Economics of sleep

How Sleep Deprivation Costs the Economy and our Public Health

Economics is the study of resource allocation under the condition of scarcity, and for many people, the scarce resource is time. Either consciously or unconsciously, people make decisions about how to allocate their time, including time in bed and time working. A familiar chart on the walls of university students says “Sleep, work, play: pick two.”

In today’s America, more and more people are choosing work and play. And our collective lack of sleep is taking a serious toll on our health and our economy.

Sleep deprivation is a trademark of modern society, and it’s only getting worse, thanks to our increased responsibilities at work, excessive dependence on electronics, and long commutes. Lack of sleep not only has serious mental, emotional, and physical effects, but those effects translate to your success in school, career, and life.

And it’s not just you. Poor sleep has real consequences for society as a whole. In this article we’ll review how much sleep we’re getting, and how much it’s costing us, both financially and otherwise.

The complicated relationship between sleep and work

The number of hours the average person sleeps has declined over the past century. Some of this may be attributed to the electrification of homes – with more light, we can stay up later. However, it is largely due to the expansion of the market economy and the specialization of labor. We chose to fill that extra time we gained from electricity with work.

Short sleepers – people who get 6 or fewer hours of sleep a night – rose 22 percent from 1975 to 2006, with the trend even more pronounced among full-time workers.

The Bureau of Labor Statistics’ 2016 American Time Use Survey revealed that people are increasingly taking their work home with them. The average American does 4.5 hours of work at home each week, and 20 percent spend 10 hours or more. In the UK, a survey of managers found that this after-hours work time was enough to equal or exceed their annual leave.

How does this extra work time affect sleep? A study of people from 12 countries found that for each one-hour increase in “market work” (as opposed to, say, unpaid housework), sleep time was reduced by 10 minutes.

Unfortunately, that missing sleep only hurts productivity.

Sleep and productivity

We’re working more and sleeping less, but we’re not making it up in revenue. Based on a survey of 7,400 individuals, Harvard University estimates sleep deprivation costs companies $2,280 per employee, or 11.3 days of productivity, each year. Nationally, that number could be as high as $63.2 billion. Meanwhile, researchers in Australia estimate it costs nearly 1% of their GDP.

Sleep deprivation is a global issue. In a review of five OECD countries, the RAND Corporation found that the productivity losses from sleep deprivation hurts economies to the tune of hundreds of billions of dollars.

It’s no coincidence that the countries hurting most from sleep deprivation  – the United States and Japan – have the most sleep-deprived citizens. Half of their citizens are getting less than the recommended 7 to 8 hours of sleep for adults:

Chronic sleep deprivation compromises your immune system, making you likelier to get sick in the short- and long-term. People who regularly get fewer than the recommended 7 hours of sleep are 3 times as likely to get the common cold. This means more sick days and shorter careers.

It’s not just sick days, either. Lack of sleep affects your mood, your judgment, and your ability to focus. This can lead to errors or poor decision making in a professional setting that have significant monetary effects.

Worse, the people making decisions tend to be the ones getting the least sleep. Half of Inc. 500 CEOs get fewer than 6 hours a night. And research shows the more senior you are and the more money you make, the less sleep you get. The perfect example of this is the power-hungry lawyer who makes over $1,800 a week on average but gets barely 7 hours of sleep per night.

Intriguingly, some of the best slept professions are those in personal fitness, who get 9 hours per night. Perhaps their work makes them more aware of the health implications of a bad night’s sleep.

72 percent of managers say they have trouble focusing due to lack of sleep. In the BLS Survey cited above, the researchers hypothesized that because people plan on taking their work home, they’re less productive at work. But then they end up working at home, and become even more tired. At which point, they turn to coffee and other stimulants to stay awake, creating a vicious cycle that makes sleep even more elusive.

How much is sleep costing us?

In the U.S. alone, RAND estimates that sleep deprivation adds up to 1.2 million working days and $411 billion lost each year.

But it’s not just corporations that are suffering. Lack of sleep costs individual citizens, too. People who don’t get enough sleep or suffer from a sleep disorder are less productive at work, have more medical issues, and are more likely to get in an accident. This weakens our national economy, sends health care costs through the roof, and endangers the rest of society (from poor decision making and lack of focus that lead to accidents).

Chronic sleep loss from increased work demands, night shifts, and sleep disorders results in hundreds of billions of dollars a year in healthcare costs, doctor visits, prescription and over-the-counter drugs.

1995 study breaks down the average total costs caused directly by insomnia:

This list doesn’t include indirect costs, such as related health care conditions from a weakened immune system that leads falls, obesity, diabetes, heart conditions, and more. Insomnia is even more expensive for people with lower socioeconomic status, less education, and the unemployed.

Sleep and socioeconomic status

study by Case Western Reserve University showed that low socioeconomic status is associated with “long sleep” (excessive sleep) and early mortality.  Racial minorities, especially black people, are likely to have sleep durations (either too long or too short) that are associated with a higher mortality risk.

Low socioeconomic status is associated with poor health, and a recent study showed that pediatric sleep apnea is more common in poor neighborhoods. Poorer people are also less likely to use CPAP machines when they have apnea. This may be due to concerns over cost or failure to seek treatment or to be aware of the problem of apnea.  

University of Chicago researchers found that higher-income people tend to sleep more than lower-income people, leading them to conclude that sleep exists “on the causal pathway between socioeconomic status (or race) and disease risk.” Sleep loss can increase the “allostatic load” and increase the risk of many chronic conditions, such as obesity, diabetes, and hypertension, heart attack, stroke, and depression which are more common among the poor.

