How daylight saving affects your wallet

Saturday, 28 September 2024

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When the clocks go forward in the early hours of the morning on Sunday - your sleep isn’t the only thing affected.

The economy is also affected with industries like hospitality, retail and energy all affected by the spring jump forward in time.

“The purpose of daylight savings time is to maximize daylight during the evenings, which can lower lighting energy use. Lower power prices and a minor decline in the demand on the energy grid may result from this,” Professor in Economics and Finance at Massey University, Faruk Balli said.

According to a New Zealand Power Authority report from 2010, daylight saving time may cause spring and summertime power use to drop by around 1%.

“This corresponds to yearly savings of almost $30 million in 2010s time, nowadays it makes around $65-70m in today’s time, if we adjust electricity prices changes and population growth,” he said.

Daylight saving results in lower energy use during the summer months.

Contribution of daylight saving on retail and hospitality was also inevitable, Balli said.

“Extended daylight hours in the evening have the potential to stimulate consumer expenditure in the retail and hotel industries by encouraging people to go out.

“Restaurants, bars, and shops often see a boost in sales during daylight saving time.”

The longer, sunnier evenings meant people got out more for physical activity.

The time change also promoted physical activity, which had been linked to better health outcomes, therefore lower healthcare expenses, he said.

“The impact of the daylight saving can be considered rather indirectly. The long day hours increases outdoor activities and this would decrease sedentary behaviour, and increase productivity and lead to long term economic growth,” Balli said.

Spring has arrived, but did you know there are four possible start dates? Learn about astronomical, meteorological, solar, and natural signs of spring, plus get ready for daylight saving this Sunday.

Dr Murat Ungor of the Department of Economics at Otago University said the effectiveness of daylight saving was mixed.

Each year countries changed their clocks on different dates and times, depending on if they were located in the Northern or Southern Hemisphere.

“As a result, any domestic impacts could potentially spill over internationally through financial markets, including exchange rates between pairs of countries,” he said.

Differences in daylight saving schedules between trading partners can potentially influence exchange rates and international trade.”

Studies suggested the potential economic costs associated with daylight savings, including lost productivity due to sleep disruption, increased traffic accidents, and even procrastination at work, he said.

A recent study on Türkiye found that keeping daylight saving time during the winter months increased electricity consumption in the early morning hours and reduced it in the late afternoon.

Another study on Australia found the effect of daylight saving on electricity consumption strongly depended on weather conditions and cooling usage as it tended to be costly in countries with higher summer temperatures and greater air conditioning use.

“Daylight saving can have both positive and negative impacts on our economy, productivity, and ultimately, our finances.”

The transition to and from daylight saving, which disrupts sleep patterns, can lead to decreased productivity in the short term, which may cause an increase in traffic accidents and other incidents, which can have economic consequences, he said.

“The overall impact of daylight saving on our wallets is complex and depends on various factors.

“While it can lead to increased consumer spending and potential energy savings, it can also contribute to more accidents and short-term productivity losses.”