Cutting out the middle man

Over the years, many people have made a living being middle men or women. This is someone — a real estate broker, insurance agent or car dealer, for example — who stands between the producer and the buyer and helps the buyer evaluate alternative products and services. But now there are more opportunities for a person to buy directly from the producer. NC State University economist Mike Walden explains.

“We are actually finding this type of occupation disrupted by technology, because now an individual buyer — let’s say you are looking for an automobile — can go on a computer, and there are many, many websites that you can search. There are actually some car-buying web sites that you can use to purchase a car. Same thing with buying insurance. Same thing with buying investments.

“And many think that the homebuying industry will move in that direction, where someone can just sit on their computer and find out what houses are for sale and actually take virtual tours. They don’t even have to go look at the house.

“So this is another example of how technology can disrupt the economy. And of course there are always going to be benefits and costs to any kind of disruption. Many homebuyers, many insurance buyers will view this as a plus: They are going to save a little money, because there’s not a commission to pay to the middle man. They also can perhaps search for whatever they want at their leisure.

“But on the other hand, some see a cost to this, in that one of the benefits that middle men perform was that they performed an informational benefit. They were trained in evaluating, for example, insurance products and investment products, and many consumers simply aren’t trained that way. So there’s a concern that maybe there will be a loss  in terms of consumers making the best choices for them.

“So my guess is in the future we are going to have both types of buying opportunities still available: If you want the services of a middle man, a broker, you can still take part in those. But if you want to do it all on your own on the web, you can do that also.”

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