Special

Article 3

Statistical Understandingof the Sharing Economy

By Nariyasu Yamasawa

Defining the Sharing Economy
This article looks at how the sharing economy, which represents
the digital economy, can be captured statistically. The article will first
explain what the sharing economy is, then provide analysis of freeInternet services such as Facebook and Google.
The sharing economy points to businesses that share unutilized
assets. It is basically a transaction between private individuals, and ischaracterized by matching of service providers and users throughthe Internet. Before the arrival of the Internet, transactions between
individuals were difficult, but with PCs and smartphones now being
widespread, matching can be easily done on the Internet. Businesses
that do the matching are called platform enterprises. Platform
enterprises make profits by taking commission from both the service
providers and service users.
Unutilized assets utilized in the sharing economy are diverse. The
Sharing Economy Association Japan uses five classifications: space,
goods, skills, time, and money.
Private lodging is a typical example of sharing space. It is aservice that rents out empty rooms at private houses to guests.
Airbnb is a famous platform enterprise. There are also businesses
that share vacant parking spaces, such as Akippa and Nokisaki.
Mercari is well-known for sharing goods. This is selling unwanted
goods in the household to other people. It is actually more likebuying and selling, rather than sharing. Other services include Laxus,
which shares luxury handbags, and Aircloset, which shares dresses
upon payment of a fixed fee. For skills and time, there is Tasukaji,
which shares housekeeping services by providing cleaning andcooking services to families. There is also AsMama, which facilitates
carpools for children and child care, and Crowdworks, whichfacilitates work like website creation. Money sharing takes the formof crowdfunding. Crowdfunding can be classified into three
categories: the donation type collects money to implement a project;
the purchasing type collects money to develop a new product andthen purchases that product once it is complete (a well-known
company is Makuake); and the investment type is individuals lending
money to an individual.
What is new about the sharing economy is that private individuals
are conducting production activities. There are such business forms
as private individual enterprises, and private stores are also activities
conducted by individuals, but there are an increasing number ofcases where employed business persons conduct side-businesses
https://www.jef.or.jp/journal/

AuthorNariyasu Yamasawa

on an even smaller scale. Each amount is small, but if the number
continues to increase, it may become too large to ignore (Chart 1).

The Size of the Sharing Economy
Development of the sharing economy in Japan lags far behind
other developed nations, but nevertheless it continues to expand. In
July 2018, the Cabinet Office released estimations for the market sizeof the sharing economy to be a total of 470 to 525 billion yen for2016. As a market size, it is the same as the size of the carbonatedbeverages market or the canned coffee market in 2011.
The market size for “space”, which includes private lodging andbusiness space rentals, is estimated to be 70 to 100 billion yen, andthe market size for “goods”, which includes sales of second-handgoods, is estimated to be around 15 billion yen. The market size for“skills and time”, such as housekeeping services, is estimated to be
10 to 20 billion yen, and “money”, which includes donations andinvestments, is estimated to be around 15 to 20 billion yen. Globally,
automobile-related services such as Uber are expanding, but due tothe regulation on unlicensed taxis in Japan, the market size is zero.
The total value of the sharing economy includes items that are not

CHART 1

Imagery of sharing economy
Payment of commission<Intermediary>

Payment of commission

Matching platform(businesses
such as Uber,
Airbnb, etc.)<Provider>

Provider ofservices(private
individuals)
Unutilized assets (cars,
houses, etc.) andskill-sets of individuals

Payment of compensation

Provide services, etc.
(automobile passengers,
lodging, etc,)<User>
Service users(private
individuals)

Source: Mitsubishi Research Institute, Inc., Report on “Research and Analysis on Reconstructing
Service Statistics” (Fiscal 2016 contracted research from Office of Statistics
Commission), March 2017

