The economic implications of daylight saving time

by Badgley Phelps | Nov 01, 2019

Sunday, November 3 marks the end of daylight saving time for the year, and is when we “fall back,” turning the clocks back one hour. While it may be just a minor nuisance for some, daylight saving time has been shown to be costly for the economy—which is why Washington state and others are planning to do away with the switch. Here’s a look at the economic implications of daylight saving time.

Losing an hour costs money—that isn’t made up

According to the SleepBetter Lost-Hour Economic Index, the total cost of the lost hour when daylight saving time begins every year in March is $434 million nationally and $4 million in the Seattle-Tacoma area alone. According to the organization, “The study focused on only the aspects of economic losses where solid evidence from peer-reviewed academic journals could be obtained, showing how the change can lead to an increase in heart attacks, workplace injuries in the mining and construction sectors, and increased cyberloafing that reduces productivity for people who typically work in offices. A reasonable economic cost was then developed and applied to the more than 300 Metropolitan Statistical Areas (MSA) in the U.S.” Unfortunately, that cost isn’t regained in the fall when an hour is added.

Losing an hour affects our judgement

The “spring forward” start to daylight saving time has been found to affect our judgement. Sleep-deprived decisions made at the beginning of the period don’t just go away when we gain an hour in November. And some decisions are weightier than others. For example, a recent study called “Sleepy Punishers Are Harsh Punishers: Daylight Savings Time and Legal Sentences,” reports that judges hand out sentences of 5 percent longer in duration the Monday following the beginning of daylight saving time, as compared with other days of the year.”

Time changes can impact the stock market

According to Psychology Today, shifts in sleep patterns can lead to anxiety—which can lead to anxious investing. “We found the market downturn associated with daylight saving time changes amounted to a single-day loss of $31 billion in U.S. markets, on average.” That said, researchers don’t recommend drastic measures in preparation for DST. “Emotions can ride even higher than usual under some conditions, including times of sleep disruption such as those associated with daylight saving time changes. By remaining calm and avoiding impulsive, emotion-driven investment decisions, there is no need to lose sleep over the market.” 





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