The Wages of Sleep

Can we sleep our way to success?

Illustration: Lorenza Walker: Source: Wikipedia

We all know that sleep is good for our bodies – that it helps us heal and refresh ourselves, restoring our immune, nervous, and muscle systems. But can sleep be good for our finances, too? Because getting enough rest helps us concentrate and interact more positively with others, sleep could improve our wages. On the other hand, you obviously can’t work while you’re sleeping. How does sleep impact our earnings?

It’s hard to estimate the income effects of getting more sleep. As your income goes up, the opportunity cost of sleep goes up as more. Your time is worth more. But a lack of sleep clearly has direct economic costs: doctors make more mistakes, students do worse on tests, folks running cars or trains or planes fail to pick up important signals. A few years ago, two Northwest pilots overshot the Minneapolis – St. Paul Airport by 150 miles because they were probably dozing in the cockpit. They lost their pilot licenses.

Some researchers looked at a large set of sleep diaries from the US. They evaluated sleep time and the local sunset across multiple time zones.

Sunset time in the Spring. Source: UCSD

They found that a one-hour increase in average sleep increases wages by about 16% – the same as an additional year of school. They also found that the optimal amount of sleep is around 9 hours. This is more than the average sleep they found in the diaries – 8.3 hours – and a lot more than the 7 hours per night minimum that most medical researchers believe is needed for our bodies.

Sleep isn’t just a curiosity. It’s a vital part of our economic, medical, and personal lives. We have to weigh the trade-offs between work, health, leisure, and other demands on our time. But if we want to improve our situation, we might start by getting a little more rest.

Douglas R. Tengdin, CFA

By | 2017-07-17T12:21:20+00:00 May 3rd, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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