Japan SPOTLIGHT • November / December 201857

Special

Article 3

accrued in GDP. This is because purchasing and selling of secondhand goods between private individuals is merely a change in theownership of goods, not production of a new good, and therefore
does not contribute as a factor to boost GDP. The market size that
corresponds to this is 270 to 275 billion yen. On the other hand, if
agricultural produce or handmade accessories are sold online, thenthat is production. This portion is estimated to be around 15 billion
yen.
Of sharing money, when a private individual lends money toanother individual, it is a monetary transaction, not production, on
the System of National Accounts (SNA). This is estimated to be 55 to
60 billion yen.
If sales and profits of platform enterprises are captured in the
Financial Statements Statistics of Corporations, the market size is
100 to 120 billion yen, and this portion is reflected in GDP.
When these are all considered, the portion that is not reflected in
the current GDP statistics is 95 to 135 billion yen on a production
value basis, and roughly 0.022% of GDP. What is reflected in GDP is
the value-added after deducting the intermediate input which makes
up around 0.01% of GDP. The market size in Japan is rather small,but it is thought to continue to expand, and there may even be
possibilities of new services emerging (Table 1).

Current Status of Private Lodging
Private lodging has the largest market size out of the sharing
economy. But it has thus far been difficult to grasp the real situation.
According to research findings published by the Ministry of Health,
Labor and Welfare in March 2019, while 16.5% of private lodgings
have been authorized under the Inns and Hotels Act, 30.6% were
unauthorized, and 52.9% were unidentified. The reasons for thedifficulty in capturing the real situation include the size of the
TABLE 1Size of sharing economy (100 million yen)
Not included
in GDP
Space
Goods

2,700-2,750

Skill and
time
Money

(550-600)

Sum

2,700-2,750

Included in
GDP, but
not captured

Included in
GDP, and
captured

700-1,000

700-800

1,400-1,800

150

100-150

3,000

100-20050

150-250150-200

150-200

1,000-1,200

4,700-5,250

950-1,350

Sum

Source: Cabinet Office, Overview of Report on “Research and Analysis on Measuring Economic
Activities of New Areas such as Sharing Economy”

58 Japan SPOTLIGHT • November / December 2018business being small, the fact that the law had not been in place until
2018, and the existence of overseas business owners.
The law regarding private lodging was enforced with theenactment of the Residence Hotel Business Law (New Minpaku Law)
on June 15, 2018. Upon notification, private lodgings can become
operational, but the number of days of operation has now been
limited to 180 days. Depending on the region, operations on
weekdays are not authorized, and some regions have even tighter
conditions. The number of private lodgings as of July 6 was 5,397
and this is not even one 10th of the roughly 60,000 listings that wereon Airbnb until this spring.
Since the regulations have become more strict, the pure form ofprivate lodging where vacant homes of individuals are rented out will
decline. But with the Olympics coming up, demand foraccommodation will increase. There may be a possibility forbusinesses to operate something similar to private lodging. In fact,businesses that rent out private residences as “vacation rentals” foraccommodation have been emerging. There have also been
movements by private individual enterprises to create a new
business model by partnering with vendors that undertakes all work,
including various procedures and cleaning.

Situation of Ride-Sharing
Ride-sharing services of privately-owned cars, such as Uber, havebeen expanding their market share globally. In Southeast Asia,
services such as Grab are commonly used. But Japan has aregulation on unlicensed taxis, and it is highly unlikely that themarket will expand. Regulation on unlicensed taxis is a regulationthat says you cannot carry people in cars for profit if the cars are nottaxis. It is aimed at preventing non-taxi businesses from charging
outrageous prices, and also at maintaining the quality of theautomobile transport services. This regulation itself has been
accepted by the Japanese people and the likelihood of deregulation isslim.
But services similar to this will likely expand from here on. Drivers
cannot be shared, but the sharing of cars itself will move forward —like Times Car, a car-sharing service where businesses own cars andthe customers sharing those cars have already been in place. In
addition, there is a service called Anyca, which rents out privatelyowned imported cars.

What Types of Statistics Are Required
to Grasp Reality
Estimations by the Cabinet Office are based on research conductedby institutions such as Yano Research Institute. In order toaccurately understand reality, there is a need to develop statistics.

