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Last week, my extension class and I watched a thought-provoking short TED talk by Rachel Botsman on the increasingly prevalent phenomenon of collaborative consumption - the talk is shown further below. According to Botsman, collaborative consumption is the use of bartering, swapping or sharing of consumer goods (usually durables) using technology to help the manage these collaborative relationships between strangers. The idea provides a great contrast to the ‘standard’ approach to thinking about consumer expenditure in an economy.
The guided questions I put to my class before watching the talk included:
1. What factors are the most relevant in explaining the level of consumer expenditure in an economy?
2. The use of barter as a means of exchange fell into disuse with the Industrial Revolution and the increasing importance of division of labour in production. Why might this be?
In the ensuing discussion on barter, it was really useful to draw out issues such as the geographical proximity of barter-traders, as well as the idea that barter involved the exchange of finished products that in many cases had been made by the traders themselves. We also discussed the concept of a double coincidence of wants; in other words, traders would have to find someone providing what they wanted, in return for what they had on offer to trade with.
Some of the questions we considered after watching the talk included:
3. How might you define ‘collaborative consumption’?
4. What combination of factors has led to the increasing use of collaborative consumption?
5. How does collaborative consumption differ from the traditional approach to barter?
6. To what extent might the use of collaborative consumption lead to a decline in consumer spending (and therefore a decline in aggregate demand)?
These questions generated some really interesting discussion. My students suggested that perhaps collaborative consumption was something for the younger generation, and noted that one of the main differences between collaborative consumption and traditional barter was the geographical distance and the resultant lack of trust. They also suggested that collaborative consumption may be more common for smaller value items, rather than goods such as cars or houses because of this trust issue.
If you try this activity with any of your students, then I’d love to know about the outcome of the resultant discussion.
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