The Economic Impacts of Daylight Saving Time

Learn how springing forward affects your wallet and more.

The time to spring forward has come again. Daylight saving time begins in the pre-dawn hours of Sunday, March 12, causing residents of most states — save Arizona and Hawaii — to lose one hour of sleep.

Feeling groggy is possibly the most widespread effect of daylight saving time; however, it is not the only one. Here's a brief look at the history of daylight saving time as well as some lesser known, yet important effects the time change can have.

The History of Daylight Saving Time
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1. The History of Daylight Saving Time

Lore has it Benjamin Franklin "invented" daylight saving time, but this isn't actually true. Franklin did suggest — somewhat tongue in cheek — that Parisians might save some money on candles if they got out of bed in the morning rather than the afternoon. Nonetheless, the idea eventually caught on. Britain tried to pass it into law in 1908 and failed, but Germany succeeded in 1916.

The U.S. jumped on the daylight saving bandwagon temporarily during World War I and II. In 1966, Congress passed the Uniform Time Act, which established nationwide dates for clocks rolling forward and backward. States are not required to observe time changes, but those that do must spring forward and fall back at the same time.

As you might expect, fiddling with Mother Nature impacts the U.S. economy in a few ways.

Possible Energy Savings
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2. Possible Energy Savings

Franklin theorized that going to bed at sunset and waking at sunrise could save Paris money on candles, which might be why many people believe time change is an effective trick to save on energy costs today. In 2008, the U.S. Department of Energy presented findings that confirm this theory.

Energy Department experts determined that extending daylight saving time by four weeks under the Energy Policy Act of 2005 saved 5 percent more electricity per day for a total of 1.3 billion kilowatt-hours, a hefty amount. Most of these savings, experts said, could be traced to three to five evening hours.

Possible Energy Increases
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3. Possible Energy Increases

A study authored by professors Matthew J. Kotchen and Laura E. Grant rebuts the Energy Department's findings. In their study, Kotchen and Grant looked at energy use in Indiana, a state that began observing daylight saving time in 2006. They compared the demand for electricity before and after the change and found that time change actually increased demand from 1 to 4 percent a year.

Air conditioning usage increased in the summer, while the need for heat increased in the winter. Indiana residents began running their AC about an hour more a day — presumably that extra hour of daylight provided for by the time change. Savings on lighting were minimal at best, according to the study. (The Energy Department study did not address the need for additional air conditioning.)

Tired, Less Productive Workers
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4. Tired, Less Productive Workers

Grant, who was part of the Indiana study, said she feels strongly that messing with circadian rhythm is neither healthy nor productive. In an article for the Foundation for Economic Education, she said that springing forward in March negatively affects productivity.

Employees are more prone to error because of sleep deprivation in the days immediately following the beginning of daylight saving time, ultimately costing their employers money.

And it's not just the toll taken by that single hour, which might last only a few days. Additional exposure to sunlight inhibits the production of melatonin, a hormone that promotes sleep. Insomnia can result, possibly lasting longer than the first few days of adjustment to the time change.

Learn: 10 Ways the Rich Stay Productive

Increased Traffic Fatalities
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5. Increased Traffic Fatalities

The University of Colorado at Boulder conducted a study in 2014 and found that daylight saving time accounted for 17 percent more traffic fatalities that were linked to springing ahead. Similar results were not found in the fall, so presumably traffic accidents are an offshoot of sleep deprivation.

The end of daylight saving time in the fall signals trouble for pedestrians, however. Carnegie Mellon University found in 2007 that those traveling on foot were up to three times more likely to be struck by vehicles in the autumn after clocks fall back, mostly right after 6 p.m. The study found that the "per mile" risk for walkers climbed by a significant 186 percent in the first two months after the time change, then dropped again in December as everyone got back in sync with sunset coming earlier.

Theses findings are in contrast to the theory presented by the U.S. Department of Transportation that more daylight hours mean fewer traffic accidents and injuries.

Higher Risk of Serious Health Issues
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6. Higher Risk of Serious Health Issues

Grant's study also found that people are not just at risk for more accidents as a result of daylight saving time; they're prone to other health incidents, too. She specifically cites heart attacks, stating that they increase during the spring, which she attributed to sleep deprivation. Grant also said they drop in the fall when people begin sleeping normally again.

The University of Alabama at Birmingham concurs. Researchers there in 2012 found that heart attacks increased by 10 percent in March in the days and weeks immediately following the time change.

Researchers cited some of the same concerns and causes referred to by Grant: lack of adequate sleep and circadian rhythm gone temporarily awry. They also indicate that the time change affects immune function.

Check Out: The 10 Best and Worst States for Health Insurance Costs

Decreased Crime
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7. Decreased Crime

On a more cheerful note, the U.S. Department of Transportation indicates that daylight saving time has a lowering effect on crime rates because many crimes tend to occur in the dark. Grant said she agrees, at least in regard to sexual assaults and muggings, which statistically occur more often at night. The Review of Economics and Statistics reports on a 2015 study that found that robbery rates dropped by 7 percent following the shift to daylight saving time.

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