Special

Article 3

Sales of services (trading volume) such as private lodgings andride-shares need to capture sales of individuals that provide these
services, but grasping that is difficult. Even the current Financial
Statements Statistics of Corporations is struggling to capture private
enterprises, and it is difficult to capture the sales being conducted byprivate individuals. One candidate to capture individual income would
be taxation data, but for those individuals whose annual income(sales subtracted by expenses) is less than 200,000 yen, there is noneed to file taxes, and hence it also gives rise to a leak in capturing
information for taxes as well.
A method to capture sales of individuals can be considered byfocusing on the commission revenue of platform enterprises. If, forexample, 10% of services provided by the individual are assumed tobe paid to the platform enterprise in commission, by capturing thecommission revenue of the platform enterprise, sales of individuals
can be calculated.
To capture platform enterprises through statistics, there is a needto properly acknowledge platform enterprises as an industry. As an
industry type, it can be accrued under “Administrator of portal sites
and servers of the Internet-associated service industry”. Platform
enterprises can begin to operate with just a computer, and thus they
are harder to capture compared to regular enterprises. Various
methods such as web scraping should be used to capture platform
enterprises.
A big challenge is the inability to capture platform enterprises ifthey exist overseas. The headquarters of Airbnb is in Ireland andAirbnb in Japan is not responsible for capturing its sales. The
Japanese government cannot conduct research on overseas
businesses and therefore they cannot be captured.
For private lodging, the “Lodging Trip Statistical Survey” by theJapan Tourism Agency (JTA) should be enhanced to grasp thenumber of guests by country and occupancy rates. From January
2018, authorized businesses for private lodgings have been includedin the scope of the survey. However, challenges still remain in thatprivate lodgings operated by non-authorized businesses cannot be
captured.
In addition, there is a need to enhance the statistics of both theproviders and users. Since many are currently being used by foreign
visitors, it is beneficial to enhance and utilize the “Consumer
Behavior Survey of Overseas Tourists to Japan” of the JTA. It is
conducted at airports by asking the foreign visitors what they used
and by how much. If domestic users increase, it will be necessary to
grasp the situation around the sharing economy in the “Household
Survey”.

Capturing Sharing Economy Prices
It is also important to create real values in order to beincorporated into the GDP system. For example, there is a need toinvestigate the prices of private lodgings. Since there are no extra
services provided, they are thought to be more affordable thanexisting hotels, and there is a need to investigate the prices
separately from hotels and inns. But it is basically a transaction
between individuals and it is not realistic to ask the service providers
directly for prices like one would to hotels and inns. It is more
realistic to collect price data by web scraping from the webpages ofplatform enterprises such as Airbnb, and create a price index.
There are various types of private lodgings but the price index
needs to align with the quality. Coordinating the quality would also
be required.

The Value of Free Internet Services
In terms of digital economy, how to capture free Internet services,in addition to the sharing economy, is a challenge. One can casually
get in touch with acquaintances by using the Social Networking
System (SNS) and exchange ideas. Using Google allows you toeasily search for things and its convenience is definitely increasing.
But if these are free, consumer expenditure is zero and thus
consumption on Internet services does not necessarily increase. Nor
is it reflected in GDP statistics.
On an analytical level, there have been more attempts to express
the increasing convenience in monetary values. The first is when it isconsidered as a business model like television. Terrestrial television
can be viewed free of charge, and various information andentertainment is being offered. Television can be watched free ofcharge because a portion of the production cost is being paid by theadvertiser. If a beverage manufacturer runs a commercial for canned
coffee, the sales of that canned coffee are expected to rise. Economic
activity can be measured through advertising costs.
Indeed, some enterprises which provide free online services profit
through gaining advertising revenue. But there are those thatconsider the value of Internet services to be much greater thanadvertising costs. Moreover, there are services like blogs andWikipedia which do not have advertisements. It would be odd to saythat its value is zero because there are no advertisements.
The second idea is investment towards digital assets. Internet
enterprises offer free services in return for various information thatcan be obtained from users who own accounts. Various informationsuch as what articles have been searched and what articles are
popular can be obtained together with the attributes of the users. It isthe notion that the real value lies in this type of information. When athird party buys the information, the payment data can be obtained
to calculate this value. But in most instances, the information is onlyused internally and not offered outside, and thus calculating thevalue becomes difficult (Chart 2).
Japan SPOTLIGHT • November / December 201859

Special

Article 3

CHART 2

Imagery of free service on theInternet

TABLE 2

Value of Internet services
Value of each service (annual) Respondents(US$)

Advertiser
Sales ofbanners

Payment ofadvertisement fee<Provider>

Provider ofservices(IT companies,
etc.)<User>

Providing services(search service,
video distribution,
app distribution, etc.)

