The economic cost of sleep: a Q&A with Marco Hafner


When Thomas Edison’s incandescent light bulb was granted a patent in 1880, little did the world realise that such a small invention had the potential to forever disrupt the natural order of day and night.

It was no secret that Edison was a staunch opponent of sleep. He believed that to stay ahead of the competition, you had to work harder and stay awake longer than your competitors.

This notion – that sleep deprivation is good for business – went on to inspire  generations, including the current leader of the world’s richest economy.

When Edison was alive, the field of sleep medicine didn’t even exist, so we can attribute his war on sleep, at least in part, to ignorance.

But in the 21st century, we know better. Sleeping for 4 hours a night (unless you’re genetically ‘blessed’) will categorically not transform you into a productivity super-hero.

Instead, insufficient sleep in the workforce is a colossal drain on performance. Workers who don’t get enough sleep suffer cognitive and motor skill impairment, bad moods, poor memory, higher risk taking – not to mention a horrorific list of ill health effects.

But if sleep deprivation is also a societal problem, surely all these factors would have a subsequent effect on economic output?

The 2016 RAND report

Up until a couple of years ago, no-one had ever attempted to quantify the economic impact of a sleep deprived workforce.

But in 2016, the RAND Corporation – an organisation responsible for some of recent history’s most influential public policy research – published a report titled “Why Sleep Matters — The Economic Costs of Insufficient Sleep” – a 100-page cross-country analysis that for the first time, gave a comprehensive, detailed breakdown of the true cost of sleep loss to the global economy.

Key Findings from the 2016 Rand Report
Key findings from the 2016 RAND Report on the cost of insufficient sleep to the economy (via Forbes)

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The report made a huge impact when it was published in 2016 and is widely regarded as a landmark study. Jeff Mann spoke to Marco Hafner, senior economist at RAND and co-author of the influential report, about his research, our societal attitudes towards sleep, and what businesses can do to mitigate the serious issues of insufficient sleep in the workplace.

This interview has been edited and condensed for clarity.

Quantifying the cost of sleep

Jeff Mann (JM): So how did an economist become interested in sleep?

Marco Hafner Senior Economist Rand Europe
Marco Hafner is a senior economist and research leader at RAND Europe working on employment, education and social policy research.
He completed his doctoral studies in economics and applied econometrics and holds a master’s degree in economics from the University of Zurich. (from

Marco Hafner (MH): It’s a very good question. I always get asked this when I talk about research, because as you say it’s often not quite clear why an economist should care about sleep.

In my case it’s clear. The average person doesn’t really care much about sleep …people complain if they have bad night’s sleep, but they don’t really care that much. I was the same for many years.

I considered myself on average a good sleeper, I never really had any big issues with insomnia or any other type of sleep disorder, but then I became a dad and my first daughter, who is now four and a half – I wouldn’t say she was the worst sleeper ever – but she was really bad at sleeping and I realized that after many nights of little sleep or none at all, I was just not really functioning anymore.

For example, I live in St Albans and my office is in Cambridge and I have a one hour drive to work. And there were many occasions where I came to the office and didn’t realise how I made it there – you know, near accidents caused by episodes of microsleep.

And over this long period of time where [my daughter] didn’t sleep – almost six months – my productivity dropped, I was always grumpy, my mental health was suffering and I just sort of realized, hey wow,  sleep is so important, and that’s how I got interested in the topic.

And then I wanted to understand what is the extent of the issue, what are the economic costs and try to quantify it.

What is the RAND corporation?

JM: Can you give us brief outline of the goals and aims of the RAND corporation and the type of work you’re specifically involved in?

MH: The RAND corporation is a public policy research institution. We conduct a lot of research, mainly specific policy areas that include defence and security policy but also health policy, labor, social policy, home affairs –  a very broad spectrum of projects and policies that we try to analyze.

It’s important to note that RAND corporation is a not for profit organization and one thing that we’re especially proud of is that we are nonpartisan, so we don’t take any kind of political stance. Our mission is really to do evidence-based policy analysis and research.

I’m involved in many different type of studies that need some sort of economic analysis or modelling. For instance we just conducted a study about how technology impacts  terrorism in Europe, but I would say my main kind of work is in the health and wellbeing sphere.

Specifically in the UK office we do a lot of research on health and well-being and what initiatives could lead to better productivity in the workplace in terms of mental health and physical health.

Research methodologies

JM: How did you go about your research?

MH: When I had this research idea I first looked around, started reading the scientific literature and I soon became aware that nobody has really tried to understand the wider economic cost of insufficient sleep.

