Sleeping Our Way to Being Productive

Lambert here: Sleep that knits up the raveled sleave of care… See NC on sleep here, here, and here.

Joan Costa-i-Font, Professor of Health Economics at London School Of Economics And Political Science, Sarah Fleche, Researcher, Centre for Economic Performance at London School Of Economics And Political Science, and Ricardo Pagan, Professor of Economics at University Of Malaga. Originally published at VoxEU.

Sleep is key to our physical and mental health. It also affects people’s employment and productivity. This column explores how the amount of weekly sleep influences employment, productivity, and the income of individuals in Germany. Each additional hour of sleep per week increases the probability of employment by 1.6 percentage points and weekly earnings by 3.4%. Sleep is partly the product of both public and private decisions, and can be incentivised so that the negative economic effects of not sleeping enough are more salient to individuals.

People are not robots; we need sleep to recover energy. Sleeping is the activity that people spend most time on in a normal week. Lack of sleep contributes to the desynchronisation of circadian rhythms and weakens the immune system and cognitive activity in addition to physical and mental health (Nagai et al. 2010). Lack of sleep is associated with unhealthy behaviours related to a modern lifestyle, the presence of psychosocial stress, an unbalanced diet, and limited physical activity.

Although sleeping enough is essential for optimal physical and psychological wellbeing, we do not always get enough sleep to feel rested. An individual’s quality of sleep is not completely under an individual’s control. It is a reflection of our worries and experiences in our professional and personal lives, including exposure to digital temptations, commuting time, financial worries, and work stress; sugary diets and mental health can also influence sleep.

Lack of sleep is so widespread that when people are asked what they would do with an unexpected weekly time windfall, the most common response is to sleep more (National Sleep Foundation 2020). Luckily, sleep patterns differ between weekdays and weekends, as unstructured time allows us to meet our sleep needs. Some of us sleep more on weekends, while others take daytime naps to compensate for this chronic lack of sleep. All of this explains the increase in sleep time dispersion over recent decades in the US (Hamermesh and Pfann 2022).

However, sleep is not factored in classic textbook microeconomic models, which typically refer to the trade-off between allocating time to leisure or work. Sleeping time is assumed to be constant. But today, we know that sleep is important as another time constraint in making time allocations, and it exerts effects on our physical and mental health.

Social and Economic Drivers of Sleep

Sleep quality is affected by changes in exposure to light, noise or the use of communication technologies (mobile devices), and access to the Internet or television. For example, the intensity of light in homes has an environmental influence on sleep quality, since natural melatonin is influenced by light exposure. Likewise, the time spent using technologies can compete with the time individuals would spend sleeping without them, and ‘digital temptations’ not only reduce sleep time but increase exposure to blue light technologies just before going to sleep (Billari 2018). Finally, those of us who are parents will have experienced first-hand how the quality of sleep deteriorates when there are children in the home.

Any economist who has read Gary Becker’s theory of time allocation would surely point out the opportunity cost of sleep, that is, the utility loss in terms of leisure and work derived from allocating time to other activities. Higher pay and responsibility, or an intense night-time social life, can take their toll in terms of lack of sleep. For example, a classic estimate suggests that a 1-hour increase in work time is associated with a 13-minute reduction in sleep (Biddle and Hamermesh 1990).

Of course, the cost of sleep can vary over people’s life cycles and even across seasons and time zones. What we do know is that this opportunity cost of sleep is exogenously influenced by the economic cycle, and some studies estimate that sleep duration is countercyclical: you sleep better when economic activity slows down, and sleep duration decreases when economic activity recovers (Costa-Font 2022).

Sleep and Productivity

Sleep not only affects wellbeing through the direct utility derived from its consumption but also through the greater income and productivity from feeling rested, which affects work motivation and cognitive functions. One way to study the effect of exogenous changes on sleep is to use changes in time zone variation to sunset times.

One such study using cross-sectional time-use data from the US estimates that a one hour increase in weekly sleep time generates an increase in earnings by 1.1% in the short run and 5% in the long run (Gibson and Shrader 2018). These results are economically relevant: they suggest that an extra hour of sleep per week raises earnings by roughly half as much as an additional year of formal education. But the study does not account for the fact that sleep is different for each person. Accounting for individual differences would require data that accounts for individual fixed effects. Further, estimates might be different in European labour markets, which operate differently due to the greater presence of union negotiations and where hourly pay is less common.

In our study (Costa-Font et al. 2024), we draw on panel data from Germany to estimate – analogously to the American study – how the amount of weekly sleep influences employment, productivity, and income of individuals. As displayed in Figure 1, we exploit as a natural experiment evidence that suggests that, on average, one hour of sun exposure reduces sleep hours by between 5 and 7 minutes, depending on where an individual lives in Germany (Costa-Font et al. 2024). We estimate that each additional hour of sleep per week increases the probability of employment by 1.6 percentage points and weekly earnings by 3.4%.

Figure 1 Sleep and light exposure

These estimates are also comparable to those of another work with British data (Costa-Font and Fleche 2017), where we used the variations in child sleep interruptions over time as an instrument for changes in mothers’ (and fathers’) sleep duration, to estimate the effect of sleep on the economic performance of mothers (Costa-Font and Fleche 2020). We documented that increasing the average duration of a mother’s night’s sleep by half an hour increases her participation in the labour market by 2.5 percentage points, her working hours by 8.3%, and her family income by 3.1%, although their job satisfaction only increases very slightly. We observe that these effects depend on the influence of maternal sleep on selection into full-time versus part-time work. However, we found that increased work schedule flexibility among more experienced mothers partially mitigates the negative effects of sleep deprivation.

