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Ceturtdiena 20.09.2018 | Name days: Marianna, Ginters, Guntra

The economics of not sleeping

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A new drug called Modafinil appears to let people get by with much less sleep which could have a large impact on society and the economy.

The Week writes that new “super drugs” like Modafinil let people reduce the amount of time they sleep, to potentially as little as two-and-a-half hours a night, without any apparent negative side effects. Most normal people would look at those extra five or six hours a night and imagine all the fun things they could finally do — watch all the Best Picture Oscar nominees, read some of the books piled on their shelves, take up basket-weaving or the violin.

But economists aren’t normal people and when they see a world full of 18 hour wakefulness, they ask: How will that affect the bottom line, both of companies and workers? Well, “workers would probably prefer to allocate the bulk of that extra time to leisure but I doubt employers will let that happen,” says Oxford doctoral student Jon M. at Sociological Speculation. In a “generous breakdown,” the company gets three of the extra five hours previously lost to sleep while the worker gets two. Everybody wins: Workers get more pay and employers get more work from the same number of employees.

Or not, says Garett Jones at the Library of Economics and Liberty. “Normal microeconomics” suggests that “a rise in supply pushes down the price of work, so wages will fall” — or you’ll lose your job. But it’s probably not that simple: My guess is that “sleep reduction drugs like Modafinil push down wages in the short run, but that increases the demand for capital which pushes wages back up in long run.” In other words, they’ll have “exactly zero effect on long run hourly wages” — but you’ll work more.

That’s broadly interesting, but let’s look at a “sleepless economy” by winners and losers, says Megan McArdle at The Daily Beast. “The mattress industry is presumably devastated,” since people won’t drop big bucks for a bed they’ll barely use, but if you work in the food-service or entertainment industry, demand for your leisure services will shoot up. “Overall, I expect that most non-elite workers will resist the pressure to work longer hours, at least initially.” But once they face the need to finance their extra hours of fun — and the reality of spending five more hours a day with their spouse and children — “they will probably up their hours at least somewhat,” and that will transform the child-care industry.

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