The welfare effects of time reallocation evidence from Daylight Saving Time

Abstract

• Daylight Saving Time (DST):

  • Over 70 countries implement DST to align sunlight with daily activities and reduce energy demand.

  • Effects on individuals' welfare are not well understood.

  • Study finds Spring DST transition causes:

    • Significant decline in life satisfaction.

    • Deterioration of sleep quality and increased time stress affecting health.

  • Positive effect seen during Autumn DST transition.

  • Paper discusses potential benefits of ending DST.

Introduction

• DST Policy:

  • Aimed at aligning activities with sunlight and reducing energy use, yet evidence shows it may increase electricity use.

• Health Risks Linked to DST:

  • Transition associated with:

    • Higher risks of car accidents.

    • Increased workplace injuries.

    • Heart attacks and depressive symptoms.

• Research Focus:

  • This paper seeks to document welfare costs from Spring DST improvements in life satisfaction.

  • Investigates how DST affects sleep and emotional health.

Literature Review

• Previous studies link DST to:

  • Sleep disruptions leading to cognitive impacts.

  • Increases in feelings of being rushed.

• Sleep Quality:

  • Sleep duration decreases after Spring transition.

  • Adverse effects on cognitive ability and emotional wellbeing.

• Autumn Transition:

  • Associated with longer sleep duration and health benefits.

Methodology

Data Source

• Utilizes individual panel data from the German Socio-Economic Panel (SOEP) (1984-2018)

• Enables tracking individuals’ well-being around DST transitions.

Empirical Strategy

Regression Discontinuity Design (RDD)

• Compares life satisfaction before and after DST transition days.

• Difference-in-Differences (DiD):

  • Used to create a control group based on the last Sunday of adjacent months.

  • Addresses biases in estimating the effects of DST.

Results

Impact of Spring DST Transition

• Life Satisfaction Decline:

  • Estimated decrease: 0.058 - 0.060 standard deviations.

• Duration of Effects:

  • Negative impacts on life satisfaction last about six days.

• Mechanisms:

  • Sleep satisfaction and increased time pressure account for significant declines in wellbeing.

Impact of Autumn DST Transition

• Life Satisfaction Increase:

  • Evidence suggests significant enhancement in life satisfaction.

  • Impacts on longer-term wellbeing highlighted.

Cost-Benefit Analysis

• Welfare Costs:

  • Ending DST could yield a small welfare loss (-210 euros per capita).

• Welfare Gains:

  • Potential welfare gain of approximately 754 euros per capita, when accounting for added health costs and productivity.

Conclusion

• Overall Findings:

  • DST negatively affects sleep and wellbeing (in particular post-Spring transition).

  • Benefits of Autumn DST may outweigh negative impacts.

  • Policy suggestions to evaluate ending DST due to significant welfare implications.

• Broader Implications:

  • Importance of considering individual experiences in policy evaluations concerning time management and economic activities.