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Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana

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  • Matthew J. Kotchen
  • Laura E. Grant

Abstract

The history of Daylight Saving Time (DST) has been long and controversial. Throughout its implementation during World Wars I and II, the oil embargo of the 1970s, consistent practice today, and recent extensions, the primary rationale for DST has always been to promote energy conservation. Nevertheless, there is surprisingly little evidence that DST actually saves energy. This paper takes advantage of a natural experiment in the state of Indiana to provide the first empirical estimates of DST effects on electricity consumption in the United States since the mid-1970s. Focusing on residential electricity demand, we conduct the first-ever study that uses micro-data on households to estimate an overall DST effect. The dataset consists of more than 7 million observations on monthly billing data for the vast majority of households in southern Indiana for three years. Our main finding is that -- contrary to the policy's intent -- DST increases residential electricity demand. Estimates of the overall increase are approximately 1 percent, but we find that the effect is not constant throughout the DST period. DST causes the greatest increase in electricity consumption in the fall, when estimates range between 2 and 4 percent. These findings are consistent with simulation results that point to a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost of increased electricity bills to Indiana households of $9 million per year. We also estimate social costs of increased pollution emissions that range from $1.7 to $5.5 million per year. Finally, we argue that the effect is likely to be even stronger in other regions of the United States.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14429.

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Date of creation: Oct 2008
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Publication status: published as Matthew J. Kotchen & Laura E. Grant, 2011. "Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1172-1185, 04.
Handle: RePEc:nbr:nberwo:14429

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  1. Peter C. Reiss & Matthew W. White, 2003. "Demand and Pricing in Electricity Markets: Evidence from San Diego During California's Energy Crisis," NBER Working Papers 9986, National Bureau of Economic Research, Inc.
  2. Kellogg, Ryan & Wolff, Hendrik, 2008. "Daylight time and energy: Evidence from an Australian experiment," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 207-220, November.
  3. Matthew J. Kotchen & Michael R. Moore & Frank Lupi & Edward S. Rutherford, 2006. "Environmental Constraints on Hydropower: An Ex Post Benefit-Cost Analysis of Dam Relicensing in Michigan," Land Economics, University of Wisconsin Press, vol. 82(3), pages 384-403.
  4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(1), pages 249-275, February.
  5. Daniel S. Hamermesh & Caitlin Knowles Myers & Mark L. Pocock, 2006. "Time Zones as Cues for Coordination: Latitude, Longitude, and Letterman," NBER Working Papers 12350, National Bureau of Economic Research, Inc.
  6. Aries, Myriam B.C. & Newsham, Guy R., 2008. "Effect of daylight saving time on lighting energy use: A literature review," Energy Policy, Elsevier, Elsevier, vol. 36(6), pages 1858-1866, June.
  7. Shimoda, Yoshiyuki & Asahi, Takahiro & Taniguchi, Ayako & Mizuno, Minoru, 2007. "Evaluation of city-scale impact of residential energy conservation measures using the detailed end-use simulation model," Energy, Elsevier, Elsevier, vol. 32(9), pages 1617-1633.
  8. Mark J. Kamstra & Lisa A. Kramer & Maurice D. Levi, 2002. "Losing Sleep at the Market: The Daylight Saving Anomaly: Reply," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 1257-1263, September.
  9. Kamstra, M.J. & Kramer, L.A. & Levi, M.D., 1998. "Losing Sleep at the Market: The Daylight-Savings Anomaly," Discussion Papers dp98-04, Department of Economics, Simon Fraser University.
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Cited by:
  1. Hill, S.I. & Desobry, F. & Garnsey, E.W. & Chong, Y.-F., 2010. "The impact on energy consumption of daylight saving clock changes," Energy Policy, Elsevier, Elsevier, vol. 38(9), pages 4955-4965, September.
  2. Crowley, Sara & FitzGerald, John & Malaguzzi Valeri, Laura, 2014. "Changing Time: Possible Effects on Peak Electricity Generation," Papers, Economic and Social Research Institute (ESRI) WP486, Economic and Social Research Institute (ESRI).
  3. Wolff, Hendrik & Makino, Momoe, 2012. "Extending Becker's Time Allocation Theory to Model Continuous Time Blocks: Evidence from Daylight Saving Time," IZA Discussion Papers 6787, Institute for the Study of Labor (IZA).
  4. Felix Weinhardt, 2013. "The Importance of Time Zone Assignment: Evidence from Residential Electricity Consumption," SERC Discussion Papers, Spatial Economics Research Centre, LSE serddp0126, Spatial Economics Research Centre, LSE.
  5. Jennifer L. Doleac & Nicholas J. Sanders, 2012. "Under the Cover of Darkness: Using Daylight Saving Time to Measure How Ambient Light Influences Criminal Behavior," Working Papers, Department of Economics, College of William and Mary 126, Department of Economics, College of William and Mary.
  6. William Michelson, 2011. "Sleep Time: Media Hype vs. Diary Data," Social Indicators Research, Springer, Springer, vol. 101(2), pages 275-280, April.
  7. Krarti, Moncef & Hajiah, Ali, 2011. "Analysis of impact of daylight time savings on energy use of buildings in Kuwait," Energy Policy, Elsevier, Elsevier, vol. 39(5), pages 2319-2329, May.
  8. Kountouris, Yiannis & Remoundou, Kyriaki, 2014. "About time: Daylight Saving Time transition and individual well-being," Economics Letters, Elsevier, Elsevier, vol. 122(1), pages 100-103.

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