There were a couple of studies that tried to look at the health care costs of people with insomnia, but I realized they were very specific about sleep disorders and any coverage of the economic implications was very limited.

So we had a type of economic modelling for a previous report on the global cost of antimicrobial resistance, to understand the economic implications of the future threat that antibiotics might stop working. And we used that model and adapted it to look at the wider economic costs of of insufficient sleep.

“I got emails from from people asking me who funded this study.. they thought it was the pharmaceutical industry”

So using survey data from another project with around 35,000 UK employees we found not surprisingly that people who sleep less than six hours a night are more likely to suffer from presenteeism, which is when they come to work but they don’t function optimally and hence lose lose a certain amount of their working time just by not being productive at work.

But it also leads to a higher level of absenteeism because we know that sleep [loss] makes you more vulnerable to infections like the flu or a cold so it also relates to people not showing up at work.

Comparing countries

In our study we looked at five different countries. We have data on a representative sample of populations of the US,  Japan, Germany, Canada and the United Kingdom. If you look at the relative figures, Japan suffers the biggest losses I think 2.9 percent of its GDP, but if you think of it, Japanese has a known word in its vocabulary meaning dying because of overwork, then this might not come as much of a surprise.

The economic costs of insufficient sleep
The estimated annual economic cost of insufficient sleep (RAND 2106)

The second one is the United States. Again, if you consider the the culture of the United States [as an example] for the first time ever I was invited to a sleep conference. This event started at 7:00 in the morning and they said you have to check your your slides at 6:00 a.m. That’s a joke, right! So you can see from the culture that these data makes sense because [the US] is a kind of working hard – get up early culture.

And then the third is the United Kingdom, followed by Germany and then Canada. Germany and Canada are not as severe as the the other three countries but still the overall economic losses due to insufficient sleep are still pretty substantial.

Reaction to the findings

JM: The 2016 report generated a lot of publicity. Were you surprised at the response to your findings?

MH: Yes I was surprised about the kind of global headlines the report made. It literally went viral from day one and our office had never ever had so many requests for media. It really was an unprecedented case, so yes the response was pretty big in that sense.

I also got emails from from people asking me who funded this study and they thought it was the pharmaceutical industry, in terms of sleeping pills and so on, and I said that’s not the case this was a RAND internal study.

Why sleep matters — the economic costs of insufficient sleep
Why sleep matters — the economic costs of insufficient sleep
A cross-country comparative analysis
Read the full report at

In terms of the kind of response from the business community, Arianna Huffington,  she’s obviously quite a big public sleep advocate and she used these numbers in TV interviews; there was a special report in the New York Times, again highlighting our numbers and since then I’ve see that generally there’s a wider awareness about the importance of sleep.

And I think there has been a bit of a shift in the corporate world where they actually start thinking about sleep; providing opportunities and interventions to improve sleep habits of employees, giving training to line managers to highlight the importance of sleep and trying to figure out within the workforce who has issues with sleeping, when productivity is dropping off or at least what might be the factors for this. So there seem to be a lot of companies trying to understand, based on our report, ‘what does this mean for my company?’

What can employers and businesses do?

JM: What are the types of changes that businesses could make to mitigate the problems of insufficient sleep in the workplace ?

MH: As you say there are still many CEOs or business leaders who say ‘sleep is for wimps’ and take [sleep deprivation] as a badge of honour, and that includes one of the most powerful men in the world – the President of the United States.

And you can definitely argue that if you’re an employee in the company where your CEO publicly says ‘sleep is for wimps’ then you will somehow see it as the proper culture and then probably your behaviour will be the same.

“Don’t sleep any more than you have to. I usually sleep about four hours per night…. That’s all I need, it gives me a competitive edge.” D.J. Trump (2004)

I think it’s important that companies try to understand that there needs to be some sort of cultural shift towards emphasising let’s say, the three pillars of health; healthy nutrition, regular exercise and also making sleep an important factor.

This could take various kind of forms like giving employees health initiatives like free gym membership, nutrition classes, sleep courses, because all the three things are related to each other.

If you do exercise you might sleep better. If you eat healthier it might have a positive effect on your sleep. So these three pillars go together and I think as an organization it’s important to understand this.

Productivity is not a linear function it’s nonlinear, it has an optimal point, and after a certain amount of hours it starts to sink. So I think we need to understand the non-linear relationship between working hours and productivity and that you can actually shift this curve of productivity by improving the health and well being of your employees and their sleep.

