Why People Who Sleep Better Earn More Money

Source: iStock

Source: iStock

The health impacts of sleep are plentiful. Among the many detriments of inadequate sleep are issues with focus and cognition, so it’s not surprising sleep can also impact your productivity, and in turn, your earnings. Economists traditionally ignore the sleep issue, focusing instead on what people do during waking hours. Some have studied the sleep phenomenon in terms of opportunity cost. Dan Hamermesh linked high earners with less time spent sleeping because, to put it simply, they have more money to gain by staying awake and working.

But a 2015 study takes a different approach to the relationship between sleep and earnings.

Economists Matthew Gibson and Jeffrey Shrader published a paper using patterns related to, of all things, America’s time zones. The sunset time on one side of a time zone is actually about an hour different that the sunset time on the other side. Looking at data from the American Time Use Survey, Gibson and Shrader found that people on the western side of a time zone (where the sun sets later), go to bed later. And they get about an hour less sleep per week. People on the western side of time zones also earn less money.

After completing their research, Gibson and Shrader came to the following conclusion: “We show that increasing short-run weekly average sleep in a location by one hour increases worker wages by 1%. Increasing long-run weekly average sleep in a location by one hour increases wages by 4.5%.”

Source: iStock

Source: iStock

That’s a significant bump in earnings for only one extra hour of sleep per week. What’s more, the researchers reported that sleeping an extra hour every night on average increases wages by a staggering 16%. In an interview on the Freakonomics podcast, Gibson acknowledges that the bump seems too dramatic to believe. Freakonomics’ Stephen Dubner pointed out, “That’s a bigger boost than you’d expect from one additional year of education!” But Gibson attributes the figure to the similarly dramatic dips in productivity that come from chronic sleep deprivation.

That said, it might not be the best idea to pack your things and move clear across your time zone. In their paper, Gibson and Shrader explain that wage increases seen in cities on the eastern edge of time zones are offset by increased real estate prices in those areas. Nevertheless, the results have profound implications for workers, businesses, and national governments, leading the researchers to call for governments to conduct cost-benefit analyses of certain policies that affect sleep time, such as daylight savings time and time zones.

What if your workday was structured around the path of the sun?

In the same episode of Freakonomics, Dubner talks with Jens Bonke about early birds and night owls. For some workers, it’s less about solar cues, and more about how their bodies are programmed. Bonke, an economist and senior researcher at the Rockwool Foundation in Copenhagen, claims that society’s structure favors morning-type people. After analyzing data from the Danish time-use survey, Bonke concluded that early risers earn 4% to 5% more.

In the meantime, night owls are often left trying to pose as early birds, struggling to adjust to an early schedule after reverting to their naturally late sleep patterns on the weekend. There is a genetic component to whether you’re a natural night owl, so these workers struggle to keep up for no fault of their own, and employers miss out on valuable worker output as a result. Bonke says one way to make things more fair for nights owls, and to encourage greater productivity in general, is to provide greater workplace flexibility. That way, all employees (and businesses) will have the opportunity to work and earn to their full potential.

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