see the advantages if this situation. It may be nice to own a boat, for example, but if you don’t own one, you also won’t have to deal with the hassle of maintenance, insurance costs, harbour dues, damages, unexpected costs etcetera.

Tiny Houses form a recent movement. The motto is: “less house, more life”. Your house may be very small, but you’re completely independent. These tiny houses are so cheap that you are not bound to a mortgage for the rest of your life. Since you are self supplying with water and energy, you don’t even have an energy bill. It will make you feel free and independent.

From ownership to usage: could this ever be successful?

If we as human beings are so strongly tied to possessing things, how could it ever be that there’s a trend in which people waive ownership? And how could car-sharing break through if the car is such a “holy cow” for many people?

Let us apply the above written wisdoms from the behavioural economy to the field of car ownership and car-sharing.

  1. Once you own a car, the step to get rid of it will be a huge one, regardless of the image of not owning a car.
  2. If you get rid of your car, it feels like losing your freedom.
  3. When car-sharing is related to getting rid of your car, many people won’t like this idea.
  4. When car-sharing is framed as new mobility with more freedom of choice, it becomes far more interesting. Isn’t it nicer to use the vehicle that you need at this particular moment, in stead of driving the same car year round, because you need it once a year during holidays?
  5. With car-sharing, it’s even possible to use more luxurious vehicles than you could ever afford yourself. Peer-to-peer platforms, for example, offer several Teslas.
  6. Don’t forget that car-sharing could relieve the pain of living without a car. In fact, you do not live without a car, since you have access to one whenever you need it. Therefore, the slogan “use it, don’t own it” from the video below could be very fitting.
  7. But take care! If you have access to a car, this might open the desire to own this car. Certainly if it’s a luxury car!

Ariely’s personal advise to us all is to look a transactions as if you are a non-owner. This creates a certain distance between you and the product for which you show interest. By this, you may be detached more easily from material things and you will become more ‘zen’.

Emphasize freedom of choice and access

Perhaps the term “the sharing economy” has the wrong framing. Of course, it’s very noble to share things with others if you don’t need them all the time. But it may also sound like partly losing the things you love: “What if I am sharing my car, and all of a suddenly I do need it?”. In that sense, shared cars could better be called access cars (marketeers certainly would find a better name). This term emphasizes the advantages of usage and increasing the freedom of choice, without stating that other people are using the same product at another moment. In that context, the term ‘Mobility as a Service’ also points in this direction.

For the sharing economy and carsharing, the challenge will be to create added value with providing access. Often a parallel is made with Spotify when it’s about the shift to usage and here this link can be made as well. What is the added value of a CD collection if Spotify delivers 24 hour access to all music? The Dutch “OV-fiets” is also an excellent example. Why should one own a bike in every city, when you only occasionally need a bike in another city?

When we can say, “We love what we share” instead of, “We love what we own”, the wealth of which Aristotle spoke many centuries ago will become true.

References

Ariely, Dan (2008): Predictably Irrational: The Hidden Forces That Shape Our Decisions.

More about Aristoteles: see History of Economic Thought, Wikipedia.

02 Jan 2017