As Economy Declines, Bartering Takes Off (2024)

BOISE, Idaho -- -- BOISE, Idaho -- Tired of her pink bathroom countertops but short on cash for remodeling, Rachel Alemany decided to get the work done the old-fashioned way: through bartering.

Alemany has experience putting down flooring, so she and her husband traded flooring work with a neighbor who has tiling experience.

"It was that easy," said Alemany, a special-education teacher from Pittsfield, Mass. She got the idea from her mother-in-law, who exchanged renovations for room and board, and she might try it again: "I have other rooms in my house that need work."

Bartering -- the trading of goods or services without using cash -- is making a comeback in a troubled economy. It can be as simple as trading babysitting with another family, or as complex as an exchange with strangers facilitated by one of the several Web sites that have sprung up to connect barterers.


Bartering ads on Craigslist have roughly doubled since last year, said Susan MacTavish Best, a spokeswoman for the online classified advertising service. Traffic is also up at local organizations such as the Midwest Barter Exchange, a Kalamazoo, Mich.-based outfit that acts as a go-between for about 1,000 business clients.

"Before, we were out beating the bushes trying to get people to join, and now they're calling us," said Lance Dorsey, a customer service representative for the exchange.

Boise beautician Heather Wood has traded haircuts and pedicures for years of day care, kids' clothes, a paint job for her car, an oil change, a set of professional portraits for her family and dental cleaning.

"It's fun, and it builds a whole different kind of a relationship," said Wood, who has five children. "They're getting what they want, and I'm getting what I want. I would much rather do that than make cash most of the time."


These days, making cash isn't always an option, so many have decided it is worth the effort to trade, say, an outgrown kid's bike for a neighbor's lawnmower, or a massage for some gardening supplies.

"I'm finding it a little bit difficult to sell anything right now," said Jeremy Kildow of Nampa, who chose bartering when he decided to get rid of a $1,000 camera, a kayak, a stainless steel kitchen range and other items.

Kildow put his stuff on the Boise-area Craigslist site under "barter" and suggested horses, pack mules, a four-wheel-drive truck, a computer or a flat-screen TV in exchange. So far, he's had an offer of a truck, some computers, and a wedding ring.

Bartering can be less expensive than buying because there are few overhead costs for rent or a staff. However, not all costs are eliminated. The IRS considers barter dollars identical to real currency for tax reporting, and barterers must obtain a special form, the 1099-B.


But bartering can also be more fun than laying down cash.

"The human element and the relationship between buyers and sellers becomes more important when we get involved in bartering transactions," said Gary Forman, president of a company called Dollar Stretcher that publishes methods for saving money. "I'm not sure we don't have some longing for that."

The quirky, independent aspect of bartering is what Vermont resident Matthew Stewart likes. He got his Honda motorcycle in a trade with a stranger through Craigslist. Stewart gave up a wood-burning cook stove he'd acquired but didn't need.

"If somebody wants something that you've got, there's probably a good chance they've got something you want that they don't want," Stewart said. "With bartering you end up with something interesting."

Some things are easier to barter than others. While carpenters, massage therapists and hair stylists have a set price for their work and can easily trade it locally, other professionals, such as physicians who work in hospitals, can be constrained by the institutions that employ them.


Nevertheless, Forman estimates that 60 percent of the companies on the New York Stock Exchange participate in some kind of bartering.

Of course, there are no signs that bartering will ever catch up with cash. Professor Andrew Whinston at the University of Texas at Austin, who has written about bartering, said the Internet has made bartering easier, just as eBay has made it easier to sell things that used to sit in the attic for years.

He doesn't see bartering as something that will "take over the world," but he said nobody knows for sure what's going to happen next with the markets that rely on credit and currency.

"Maybe if the economy goes totally down the drain, we'll all be bartering," Whinston said.

