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What Malcolm Gladwell Misses with Millennials, Trust and the Sharing Economy

Raz Godelnik headshotWords by Raz Godelnik
Investment & Markets
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Last month in a keynote speech, Malcolm Gladwell presented an interesting paradox: Why are levels of trust among Millennials at all time low while services based on trust, like Airbnb and Uber, are flourishing?

Gladwell suggested two possible explanations – either the mechanisms generating trust in sharing economy platforms aren’t that strong as we think they are, or Millennials just don’t tell the truth in surveys.

He then goes on to explain that you need to look not at the data, but at the context. In this case, Gladwell says the right context is the impressive decrease in crime in the U.S., which gets young people to be more trustful of people. Therefore he believes the second explanation is the right one - Millennials are just bullshiting (aka not saying the truth) when asked about trusting others in surveys.

I believe Gladwell could be wrong. There is actually a third explanation he ignores, which could better explain this paradox.

First, why this paradox is important? “It strikes me that you kind have to make sense of this paradox because unless you do, you have no idea whether the business models behind these new companies in the trust economy are real. If it is in fact true that Millennials don’t trust anyone or anything then Airbnb and Uber are on really really shaky ground,” Gladwell explained. I agree with him on this point.

However, what he misses is that Millennials could actually trust strangers while using sharing economy services like Airbnb, Lyft or DogVacay, but these high levels of trust in these transactions don’t translate to higher levels of trust in strangers once these transactions are over. In other words, what happens in the sharing economy stays in the sharing economy.

I believe the sharing economy has done a pretty good job of creating and developing mechanisms that enable us to trust strangers with our most valuable assets, from our car and apartment to a beloved pet. “It’s a digital re-­creation of the neighborly interactions that defined pre-­industrial society. Except that now our neighbor is anyone with a Facebook account,” Jason Tanz wrote last year on Wired.

It also seems that without trust the sharing economy wouldn’t be growing so fast. A PwC report explains that “convenience and cost-savings are beacons, but what ultimately keeps this economy spinning—and growing—is trust. It’s the elixir that enables us to feel reassured about staying in a stranger’s home or hitching a ride from someone we’ve never met.”

Sharing economy participants also seems to be immune to bad-apple stories about Airbnb horrors or allegations that Uber missed criminal records of drivers. Is it because  “while we totally distrust strangers, we totally trust people—significantly more than we trust corporations or governments” as Joel Stein suggested in Time Magazine? Maybe. The PwC report’s findings supports this assumption, showing that “64 percent of consumers say that in the sharing economy, peer regulation is more important than government regulation,” and “69 percent say they will not trust sharing economy companies until they are recommended by someone they trust.”

One way or another, trust mechanisms in the sharing economy work, making transactions between strangers safer. At the same time, Gladwell is right - surveys tracking trust between people show a decrease in the level of trust in people: “Data from the 2012 General Social Survey, the National Opinion Research Center’s poll of American attitudes, found that only 32 percent of respondents agreed that people could generally be trusted, down from 46 percent in 1972.”

It’s also true that Millennials have lower levels of trust in others comparing to other generations – in 2012, in response to the General Social Survey question “generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people,” just 19 percent of Millennials said most people can be trusted, compared with 31 percent of Gen Xers and 40 percent of Boomers.

So, could it be that Millennials are Dr. Trust while making transactions on the sharing economy and Mr. Mistrust outside the sharing economy? Or in other words, is it possible that the sharing economy doesn’t generate social trust as some claim? The evidence so far is mixed as Juliet Schor points out, but even this evidence mainly relates to the social value of the interactions within the sharing economy. As far as I know there is no study looking at the impacts of the sharing economy on trust levels in other people outside the sharing economy.

This question is very important not just for the future of the sharing economy, but also for the value it creates for society. If these effective trust mechanisms help us only to trust Uber drivers or Airbnb guests, then this is great for Uber and Airbnb, but doesn’t make much difference to society at large.

We also have to remember that not all sharing companies are alike. Some platforms designed to increase engagement and interaction could enhance trust (for example, Couchsurfing), while others are designed to do the opposite (for example, most of the on-demand services).

Yet, even with its complexity I hope we can make the case about the impact of the sharing economy on social trust levels. My sense is that Gladwell is wrong and Millennials are not lying in surveys. They just haven’t found yet how to translate the trust they have in the sharing economy to the other parts of their lives. Maybe that should be the next big challenge we put in front of Uber, Airbnb and the rest of the companies.

Image credit: alexmontjohn Clark, Flickr Creative Commons

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

Read more stories by Raz Godelnik