Insights at UBC Sauder

The economics of Daylight Saving Time

Daylight Savings
Posted 2017-03-10

Every March, a collective groan can be heard across the country when it’s time to “spring” the clocks forward one hour. But for all the difficulties that Daylight Saving Time (DST) seems to cause, are there any benefits to the bi-annual time change?

We spoke to UBC Sauder School of Business economist Werner Antweiler about the pros and cons associated with DST, and whether it will ever be abolished.

Is Daylight Saving Time really as bad as it’s made out to be?

From an economic standpoint, Daylight Saving Time doesn’t survive a rigorous cost-benefit analysis. There are some very significant costs associated with DST, and empirical research has unearthed few, if any, societal benefits to the time change.

For instance, a recent meta-study by a group of researchers from the Czech National Bank and Charles University found that the energy-saving effects of DST are too small to justify the bi-annual time shift. A 24 per cent increase in acute myocardial infarctions and a six to eight per cent higher risk of being involved in a motor vehicle accident on the Monday after DST have also been established. And of course, there is always the loss of employee productivity due to fatigue that is often associated with DST.

Even in the world of finance, DST shifts lead to peculiar side effects. A study by UBC Sauder finance professor Maurice Levi found that switching over to DST magnifies the Monday dip in stock returns by 200 to 500 per cent, leading to a one day loss of as much as $31 billion across all American stock markets.

Many jurisdictions are exploring whether to abolish DST – will that ever happen?

If we were to abolish DST, we have two choices: either adopt standard time or DST year-round—which then becomes a question of whether the sun hits its peak around noon or around 1 p.m. It might actually be better to switch to year-round DST – with our days centered around 1 p.m. – since new research suggests this would result in optimal energy savings. Research has also indicated that year-round DST and the resulting evening daylight is beneficial for children’s physical activity.

However, at the end of the day, our choices are ultimately tied to what happens in the United States – and unfortunately for those who hate turning their clocks back and forth, there hasn’t been a resounding push to abolish DST.