Leading Edge / Spring 2016

Companies such as Uber are disrupting entire industries, but this is good for the economy overall, says an economics prof

Illustration of a smartphone app (left side) and a car (right side)

Illustration by Alina Skyson

Uber connects drivers with passengers in real time through a smartphone app. Like Airbnb, which matches travellers with rooms or apartments, Uber puts resources to use that might otherwise sit idle.

In a big-picture sense, this “Uberization” of the economy – a buzzword for technological disruption – is a positive development, says economics professor Jonathan Hall, because it allows people to earn more from assets they already own. Why leave your car in the garage all day when you can earn money by driving it?

The downside, says Hall, is that although this allows students, stay-at-home parents and other part-time workers to bring in extra cash, taxi drivers (and full-time employees in other industries being Uberized) risk being put out of work. The process creates winners and losers. But Hall adds that using our resources more optimally should make society as a whole better off. “In New York City alone, matching passengers with vehicles by using an app such as Uber could increase efficiency by $1 billion a year,” he says.

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