Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana

This paper takes advantage of a natural experiment in the state of Indiana to estimate the effect of Daylight Saving Time (DST) on residential electricity consumption. Our main finding is that—contrary to the policy’s intent—DST increases residential electricity demand. Estimates of the overall increase are approximately 1 percent, but DST causes the greatest increase in electricity consumption in the fall, when estimates range between 2 and 4 percent. These findings are consistent with simulation results that point to a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate the cost of increased electricity bills to Indiana households to be $9 million per year. We also estimate social costs of increased pollution emissions between $1.7 to $5.5 million per year. Finally, we argue that the effect is likely to be even stronger in other regions of the United States. * We thank numerous seminar and conference participants, along with two anonymous referees, for many helpful comments that improved the paper. We are grateful to Dick Stevie and Monica Redman of Duke Energy for generously providing data and assistance throughout, and we gratefully acknowledge financial support from the University of California Energy Institute. † Corresponding author: 226 Kroon Hall, Yale University, New Haven, CT 06511. Tel: (203) 432-9533. Fax (203) 436-9150. Email: [email protected]. ‡ An earlier version of this paper has been circulated with the same title as NBER Working Paper 14429.