Wednesday, 16 January 2013

Zombie nation? (an update on a sleepless world)

Sadly this isn't a post about German trance band made famous by this piece of popular music (slightly NSFW) but a follow up to my previous post about sleep reduction and the economy. It stirred up plenty of debate here and at Marginal Revolution and EconLog so I thought I'd follow up with some amendments and replies. Thanks to everyone who linked and commented- working through a new idea like this is exactly what I hoped the blog would allow.

Is 2.5 hours realistic?

Plenty of responses were sceptical whether modafinil could reduce sleep to 2.5 hours a night regularly. This is a fair point and the figure is definitely toward the extreme end of reported experiences on the Internet and most of these were not long term users. I used the 2.5 hours as an extreme case (which it's fair to say is probably not achievable for most people with current medicine) but the more common experiences seem to be people who reduce their sleep by a few hours habitually and people who use the drugs to stay up for extended periods once in a while without suffering the drastic cognitive declines insomnia normally entails. It'd probably be possible to keep people up for this long but I'll agree with the commenters that this is likely unsafe. So current drugs such as Modafinil are probably not capable of changing a whole population over to a 2.5 hour sleep schedule, so we would probably be looking at smaller increases in the work day than the 34% discussed. Still, the mechanisms of increased productivity should still apply albeit at a smaller magnitude.

40 hour weeks are as much as we can do

Other commenters suggested that a 40 hour work week is the maximum productive number of hours people could manage. This may be true at present but most of the studies on these drugs do suggest they have a substantial impact on reducing fatigue and maintaining performance. I'd see this 40 hour limit as a contingent fact of our normal mental state rather than a cast iron rule. These drugs are doing more than keeping users awake in an undead state but actually prolonging the time that they are able to be alert.

An arguably stronger effect of this class of drugs would be increasing the productivity of those already working long hours. The current usage of these drugs seem to support this view. A study of doctors found that their performance during long shifts was significantly improved by taking modafinil. The authors conclude that:

 Our results suggest that fatigued doctors might benefit from pharmacological enhancement in situations that require efficient information processing, flexible thinking, and decision making under time pressure. However, no improvement is likely to be seen in the performance of basic procedural tasks.

Sleep is important

At the moment this is definitely true and there is convincing evidence that sleep promotes memory consolidation. What we don't seem to know (it'd be good to hear from any sleep experts who have a more complete answer) is how much sleep is required and whether these functions are affected (positively or negatively) by wakefulness drugs.

People enjoy sleep

I am genuinely not sure if this is true. I certainly enjoy dreaming (which is only a small proportion of total sleep), snoozing (that half asleep phase after you wake up) and feeling refreshed. But I'm not sure I like sleeping 8 hours simply because it meant I was asleep for 8 hours. If I could feel equally refreshed and remember just as many dreams after 3 hours I'd probably be just as satisfied. I'm not sure if the number of hours in which I was not experiencing anything is something I value in itself so much as for the effects it has on me.

I don't want to work more hours

This was probably the most commonly made point. Whether this is valid comes down to whether we care about the proportion of our time that we are at work or the total amount of work we do in a day. The American Time Use Survey in the previous post suggests that (at least on work days) people spend more of their waking hours working than all other activities combined (this includes household tasks and caring for dependents). If we do get extra wakeful time it could all go to leisure but this would be a huge increase in the proportion of our waking lives spent in leisure. This of course is no bad thing but our current tendency spend a high proportion of our time on work suggests that people do not value leisure so much as to forgo wages substantially.

The split I suggested would increase leisure time much more proportionally than it would work time. Nevertheless, it is an open question whether we fundamentally dislike working more than 8 hours a day regardless of the time we spend in leisure. It is possible that regularly working 11 hour days would be unpleasant regardless of how much leisure time was available for relaxing. There may be timetable that can allow extended breaks of several hours during the day but everyone knows lunch breaks don't feel as good as real time off.


Signalling?

Nelly wrote that:
"These drugs may make someone more productive on a daily basis, but wouldn't necessarily make someone more productive on an hourly basis. Maybe more importantly, it is quite possible that those who would choose to take these drugs would be negatively selected. They would likely be taking them to become more competitive, which would be in line with your increasing the labor supply argument."


