Michael Munger: So many of the things that are important consumer durables we own because we want to have immediate low-cost access to their services. So, that's true of most tools. Most of the time, most of us--if we're professors or work in some white-collar job--most jobs, you don't constantly use your tools unless you are a contractor. And yet, somewhere in your garage or in your storage, you have quite a few tools.
So, I'm standing in front of a wall. My wife has said, 'We're going to put up some pictures.' I want to drill a hole in the drywall so I can put an anchor in so it won't tear within a couple of weeks. And I could go and buy a drill. I could rent a drill. But what I is go to my garage and get one of the 4 power drills that I'm embarrassed to admit that I have. And, then drill a hole. And then she looks at it and says, 'No, not that wall. That's not the right one.' So I fill in that one and then I go and I drill a different hole. But still, I used the drill for maybe 30 seconds and then I put it back up.
The question is: Why is it that we own so many things? And the Austrian economics' insight is that almost any consumer durable--your car, a suit that you have in the closet--what those actually are is not something you are going to use like an apple where you eat it and it's gone. It is a stream of services that extend out into the future. So, you have to think about the value of time; and you have to think about the value of uncertainty. Now, it turns out that power tools are particularly interesting because they've become a kind of trope of this sharing economy literature. There are 110 million power drills in the United States.
If you take the 110 million and rank them from the most used to the least used, and then look at the median, it has been estimated that the 55th-millionth power drill ranked by lifetime--lifetime--use is between 30 and 40 minutes. Because, using the power drill for 30 minutes if you are a contractor isn't much. But if I'm drilling two holes to put up a picture in the house, I use it for 30 or 40 seconds, and then I put it away.
So, why is that we store these things that we only use for 30 minutes over their entire lifetime? And, I claim that it's at least possible to think of an alternative, where, instead of owning it, I share it; and I share it in a particular kind of way that economists call renting. Because, renting is just a way of sharing things with people that you don't know with one residual claimant that takes care of all of the transactions costs.
More: http://www.econtalk.org/michael-mun...costs-and-tomorrow-3-0/#audio-highlights
So, I'm standing in front of a wall. My wife has said, 'We're going to put up some pictures.' I want to drill a hole in the drywall so I can put an anchor in so it won't tear within a couple of weeks. And I could go and buy a drill. I could rent a drill. But what I is go to my garage and get one of the 4 power drills that I'm embarrassed to admit that I have. And, then drill a hole. And then she looks at it and says, 'No, not that wall. That's not the right one.' So I fill in that one and then I go and I drill a different hole. But still, I used the drill for maybe 30 seconds and then I put it back up.
The question is: Why is it that we own so many things? And the Austrian economics' insight is that almost any consumer durable--your car, a suit that you have in the closet--what those actually are is not something you are going to use like an apple where you eat it and it's gone. It is a stream of services that extend out into the future. So, you have to think about the value of time; and you have to think about the value of uncertainty. Now, it turns out that power tools are particularly interesting because they've become a kind of trope of this sharing economy literature. There are 110 million power drills in the United States.
If you take the 110 million and rank them from the most used to the least used, and then look at the median, it has been estimated that the 55th-millionth power drill ranked by lifetime--lifetime--use is between 30 and 40 minutes. Because, using the power drill for 30 minutes if you are a contractor isn't much. But if I'm drilling two holes to put up a picture in the house, I use it for 30 or 40 seconds, and then I put it away.
So, why is that we store these things that we only use for 30 minutes over their entire lifetime? And, I claim that it's at least possible to think of an alternative, where, instead of owning it, I share it; and I share it in a particular kind of way that economists call renting. Because, renting is just a way of sharing things with people that you don't know with one residual claimant that takes care of all of the transactions costs.
More: http://www.econtalk.org/michael-mun...costs-and-tomorrow-3-0/#audio-highlights