Economic Effects and Incentives to Sleep

Some research has quantified the overall effects of sleep on the economy. The monetary costs of sleep deprivation on the economy are estimated at 1.9–2.9% of GDP in the US, 1.4–1.8% in the UK, 1.0–1.6% in Germany, and 0.8–1.6% in Canada (Hafner et al. 2017).

Given the effect that sleep has on work outcomes and health, some organisations have considered designing incentives for sleep. For example, Aetna, a private health insurance company, offers $25 for every 20 nights that people sleep 7 hours or more, with a limit of $500 a year, which is monitored by electrical devices (Hallett 2016). This effect adds to other evidence suggesting that subsidising digital information devices to track sleep can incentivise the time allocated to sleep. In fact, evidence from a randomised control trial suggests that a subsidy to employees to purchase a wearable bracelet significantly improves sleep and exercise (Handel and Kolstad 2017).

However, one possible criticism of traditional economic approaches to sleep is that it is unclear to what extent individuals are aware of its effects on their economic activity, which limits the role of traditional economic incentives. This seems a fertile field to test behavioural incentives, since many of the decisions about sleep are automatic, forged by routines and not by conscious decisions, which opens the possibility of making multiple adjustments in the sleep decision-making architecture.

What Are the Policy Implications?

Public interventions can make these economic effects of lack of sleep more salient to individuals. For example, it is possible to redesign television programme schedules or work hours, as well as regulate work expectations about answering emails and access to screens at night in general. Another issue that we could revisit via policy interventions is the so-called ‘cultural or social reference points’.

Lack of sleep generates what we call internalities in behavioural economics. That is, it entails negative consequences on our future wellbeing (future selves). Since people are subject to ‘present bias’, we fall to the temptation of delaying bedtime for the immediate gains of watching our favourite television series or having interesting conversations, ignoring tomorrow’s losses in productivity and motivation. These behavioural biases point to the need for behavioural interventions (‘nudges’), as simple as an alarm when it’s time to go to sleep.

References available at the original.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. The Rev Kev

    The problem with sleep is that there is always some bean counter reckoning that it would be more “efficient” is people slept a little bit less. Of course if you are working three jobs, this will not be a problem. Don’t like the idea of Aetna – a private health insurance company – hooking up people in exchange for money to sleep better. Who gets to see that data and who owns it? Does it get monetized and how will it be used?

    In passing, after decades of trial and error, I have finally worked out how much sleep the average person needs and it turns out to be – ten minutes more.

  2. Mark Gisleson

    Because of the irregularities in how I obtain cannabis, my choices are limited to whatever new strains growers are working on. Two most recently acquired strains are both very good at putting me to sleep.

    Cannabis cultivation aggressively seeks to create strains that consumers want. Nowadays munchies are under control, unless a strain is meant to enourage chemo patients to eat, you don’t get hungry from using cannabis (you may still find food to be fascinating but not as addictively so).

    Growers created strains that let you stay focused, as well as strains to shut your brain down. These evolutions in grow room product are in direct response to what people want to buy.

    Right now a lot of folks want better sleep. The strain names are somewhat fantabulous, great deal of variance in strains coming from different growers but if you see something labeled “Deep Space” or “White Terror,” it will help you sleep. [“White” strains are very high THC and relaxing at the same time, the color references the milky white THC build up on the buds; not a shout out to racists.]

  3. Pym of Nantucket

    Probably an obvious question but not all peer reviewed research is necessarily good these days (or ever?): I’m curious of what methed was used to determine which of the observed covariates were causative. For me low income most definitely causes decreased sleep.

    1. Albe Vado

      Instantly my first thought was is getting more/better sleep getting you a better job…or do people already better off get the luxury of better sleep?

  4. MaryLand

    Getting enough REM sleep seems to be key to overall health. With arthritis pain waking me several times a night I find taking advil near bedtime helps me sleep more deeply and gives me a more rested feeling in the morning. I worry about my grown kids whose stressful jobs plus intensive parenting duties allow them much less than 7 hours sleep a night.

  5. ADB

    “some studies estimate that sleep duration is countercyclical: you sleep better when economic activity slows down, and sleep duration decreases when economic activity recovers…” Indeed, the American Time Use Survey seems to suggest that Americans slept more during the pandemic years 2020 and 2021. I know I did! Not sure if the paper talks about that…the excerpt does not.

  6. Brian Wilder

    One of my favorite things to do is an early dinner of pizza, beer or uncaffeinated soda and naproxen. It is not something anyone should repeat more than once a week, but low-level inflammation interferes with sleep and an occasional long-effect analgesic can really help. Feeling fully rested is a revelation about the benefits of getting enough sleep!

  7. SocalJimObjects

    I had been diagnosed with a mild case of sleep apnea and was on CPAP for a while but I just could not get used to wearing it while sleeping so I eventually ditched it off. Recently, on a friend’s recommendation, I am giving Chinese traditional medication + acupuncture a try, and so far I have been sleeping better, I am still waking up once or twice every night, but I wake up every day feeling refreshed.

  8. John Wright

    A local veterinary clinic had a humorous message for drivers as they passed by.

    “Don’t give up on your dreams, go back to bed.”


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