Is our obsession with efficiency slowing us down?
- Written by Linda Baker
- Published in Economy and Finance
- 0 comments
Actually, the sharing economy can be pretty selfish.
Economists like to talk about the efficiency paradox, a phenomenon that occurs when a new technology increases the efficiency with which a resource is used. When a product or service becomes cheaper and easier to use, people consume more of it, often negating any gains in efficiency.
I had ample opportunity to ponder the efficiency paradox — also known as the "rebound effect" — while sitting recently in a Lyft vehicle that was stuck in traffic on NE Martin Luther King Blvd.
Like many ride-hailing enthusiasts, I am enamoured of the transportation network company (TNC) promise. Press a button, and a car arrives within minutes. None of this business of waiting — for a bus, or light rail.
Except there I was, waiting, one in a tangle of vehicles languishing on crowded eastside arterials.
Lyft’s route optimization algorithm identified the car closest to my location, so a driver showed up at my house within minutes. But thanks to all the cars on the road (my Lyft vehicle being one of them), I sat in traffic for a long, long time before arriving at my destination.
Basically, I traded convenience on the back end with inconvenience on the front end.
The sharing economy is built around conservation of resources and the dematerialization of stuff into services. Instead of buying your own car, you share the service the car provides. Instead of staying in a purpose-built hotel, you contract with a homeowner to share a room in their house.
But as the sharing economy matures, and as the congestion and housing crises in Portland and other cities reach a tipping point, the impacts of collaborative economy businesses merit a closer look.
One question is whether ride-hailing efficiencies are contributing to the rebound effect — by making traffic worse instead of better.
Responding to my inquiry, Uber spokesperson Jon Isaacs pointed to a recent Arizona State study indicating that "traffic congestion and carbon-dioxide emissions significantly decrease after Uber enters an urban area."
Echoing the pitch honed by former CEO Travis Kalanick, Isaacs said Uber discourages car ownership and in the process encourages multi-modal transportation including transit, walking and biking.
“Uber is proud of the complementary role we play to TriMet and other public transportation options,” he said. “In fact, about a quarter of all Uber trips in Portland in the past year have been one way, meaning riders used another form of transportation to complete their round trip."
Uber may well discourage car ownership. But the environmental and congestion benefits of living car-free in 2017 are far murkier than they were, say, in the 1990s, before there were 6,000 active Uber drivers and a comparable number of Lyft employees circling Portland neighborhoods. And for every study commissioned by a sharing economy company, there is another showing ride-hailing services have a detrimental impact on traffic flow.
New York and San Francisco recently released analyses indicating ride-hailing vehicles have indeed made congestion in those cities much, much worse.
Surprisingly, Portland does not track either the number of Uber/Lyft cars on the road or the congestion impacts, said Portland Bureau of Transportation spokesperson John Brady. "We don't yet have any studies of our own. But we are looking at studies in other cities and considering their findings.”
OB Archive photo: Portland Airbnb landlords
Similar questions arise in the home sharing market.
Laura Rillos, an Airbnb spokesperson, sent me this report describing the company's positive environmental impacts.
“Home sharing is about using existing resources more efficiently,” Rillos said in an email. "Hotels are purpose-built and primarily used for travelers, whereas home sharing allows a property that is already being used for residential purposes to double up as a place for a visitor to stay, thereby reducing that visitor's impact from an energy consumption and greenhouse gas emissions perspective."
House sharing may yield benefits over hotel construction. But charting the lifecycle impacts of Airbnb vs. hotels is no easy task. I was for a time an Airbnb landlord. One of the reasons I quit is because I had to wash the sheets every time a new guest arrived. My water consumption skyrocketed.
What’s more: investors in some Airbnb markets are buying up apartments and renting them out as absentee landlords. In this scenario, a home sharing platform operates as a de facto hotel.
A similar trajectory is unfolding in the red hot car and ride-sharing market. These "urban mobility" services have made it easier for people to live car-free. But as more companies put more cars on the road, the day could conceivably arrive when every proudly car-free Portlander has their own Car2go and Uber driver. A Jonathan Swift scenario, to be sure. But perhaps not so far fetched.
Lyft "driver hub" on North Mississippi, Portland
Clearly, the collaborative economy has opened up new and exciting opportunities for streamlining processes and reducing environmental impacts.
But as cities attract thousands of new residents, the unintended and selfish consequences of the sharing economy are becoming more problematic. What looks like efficiency at the micro level — securing a Lyft within minutes of pressing the button, renting a room in your house — may turn out to be inefficient for the system at large — i.e., the traffic network, affordable housing stock.
As these rebound effects kick in, regulators, business leaders and consumers must grapple with a peculiar question: To make systems more effective, should we abandon our obsession with efficiency?
I predict a new generation of products, services and companies will spring up to address these later stage sharing economy concerns.
Lyft arguably took one small step in that direction yesterday, when the TNC opened a new "driver hub" on N. Mississippi Ave.
According to a press release, the facility is "a tangible example of Lyft’s commitment to building a connected internal culture, creating an inviting, convenient space where drivers can come together for assistance with the Lyft app, receive vehicle safety inspections, or just take a break and have a cold drink."
Maybe it's just me. But the new Lyft hub sounds an awful lot like the fleet garage setting for the hit '80s TV show, Taxi, featuring the employees of the Sunshine Cab company in New York City.
Back-end efficiency as the goal of the sharing economy has its limits. In the end, consumers, workers and communities want a shared mission. We want a shared purpose. And more than anything, we want a networked solution that enables cities and systems to work for everyone.