Service users(private
individuals)

Source: Mitsubishi Research Institute, Inc., Report on “Research and Analysis on Reconstructing
Service Statistics” (Fiscal 2016 contracted research from Office of Statistics
Commission), March 2017

(Yen)

(No. of people)

Search engines

17,5301,928,300

8,074

Email

8,414

925,540

9,102

Map apps

3,648

401,280

7,515

Video

1,173

129,030

11,092

E-commerce

842

92,62011,051Social media

322

35,420

6,023

Messaging service

155

17,050

6,076

Music

168

18,4806,007

Note: Yen-based value has been calculated by the author using $1 = 110 yen.

Source: Brynjolfsson, Eggers and Gannamaneni (2018) “Using Massive Online Choice
Experiments to Measure Changes in Well-being”, NBER Working Paper No. 24514

How to Measure Free Internet Services
Even if it is not reflected in GDP statistics, convenience isincreasing and thus there have been attempts to capture it as aconsumer surplus. If a service that is thought to be worth 10,000
yen can be received at 6,000 yen, then the consumer surplus can becalculated as 4,000 yen. If how much consumers are willing to pay
for free Internet services can be figured out, then the consumer
surplus can be calculated.
Two methods have been suggested to measure the value of things
whose prices the market cannot determine, such as free Internet
services. One is to measure the value based on economic statistics
under the revealed preference approach. The other is the statedpreference approach, and the monetary value is calculated throughquestionnaire surveys.
We look first at the research findings of the revealed preference
approach. Even if the Internet says it is free, we cannot spend all
hours on the Internet. We need time to work. Thus, a method toassess the value of the Internet as “labor hours given up by
consumers” was proposed. According to a paper titled “TheAttention Economy: Measuring the Value of Free Digital Services on
the Internet” by Erik Brynjolfsson and Joo Hee Oh in 2012, freeInternet service pushed up the annual average growth rate of US
GDP by 0.74% from 2007 to 2011. For Japan, according to a paper
titled “Consumer Surplus of Information Sharing on the Internet in
Japan” by Shinichi Yamaguchi, Hirohide Sakaguchi and Kotaro
Iyanaga in 2017, the value of free Internet service was between 3.2%
and 3.7% of nominal GDP in 2014.
However, consumption of digital services may have been done
60 Japan SPOTLIGHT • November / December 2018

simultaneously with other activities, and the time of usage may beoverestimated. There is also the possibility that time spent on
Internet access may change depending on the data transmission
speed.
Next, we look at the stated preference approach. This is what iscalled the Contingent Valuation Method, and it conducts
questionnaire surveys on the value of a particular service. It will ask
for the amount of money one is willing to pay for a particular service,or it will ask how much it will take to give up that service. The pricethat one is willing to pay is called WTP (willingness to pay) and theprice of giving up is called WTA (willingness to accept). WTP tends
to come out small while WTA comes out big.
According to US research, when subjects were asked about theamount of acceptable compensation on “how much you will require
to give up using Facebook for a month”, the median value came out
to be $38 a month (“Using Massive Online Choice Experiments to
Measure Changes in Well-being”, by Erik Brynjolfsson, Felix Eggers
and Avinash Gannamaneni, NBER Working Paper, No. 24514, 2018).
In the same research, WTA for search services was $17,500 annuallyand email was $8,400, and the assessment values came out rather
huge (Table 2). If these research findings accumulate, calculations of
the consumer surplus for the entire country will become available.


Nariyasu Yamasawa is a professor of the Faculty of Management at Atomi
University. He has worked for the Nihon Keizai Shimbun (Nikkei) and the Japan
Center for Economic Research, and is a former director of the Statistics
Commission Office at the Ministry of Internal Affairs and Communications.