The researchers also found that women sleep more than men, and white people sleep more than black people.

Time in bed7.517.847.347.557.10
Sleep latency (minutes)22.3313.3018.5228.3635.93
Sleep duration (hours)6.136.716.095.905.10
Sleep efficiency80.8%85.7%82.4%78.2%73.2%

People who live in urban areas with large populations are also at greater risk of sleep deprivation. This could be due to a complicated mix of factors that make them significantly more disadvantaged than those living in wealthier neighborhoods. Poorer individuals are often forced to work multiple jobs or overnight shifts, which interfere with sleep and cause extra stress and worry. They deal with more life stressors, often resulting in increased depression and anxious thoughts that keep them up at night. Crowded inner cities also have busy streets and thinner walls, creating increased noise and light pollution that disrupts sleep.

The chart below, from the 2013 National Health Interview Survey, shows the percentage of adults getting fewer than 6 hours of sleep based on their poverty level:

Sleep as a public health issue

One-third of American workers get fewer than 6 hours of sleep, leading the CDC to declare sleep deprivation a public health problem.

Sleep doesn’t work like a bank. The effects of sleep deprivation take a toll in both the short- and long-term. There is no “making up” of lost sleep. There’s no question that sleep disorders are a drag on the economy when it comes to lost productivity, increased medical expenses, and public safety.

Public safety risks caused by poor sleep

Lack of sleep is dangerous both to the individual as well as those around them, especially in the case of medical professionals or people who operate heavy machinery or drive for work.

When health care professionals don’t get sufficient sleep, their reduced attention spans and inability to concentrate can impact patients’ health outcomes. One study found that medical on-call residents working overnight shifts have twice as many attention failures, commit over a third more serious errors, and report 300 percent more errors than their counterparts who work 16-hour shifts. In a Harvard University study of hospital interns, those who worked overnight shifts were 61 percent more likely to stab themselves with a needle or scalpel, and 168 percent more likely to have a car crash. The near-miss crash rate was 460 percent higher.

Speaking of car crashes, driver fatigue has caused over 1.35 million car accidents in the U.S. One-fifth of all car crashes are from drowsy driving, resulting in 8,000 deaths a year. 80,000 people fall asleep at the wheel each day, and 10 percent of drivers run off the road.

The simple human errors that result from insufficient sleep also contributed to the Chernobyl nuclear explosion and the Challenger space shuttle disaster.

Health problems caused by lack of sleep

Getting poor sleep for a few nights is dangerous, but the long-term problems are just as deadly.  Lack of sleep leads to serious health issues such as heart disease, obesity, and diabetes. Certain sleep disorders even increase your risk of cancer.


Source: Inc.

The relationship between your sleep and your health is a cyclical one. Chronic sleep deprivation increases your appetite and cravings for junk food that facilitates obesity. Obesity often leads to  sleep apnea, further hindering the sleep you do get from being truly restful. In turn, the reduced amount of oxygen in your blood from the sleep apnea places you at higher risk for heart disease and high blood pressure.

People who regularly sleep between 6 to 7 hours a night have a 7 percent higher mortality risk than those who sleep more than 8, and the risk increases to 13 percent if they sleep fewer than 6 hours per night.

What can be done to improve our sleep?

The good news is that even small changes to our sleep could make a big impact on the economy and our health. If the people sleeping fewer than 6 hours got 1 more hour of sleep per night, it could result in $226.4 billion for the American economy, according to RAND. A study of medical interns who had their hours capped at 80 hours per week had failures in attention at less than half the rate of the ones working over 80 hours.

Public health officials and sleep researchers offer several solutions for helping us get more sleep, beginning with childhood. Children from lower socioeconomic groups tend to have less efficient sleep than wealthier kids, and experts believe this partially explains the gap in academic performance. The effects are worsened once they reach adolescence. When children enter puberty, they experience a circadian shift that causes their body to naturally fall asleep and wake up later than before. However, 80 percent of middle schools and 90 percent of high schools start before 8:30am, forcing kids to wake up earlier than when they’re ready and go to school exhausted.

RAND research found that pushing school start times back to 8:30 would add $140 billion to the economy within 15 years, due to the decrease in death from car crashes and higher student lifetime earnings. While there’d be initial costs in making such a systematic change, they estimated there would be a $8.6 billion gain within just the first 2 years, which would more than cover those costs.


Once people enter the workforce as adults, it’s up to employers to change their company culture around sleep. Just as companies have policies against smoking and sexual harassment, they should develop sleep-healthy policies that limit employee work hours or prevent executives from having to take redeye flights. For example, Aetna offers a sleep incentive program for employees. Brighter workplaces with more natural sunlight and discouraging people to “shut off” blue light devices at night will also help. Night owls and morning larks work best at certain times, and flexible work schedules should cater to those needs. Employee health care plans should cover sleep specialists and treatments.


There’s a common misconception that sleep is something that can be controlled, and made up for. Not only that, our culture makes heroes of people who get by without sleep, from Benjamin Franklin to Elon Musk. This kind of thinking encourages us that in order to succeed, we must give up on sleep. However, nothing could be further from the truth.

The reality is: The less sleep we get, the less productive we are. The less money our country makes. And the sicker we get.

The more we educate people on the importance of sleep and the dangers of not getting enough, the better off we’ll be as a society.

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