As Economy Declines, Bartering Takes Off (2024)


How does bartering affect the economy? ›

Uses of Bartering

In times of monetary crisis or collapse, a barter system is often established as a means to continue the trading of goods and services and to keep a country functioning. This may occur if physical money is simply not available, or if a country sees hyperinflation or a deflationary spiral.

What is a barter economy quizlet? ›

A barter economy is one in which goods and services are directly exchanged for other goods and services, with no single medium of exchange.

What was the biggest reason why the barter system failed? ›

There is the issue of double coincidence of wants, and common measure of value. Barter system will not work in large economies. Hence the barter system failed.

Why is barter important in a down economy? ›

Throughout history, barter has been a very important tool to help people feed their families and ensure the survival of their business during economic downturns.

What are the disadvantages of a barter economy Quizlet? ›

Disadvantages are that bartering frequently requires much time and hassle and that goods are often not readily divisible, meaning that swapped goods have to be basically equal in value if a trade is to occur.

What are 2 disadvantages of bartering? ›

Drawbacks of Barter Systems:
  • Lack of double coincidence of wants.
  • Lack of a common measure of value.
  • Indivisibility of certain goods.
  • Difficulty in making deferred payments.
  • Difficulty in storing value. Was this answer helpful?

What type of economy uses bartering? ›

Bartering occurs when two or more parties, such as individuals, businesses and nations, exchange goods or services evenly without the use of a monetary medium. While a barter economy is considered more primitive than modern economies, barter transactions still regularly transpire in the marketplace.

What is barter system answer? ›

Barter is an alternative method of trading where goods and services are exchanged directly for one another without using money as an intermediary. It is an old method of exchange. People exchanged services and goods for other services and goods in return.

How is a barter economy different from a money economy? ›

Currency System: An Overview. The primary difference between barter and currency systems is that a currency system uses an agreed-upon form of paper or coin money as an exchange system rather than directly trading goods and services through bartering.

What problem did bartering create? ›

The problems associated with the barter system are inability to make deferred payments, lack of common measure value, difficulty in storage of goods, lack of double coincidence of wants. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

Why did the barter trade fail? ›

The barter system, which was once the cornerstone of economic transactions, eventually fell out of favor due to its inherent limitations. The primary reasons for its failure are the challenges associated with the double coincidence of wants and the lack of a common measure of value.

What is the greatest disadvantage of the barter system? ›

Some of the major drawbacks of the Barter System are Lack of double coincidence of wants, no common unit of exchange, lack of specialization, difficulty in storing wealth, etc.

What are 3 disadvantages of barter? ›

Other disadvantages of the barter system are inability to make deferred payments, lack of common measure value, difficulty in storage of goods, lack of double coincidence of wants.

Does bartering still exist? ›

Absolutely. The use of a cashless exchange system is still flourishing today. Examples of modern forms of bartering include time banking, child care cooperatives, and house sitting.

Is barter good or bad? ›

Barter has an advantage in situations when one has no money, whereas it poses a problem in the trade of those goods that cannot be equally divided.

What are the advantages and disadvantages of barter economy? ›

Advantages & Disadvantages
Everyone can conduct haggling trade without having moneyThe correct and honest dealing history of parties involved in haggling remains unknown
It builds trust between two individuals involved in tradeA powerful trader can take away the goods from a weak trader by force
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Mar 5, 2024

What are the disadvantages of barter system in economics? ›

Drawbacks of Barter System
  • In a large economy, Barter exchanges are not feasible.
  • Under the barter system, it is not feasible to carry forward one's wealth.
  • In a search for a person to exchange their surplus, in a barter system, a person would end up incurring very high costs.

What is the main disadvantage of a barter system? ›

Some of the major drawbacks of the Barter System are Lack of double coincidence of wants, no common unit of exchange, lack of specialization, difficulty in storing wealth, etc.

What type of economy is bartering? ›

barter, the direct exchange of goods or services—without an intervening medium of exchange or money—either according to established rates of exchange or by bargaining. It is considered the oldest form of commerce.

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