Shift work and irregular hours

JM: How about people who work irregular hours, say the gig economy?

MH: We haven’t specifically looked at how the new forms of work relate to sleep but what we know is that if you have irregular hours and work night shifts these types of working conditions are definitely associated with lower quality of sleep, lower duration and so on.

But you can also make the case that in the gig economy you can actually choose when you want to work. For instance if you’re an Uber driver, in theory, you can work the hours you’re most comfortable with.

But at the same time those jobs usually have a low job security – you know zero-hour contracts – subsequently that might lead to more insecurity in your life which obviously has a negative effect on your sleep as well.

So it’s not quite clear, you can speak to the positive and negative [aspects] of these new forms of work and I think that it needs a little more research on how those jobs potentially could be affected by sleep or how sleep affects your choice of going into this types of jobs.  I think that’s kind of an interesting question for future research.

Research into school start times

JM: Last year you also co-authored a report examining the economic effects of shifting school start times in the U.S. to 8.30am. Can you tell us about a bit more about this study?

MH: To come back to the general explanation of why it’s an issue, we know that during the onset of puberty the circadian rhythm shifts and for teenagers it’s delayed by up to two or three hours. So that means teenagers are not just lazy, they just physically cannot fall asleep before 11 p.m. So subsequently in the morning it’s very difficult for them to get up before 8 a.m.

Later School Start Times In The U.S.
Later School Start Times In The U.S. – An Economic Analysis RAND Aug 2017
Read the full report

Now in the US if you look at average start school start times for high school it’s just before 8 a.m. which sounds OK but there are still around 40 percent of schools that are actually 7:30 or earlier.

And the journey to school it’s often quite long depending on where you live, so many teenagers need to get up at 4:30-5 in the morning which is the equivalent of [an adult] waking up at 2:00 to 3:00 in the morning.

If you think about it, if I got up every single day from 2:00 to 3:00 am  I would definitely be a zombie.

“High school students have to get up the earliest which is totally against their nature and that’s literally  99% driven by the fact that schools want to save money.”

And these kids have to do tests in the morning, and [sleep loss] really impairs their ability to learn, to be productive, it impairs their grades. It has negative consequences on their health too; increases obesity levels, increases the risk factor for substance abuse, suicidal thoughts, decreases mental health and so on.

So there’s a lot of research over the last 20 years which shows all this, but there hasn’t been any kind of attempt to try to shift [these policies].

So the question is why?  And the reason is schools want to save money.

So in the U.S. the schools have different levels, primary school, middle and high school. And in order to save money they just buy one fleet of buses.

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And the buses first pick up the the older kids – the high schoolers – and drop them at school. Then they come back take the middle schoolers and then they go back and pick up the youngest ones.

So that means high school students have to get up the earliest which is totally against their nature, and that’s literally  99% driven by the fact that schools want to save money.

And there’s a huge movement in the U.S. that’s trying to change this but nobody ever has really done an economic analysis around this.

For this reason we wanted to try to bridge the gap and see what could be  the indications if each of these states would shift their school start times to 8:30, which is the recommended minimum time that the major medical association’s in the U.S. try to establish.

Making friends and enemies

JM: How was the school start times report received?

MH: I think I made a lot of friends and maybe some enemies because it’s a very politicized topic in the US.

When the report came out I was on a live radio show in Wisconsin, with call-in questions from people who were driving to work and some of them told me [the report] is rubbish and we’re just gonna give the Chinese a more competitive advantage if our kids don’t go to school early.

It’s a very polarized topic but generally I think it was pretty well received. We got a lot of questions about it and a lot of requests if we could do this on a granular level of schools but I said unfortunately we don’t have the data on that and we had to do it on state by state level. But generally RAND saw it as one of the most impactful reports of of last year.

Final thoughts

JM: Away from economics, what are your general thoughts about about sleep health?

MH: It’s such an important thing, it’s definitely related to happiness, life satisfaction, we’re less grumpy, less likely to be depressed, we’re better people. I’m a better parent when I sleep better, I’m getting less stressed with my kids.

There’s so many factors where sleep is affecting our day to day lives. There’s a lot of research that shows that employees who sleep better make less dodgy decisions, they’re more trustworthy. Even from a social perspective, linkages and interactions between human beings are driven by sleep, the safety of our communities, being better drivers.

At the end of day sleep is just the most fascinating thing and it’s something that we don’t fully understand yet, which drives me as a researcher to better understand,  first of all, why we sleep and also the impacts of not sleeping enough.

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