Happy Biennial Social Construction of Time Day!

Or, more specifically, happy Fall Back! Today, for most of the country, daylight saving time is over. Wikipedia has a better than average page on the subject. The blogs this year have also been bountiful.

Legal History Blog discusses the history of DST, including a fantastic quote from Franklin which is often sourced as the origin of the idea of DST, and a wonderful letter read into Congress during an attempt to repeal DST in 1944:

“To delude one’s self that it is 6 o’clock when the sun, moon and stars and God in heaven have ordained that it is but 5 o’clock, I believe justifies the…statement that the so-called daylight saving time probably stands at the head of the list as an example of complete asininity.”

The blog goes on to add an excellent bit of analysis:

Although standard time itself was a human construct, many persisted in the idea that standard time was natural or God-given, like the Oklahoma State Senate, which passed an anti-daylight saving resolution insisting that “It is the sun and not the laws of man than determines daylight and darkness.”

So clearly there is (or at least was!) still room for a “social construction” critique of time – as problematic as that phrase is.

Canadian economics blogger Nick Rowe of Worthwhile Initiative has a post analogizing DST to monetary policy and trying to understand why DST works as an analogy for why changes in the money supply can have real effects. Here’s the punchline:

If we solve for the symmetric Nash equilibrium we find there’s a range of equilibria around the sun. Any time, as long as it’s not too far away from the sun, is an equilibrium time to hold the meeting. Everybody shows up when they expect everybody else to show up. And if the government tells, or merely suggests, that we all put our watches back one hour, and if everyone expects that everyone else will follow the government’s suggestion, we all go to the meeting one hour later by the sun. Because everyone hears the government’s suggestion, and knows that everyone else hears it too, and so on, it acts as a focal point to coordinate our expectations about when meetings will take place. But if the government suggests we all set our watches back two hours, or maybe three or four, we decide to ignore it, and know that everyone else will too.

Back to monetary policy. What we need is some sort of loss function with a kink in it. So the losses to a firm that raises or lowers its price, relative to other firms’ prices, are significant even if it raises or lowers its price by just a penny. The marginal costs of having the wrong relative price don’t start at zero. So firms won’t cut their prices unless they expect other firms to cut theirs too, even if all prices are too high relative to the sun, I mean the money supply. The losses from small deviations of price from the money supply must be second order of smalls, but losses from small deviations of price from everyone else’s price must be first order of smalls.

Note that for Nick, the “real effect” of DST is simply that everyone starts doing things an hour earlier relative to the sun. Nick is not arguing that DST has its (originally) intended effect of saving energy – his post is neutral on the subject.

Recent peer-reviewed economic research is less neutral, however. Drawing on the “natural experiment”* of legal changes in how various parts of Indiana deal with DST, Kotchen and Grant (2010) find that:

DST increases electricity demand. The findings are consistent with simulation results that identify a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost to Indiana households of $9 million per year in increased electricity bills. We also estimate social costs of increased pollution emissions between $1.7 to $5.5 million per year.

The evidence for DST is not so great elsewhere, either. Kellogg and Wolff use similar data from Australia and also find no positive effect. I wonder if any economists have looked historically – if the data exist. Kotchen and Grant suggest that heating and cooling uses swamp any savings on lighting, but I bet the relative amounts of electricity used for those activities have changed a lot since WWII (when the entire country went on “war time” year round to save on electricity). So, the question, does DST save energy now? is distinct from the question, did DST save energy then?

Either way, I hope we keep DST. As I’ve said before, there’s no better example of the constructedness (enactedness? sociality? pick your favorite theoretical word) of the world in my book. As long as folks out there can still imagine that “It is the sun and not the laws of man than determines daylight and darkness.” and not a complex set of historical and institutional forces, there’s a place for sociology.

* It’s very amusing to me how the word natural gets used in the context of natural experiments. Since when is a change in the law natural? If that’s natural, how is any human action not? I know that “natural” in natural experiment has a peculiar meaning relating to endogeneity issues and all that, but you’ve got to admit that it’s a bit weird.

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