Iain Murray explains for the Competitive Enterprise Institute the benefits of a new index targeting the sharing economy.

The Swedish think tank Timbro has published the first global index of the sharing economy. The Timbro Sharing Economy Index (TSEI) is the first study to compare the impact of the sharing economy between nations. …

… The resulting data set offers the world previously unconsidered insight into the global sharing economy. With the rapid global growth of the sharing economy coupled with increased government determination to regulate the market, this new data will help regulators and entrepreneurs respond effectively to the shifting economy and understand the benefits associated with a flourishing sharing market.

Among the threats to the sharing economy are some common misconceptions about the nature of the market that the new data provided by Timbro refute.

For instance, many believe that high levels of social trust are a precondition to maintaining an effective sharing economy. By controlling their international data sample for certain variables, Timbro found that social trust is unrelated to the use of sharing economy services. This suggests that introducing sharing economy services to a nation contributes to an increase in social trust there.

Critics have also claimed that the sharing economy has developed simply as a way for businesses to avoid taxation and regulation. If this were true, one might expect the data to show a correlation between high regulatory environments and expansive sharing networks. Instead, TSEI shows a negative correlation between the two. Furthermore, sharing networks tend to thrive in nations with greater economic freedom. According to the report, the sharing economy is “basically a new and innovative way of doing business” rather than an end-around run around excessive regulation. This suggests that regulators should be less skeptical about the emergence of a sharing economy innovation in an area they regulate.