NCPA - National Center for Policy Analysis

Sleep and the Stock Market

January 31, 2001

Sleep disruption has far reaching consequences. In the United States alone, 25,000 deaths occur each year due to sleep disruption. It also has economic consequences. A recent study analyzes the effects of sleep deprivation on stock performance.

Sleep time has been decreasing throughout the past century. Researchers say that the average American sleeps two hours less a night than a century ago. Additionally, switching to and from daylight savings time disrupts sleep as well. This sleep desynchronosis can deeply affect stock performance.

According to the study, stock prices are usually down after the two daylight savings weekends. This is especially true following the fall daylight savings weekend. On the first trading day following this weekend, the average daily stock return on:

  • The NASDAQ is down 0.6 percent more than after a typical weekend.
  • The New York Stock Exchange is down about 0.5 percent more than after a typical weekend.
  • United Kingdom stocks are down on average 0.3 percent more than after a typical weekend.

There are lesser repercussions during the other daylight savings weekend as well. The authors estimate that this one-day loss can be as much as $31 billion over three stock markets. This could prompt investors to invest after the time change to reap the rewards.

Source: "Sleep Disruption and Stock Performance," Economic Intuition, Fall 2000; based on Mark J. Kamstra, Lisa A. Kramer, and Maurice D. Levi, "Losing Sleep as the Market: The Daylight Saving Anomaly," American Economic Review, September 2000.


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