Changing time: the Economics of Daylight Saving Time
The annual switch to summertime, also known as Daylight Saving Time, is a controversial topic that has been debated for many years in Luxembourg. This year, the time change will occur in the early hours of Sunday, March 27, when clocks will jump from 2 a.m. straight to 3 a.m., causing residents of the Grand Duchy and the rest of Europe to lose one hour of sleep.
In theory, less lighting should equal reduced electricity consumption. However, the effectiveness of this measure in achieving significant energy savings is highly disputed. Moreover, experts agree that wintertime is our natural time and should not be mixed up. The switch to summertime disrupts our sleep rhythm and has negative health effects, including tiredness, feeling under the weather, sleeplessness, and difficulty focusing.
Did you know, that the idea of daylight saving time (DST) was first proposed in 1784 by Benjamin Franklin as a way to save candles? However, it wasn't widely adopted until the 20th century. So the motive stayed the same!
Despite the negative health effects, polls consistently suggest that most people would prefer to remain in summertime indefinitely. In 2018, the European Commission initiated an EU-wide survey in which 80% of the 4.6 million participants spoke out in favor of ending the time change. In 2019 the plan to abolish the time change was presented in the EU, but member states could not agree on which time to adopt it permanently. And a mishmash of time zones across the EU is not an option.
If the EU were to stick with wintertime forever, the western countries would benefit the most from the sun rising earlier in the morning. But, in Eastern Europe, this would mean that the sun would always set earlier. It is worth noting that several countries around the world have already abolished the time change, including Argentina, Belarus, Brazil, China, India, Japan, Namibia, Russia, and others.
Only about 30% of countries worldwide use the time change, with most of them located in North America and Europe.
Another interesting fact about time change is that it can have a significant impact on the economy. A study conducted by JP Morgan Chase found that the switch to Daylight Saving Time results in a net economic benefit of about $200 million per year in the United States. This is primarily due to increased consumer spending on outdoor activities during the long evenings in the summertime.
However, the same study also found that the time change can have negative effects on certain industries, such as airlines and the financial sector. For example, airlines have to adjust their schedules and operations to accommodate the time change, which can be costly and lead to delays. In the financial sector, the time change can disrupt trading patterns and lead to decreased productivity.
The debate around the time change is likely to continue for years to come, as there are both benefits and drawbacks to the practice. While some argue that the switch to summertime can help save energy and boost the economy, others point to the negative health effects and the difficulty in finding a consensus among EU member states.
