Is Owning Overrated? The Rental Economy Rises: Note for a lecture, "E Pluribus Unum? What Keeps the United States United."

Claire Cain Miller, "Is Owning Overrated? The Rental Economy Rises," New York Times

Things that you can now rent instead of buying: a power drill, a song, a tent, an office for an hour, a Prada handbag, a wedding dress, a painting, a dog, your neighbor’s car, a drone.

This new way of consuming — call it the Netflix economy — is being built by web start-ups that either rent items themselves or serve as middlemen, connecting people who want something with people who own it. They are a growing corner of the broader sharing economy, in which people rent out rooms in their homes on Airbnb or drive people in their cars with Uber or Lyft. Soon, tech entrepreneurs and investors say, we’ll be able to rent much of what we always thought we must own.

It is no coincidence that many of these companies — like Rent the Runway for designer dresses and Getaround for private cars — were born during the financial crisis, when people needed new ways to save money, as well as new ways to make it. The ones that have survived and grown during the recovery could herald a cultural shift away from the overconsumption that has driven so much of American culture — not to mention American debt.

The sharing economy is being built by start-ups, including Rent the Runway, which rents out designer fashions. Credit Todd Heisler/The New York Times
“It’s very counterintuitive from the old individualistic American culture, where what people aspire to has been increasing amounts of privacy, gated communities, owning your own,” said Juliet Schor, a sociology professor at Boston College who is studying the sharing economy for a MacArthur Foundation research project. “So it is a real twist on where values, sensibilities and culture have been.”

Then again, it might just be a new way to fuel conspicuous consumption, albeit in a more financially responsible and potentially less wasteful way. In other words, for some it is less about saving the planet than being seen in the latest, unaffordable Versace gown.

Either way, the entrepreneurs say the rental economy is part of a growing, post-recession movement to value experiences over possessions. Anticipating a new belonging can bring more happiness than actually owning it, studies have shown, and everyone knows how quickly the glow of a new purchase wears off.

“Our value set has changed as a younger generation,” said Jennifer Hyman, co-founder and chief executive of Rent the Runway. “We are now in a state of mind where we want to acquire more experiences. The 1990s ‘MTV Cribs’ show-off-how-much-money-you-have generation is over.” (The customer who rents that $1,895 Versace gown for $80 might disagree.)

Even as the economy improves, there is evidence that people might have a chastened approach to discretionary spending. Though overall consumer spending has returned to pre-crisis levels, it has been rising at a disappointing rate, and the biggest increases are coming from necessities like food and transportation as opposed to small luxuries like apparel and entertainment.

Before the recession and before she was a senator, Elizabeth Warren was a professor at Harvard Law School, and she found that Americans were winding up in debt and without nest eggs not because of spending on clothes, gadgets or restaurants but because of spending on the basics of middle-class life, like homes and cars.

So could the answer be to forgo ownership of everything else?

In many ways, renting is just a continuation of what people have always done — borrowing a cup of sugar or a pick-up truck from a neighbor. The difference is that technology has made borrowing possible at a broader scale, and between strangers. Social networking profiles and rating systems offer a level of trust and verification, and mobile phones equipped with GPS take much of the work out of pairing people. Examples are TurningArt for renting artwork, Pley for renting Legos and LiquidSpace for renting an office by the hour.

Still, the services raise questions for consumers — mainly around trust. What happens if someone stains the dress being rented, crashes the car or loses the dog? (The companies have different ways to deal with the risks, including insurance policies, contracts and fees.)

Rent the Runway, which was started in 2009, said that so far this year, new customers and orders were more than double those of last year. Last month, it expanded beyond fancy dresses to accessories like bags and jewelry, which customers can rent for as long as they desire. Ms. Hyman said this service competes with fast-fashion retailers like Zara, from which people buy things to wear for just a few months.

The idea works best for “fallow assets,” or expensive items that people rarely use, said Aileen Lee, founder of the venture capital firm Cowboy Ventures, who is on the board of Rent the Runway. That is why the company rents cocktail dresses but not jeans.

As for how much this trend will change consumer culture, consider this: People who rent items often end up buying them. Maybe in this economy, people just need a little hand-holding before making big splurges. And particularly for things that wear out, Ms. Schor said, buying might even be the most ecological and economical choice.