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(credit: Guercio)

From sharing to gigging

Would-be self-employed workers may underestimate the true cost of freedom

When I was a little whippersnapper, sitting in the back seat (or on a rare occasion, on the lap of an adult in the front — amazing what was OK back then!), I used to be impressed by the advertising on the side of solitary houses we passed on the way to a Sunday visit to distant relatives. Sometimes it was just painted on lettering, faded by decades of weather, praising brand names that no longer existed. The grown-ups in my life at the time referred to it as ‘getting rich while sleeping’, and that certainly spoke to my imagination.

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Just sharing my wall (image: glasseyes view)

From idleness, an income

Such instances of making money from unused resources were rare, though, until the internet came along. People did sell the occasional sofa or bike through the small ads or went to car boot sales, but it was eBay that enabled a much larger and more dynamic market place. Suddenly, you could trade slightly-out-of-fashion-but-still-perfectly-wearable clothes with people hundreds and thousands of miles away.

The sunk cost of the sharing economy

Both the economics and the behavioural economics of the sharing economy are peculiar, though.

From sharing to gigging

Nevertheless, a lot of people have taken to Uber (or one of its rivals) as their main, or even only income-generating activity. Uber is estimated to have more than 2 million drivers worldwide (of which more than half in the US). A 2016 study in the UK found that 44% of London’s Uber drivers drive for more than 30 hours per week (28% even more than 40).

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Free app, but what is the true cost of freedom?

Not the future

Perhaps it is important to take into account the difference between gigging and a steady job. Not everyone is happy with a routine job, and there are undoubtedly people for whom the ability to work when they want and as much as they want is valuable. A paper by Keith Chen, an economist at UCLA, and colleagues, models the ‘driver surplus’ (the extra income they would need to give up the flexibility to choose when, and how many hours they work), based on a sample of 200,000 UberX drivers. The authors calculate that a median driver (working for 12–15 hours per week) would require a 54% uplift to work fixed hours in a day, and a 178% increase to fix the days in the week as well. [1]

Written by

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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