This is a slightly revised post from exactly a year ago…..
In 2008, economist William F. Shughart did a back-of-the envelope calculation and estimated that the opportunity cost of daylight saving time (DST) was $1.7 billion per year:
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.”
MP: Since 2007, the average hourly wage has increased about 14%, and the U.S. population has increased about 4.5%, so that would put the annual cost today of changing clocks twice a year at about $2 billion. Note: If we adjust the time cost of ten minutes per each housing unit (130 million) instead of ten minutes for each person, the cost would be less than $1 billion.
Tim Worstall pointed out last year that another cost to the US of daylight saving time is that we are not synchronized with Europe, partly as a result of the “Energy Policy Act of 2005.” We used to switch on the first Sunday in April and the last Sunday in October, which was only one week different from Europe – last Sunday in March and last Sunday in October. Following the 2005 legislation, we now switch on the second Sunday of March and the first Sunday in November. So for the next two weeks, and for the first week of November, the U.S. will be on DST, but Europe will remain on regular time. This lack of coordination for three weeks every year likely imposes additional costs on both the U.S. and European economies.
Here’s a detailed discussion of Daylight Saving Time at Wikipedia, which includes the world map above (click to enlarge) of daylight saving time around the world (blue countries observed daylight savings time).