Sunday, March 10, 2013

Daylight Saving Time - A Natural Experiment

Early this morning, most of North America "sprang forward" to embrace the coming of Spring an hour sooner than we otherwise would have done. In Canada, the province of Saskatchewan was the notable exception. Ironic really - I'd have thought that with their climate they'd be pleased to get out of winter's icy grip an hour sooner!

Several researchers have noted that the phenomenon of daylight saving time offers a rather nice "natural experiment". We didn't always abide by this custom; now we do. At least, most us do, but some of us don't. In (most of) Canada and the U.S., the duration of DST was extended a couple of years ago.

What a great opportunity to use some econometric modelling to address questions such as: "Does the use of daylight saving reduce energy usage?" After all, as I understand it, this was one of the primary motivations for the introduction of this minor time warp. This just screams out "difference-in-differences" analysis!"

Here are a few links to some studies that have addressed the above question:

  • Kellogg, R. & H. Wolff, 2007. Does extending daylight saving time save energy. Evidence from an Australian experiment. IZA DP No. 2704.
  • Kotchen, M. J. & L. E. Grant, 2011. Does daylight saving time save energy? Evidence from a natural experiment in Indiana. Review of Economics and Statistics, 93, 1172-1185. (2008 Working Paper here.)
  • Nadarjaze, R., H. Sadeghi, & Y. Gohli, 2012. An econometric analysis of the impact of daylight saving time (DST) on electric energy consumption in Iran. Quarterly Energy Economics Review, 8, 145-160.
Are there any econometric studies that focus on the "Saskatchewan versus the rest of Canada" aspect of this? I'm not aware of any, off hand. If there are, then I'd love to hear about them.

If not, then this would make a nice student project.

© 2013, David E. Giles