As much of the United States prepares to “fall back” and reset their clocks on Sunday, November 5, the debate surrounding the health effects of Daylight Saving Time (DST) takes center stage, with its well-documented disruption to sleep schedules and the increased risk of cardiac issues. However, the economic impact of this biannual time change has often gone understudied and undiscussed, despite mounting evidence of its real consequences.
Research is increasingly shedding light on the adverse financial effects of changing the clocks twice a year. A study conducted by researchers from multiple business schools revealed that investors and capital market participants respond more slowly to accounting reports in the week following the “spring forward” adjustment, which coincides with earnings season. This delayed response is particularly pronounced for firms with investors trading on earnings news and those with a less sophisticated investor base. The study suggested that cognitive impairment and investor pessimism may jointly contribute to the reduced market response to earnings news during this period.
Another group of business school researchers uncovered a notable rise in workplace injuries on the Monday following DST, with injuries being not only more frequent but also more severe, leading to a 67% increase in days of work lost due to these injuries. Additionally, a subsequent study identified a sharp uptick in “cyberloafing,” where employees engage in non-work-related internet activities, on the Monday after DST.
Moreover, evidence indicates that the time change correlates with an increase in heart attacks, strokes, and depression, leading to higher healthcare costs. Commuting becomes riskier and more expensive, as the transition to DST has been linked to a surge in car accidents.
Although DST has been promoted as an energy-saving measure, a 2008 study by the National Bureau of Economic Research found that it actually resulted in a 1% increase in residential energy consumption in Indiana. This increase cost households in the state an extra $9 million on their electric bills and led to estimated additional costs of $1.7 to $5.5 million in “social costs of increased pollution emissions.”
While it is challenging to quantify the total economic impact of these factors, a study by Chmura Economics & Analytics from a decade ago estimated that the springtime DST change cost the U.S. economy more than $433 million. Furthermore, as of 2021, Manhattan Institute senior fellow Allison Schrager reported that DST alone cost the airline industry hundreds of millions of dollars.
Despite mounting evidence of the negative effects on health and the economy, the latest efforts in Congress to end the practice of DST remain stalled. Sen. Marco Rubio, R-Fla., has been leading a bipartisan coalition to establish DST as the new standard time through his “Sunshine Protection Act.” Although the bill passed the Senate by unanimous consent last year, it was not taken up by the House. Rubio reintroduced his legislation in March, with support from senators of both parties, and Rep. Vern Buchanan, R-Fla., filed a companion bill in the House. The debate over DST’s impact continues, highlighting the need for a comprehensive evaluation of the costs and benefits of this time-honored practice.