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Daylight Saving Time Costs Nation $1.7 Billion
March 7, 2008
William F. Shughart II
Newsweek.com, ChicagoTribune.com, Buffalo News, News-Leader (MO), Shreveport (LA) Times, Birmingham (AL) News, Athens Banner-Herald (GA), Roanoke (VA) Times, Tallahassee (FL) Democrat, Newark (NJ) Star-Ledger, Providence (RI) Journal, Clarion-Ledger (MS)

Americans’ body clocks will suffer another jolt this weekend as daylight saving time returns and everyone (except Arizonans) goes back to the future by an hour. The annual ritual of springing forward and falling back has joined death and taxes as one of life’s certainties.

Since the passage of the Energy Security Act of 2005, which extended daylight saving time (DST) by four weeks—to eight months of the year—DST has become more standard than...standard time. According to the legislation’s co-sponsors, Reps. Edward Markey, D-Mass., and Fred Upton, R-Mich., the daylight saving time extension is supposed to significantly reduce energy usage, as evening sunlight replaces power-generated electricity an additional hour each day.

Unfortunately, this dramatic cut in energy use could very well be illusory, while the costs of daylight saving time are very real.

In making the case for expanding daylight saving time, Reps. Markey and Upton promised Americans it could reduce fossil-fuel consumption by the equivalent of 100,000 barrels of oil a day. It turns out, however, that the 100,000-barrel-a-day estimate was based on outdated data from 1974, when then-President Richard Nixon, in the midst of an energy crisis, ordered clocks moved ahead an hour in January. In fact, there is no reliable data supporting the premise that DST significantly reduces energy consumption. U.S. Department of Energy (DoE) officials admit ‘‘the jury is still out on the potential national energy savings.’’

As is so often the case, Washington adopted a political policy of shooting first and asking questions later, ordering DoE to submit a study to Congress, due on an unspecified future date, on whether DST actually saves energy. The study has not yet been done.

Although it is unclear what benefit Americans derive from adjusting their timepieces twice a year, the costs they bear are clear. As the Benjamin Franklin adage goes: Time is money, and time spent resetting clocks and watches is time that cannot be devoted to other, more valuable uses. Switching between daylight saving and standard time has what economists call an ‘‘opportunity cost.’’

Economists typically value the opportunity cost of a person’s time at his or her wage rate. The U.S. Department of Labor’s Bureau of Labor Statistics reports that the average American’s hourly wage was $17.57 in September 2007. Assuming that it takes everyone 10 minutes to move all of their clocks and watches forward or backward by an hour, the opportunity cost of doing so works out to $2.93 per person. Multiplying that number by the total U.S. population (excluding Arizona) yields a one-time opportunity cost for the nation of just under $860 million—or, to be more precise, $858,274,802. Since clocks must be changed twice every year, this back-of-the-envelope calculation must be doubled, to approximately $1.7 billion annually.

There are other costs associated with adjusting to DST and standard time as well. For example, the time changes interrupt our circadian rhythms—that is, our daily biological patterns—and productivity inevitably falls in the days following the switch, as people report groggily to work.

Perhaps daylight saving time promotes sales of charcoal briquettes and gas grills, but that would hardly justify the $1.7 billion or more in opportunity costs we bear, particularly if there are no significant offsetting energy savings.

So why is it, exactly, that we allow the government to tell us what time it is?

Economics graduate student Brandon Ramsey contributed to this article.