This is an interesting point and might be true to begin with. However, if the negative selected individuals are managing to compete with those with a higher underlying skill, it might make sense for skilled people to take these drugs as well in order to maintain their position. In a jobs market where the payoff to human capital is partially positional (i.e. almost every jobs market), people with higher talent are disadvantaged by people with lower talent using drugs to catch up. If the talented can't stop the dopers from using drugs, then they may be pushed towards joining them.

This creeping economic pressure to use these drugs is still the most convincing argument against their use. But this is roughly analogous to the economic pressures to use any other technology. Workers who refuse to use any motorized transport limit their job opportunities and only a few farmers still use pre-industrial methods. That's not to say that cars and fertilizer are purely positive developments but they still spread rapidly.

These pressures mean that if we do decide that we don't want to live in a society that relies on these drugs, we may have to actively regulate them rather than leaving the decision to individuals.

Sunday, 13 January 2013

The Sleepless World: One more piece of low hanging fruit?

Update: more detail on the argument and responses to it here

Tyler Cowen at Marginal Revolution is a major proponent of the Great Stagnation thesis: that new innovations are not having the same impact on productivity as those we saw in the previous 150 years. Think of iPads versus electricity and cloud computing versus the railroad. Hence, we can expect to see slowing growth in GDP per capita as future productivity gains will take much more effort to unlock. This week The Economist took up this line of thought with a thorough briefing on the subject that broadly agreed with Cowen, although with some equivocation.

Overall, I think the argument has a lot of merit but there may be at least one more piece of low hanging fruit: a vast reduction in our need for sleep.


The American Time Use survey reports that an average American work day includes 8.8 hours of work and 7.6 hours of sleep. Sleep is the second largest single use of time. However, new drugs such as Modafinil appear to vastly reduce the need for sleep without significant side effects (at least so far). Based on reports from users, it seems that people could realistically [edit: potentially (see update)] cut their sleep requirements to as few as 2.5 hours a night without a decrease in mental acuity. That gives us another 5 hours to distribute over the day.

Workers would probably prefer to allocate the bulk of that extra time to leisure but I doubt employers will let that happen. Let's make a generous breakdown and give work an extra 3 hours and let workers spend another 2 as they wish. This increases working hours by around 34% and potentially increases leisure time by 80%. This increases the number of hours a worker spends at work from around 1800 hours a year now to about 2,400.

So would this lead to an increase in productivity? That partially depends on how we measure it. If we look at output per worker, then a 34% increase in hours worked would be a substantial boost in productivity and would surely lead to increased economic growth. This alone makes a sleepless world a classic example of low hanging fruit (although it may be closer to an increase in labour force participation than a productivity boost from innovation).

However, there are also reasons to think that output per worker hour may be improved by longer hours. Let's assume that the additional hours worked allow companies to keep the same production with a quarter fewer workers.  Why hire four workers for a task, when you can hire the three workers who are most productive to do more hours?

That process would be a major gain for firms. They can hugely reduce costs by spreading the fixed cost per worker over more hours of work. More hours worked shouldn't increase costs of healthcare, training and fringe benefits so the fixed costs fall in line with their reduced workforce.

There are also productivity boosts by lengthening the work day itself in terms of travel time, starting up computers and lunch breaks that we wouldn't expect to increase at the same rate as hours worked. The longer work day may also push forward globalization as workdays overlap for longer periods across time-zones.

Once again though, the gains go even deeper than this. Probably the largest productivity improvement  of all will be in human capital accumulation and the returns an individual can expect from it. From the perspective of a student, a sleepless world is an increase of a third in expected working lifespan giving a longer time period for her to benefit from the investment she has made in her human capital. It also means she can potentially finish her education in a shorter time or use the additional waking hours in employment, reducing the opportunity cost of an extended university education.

The sleepless world may finally begin to reverse the age inequality in employment (at least temporarily). Young people will accumulate job experience at a faster rate through more hours of work experience. They may also be more willing to adopt the new drugs than older generations increasing their relative value as employees.

So given the benefits, do we want to grab this piece of low hanging fruit?

The main argument against it is that it will not be a voluntary choice for an individual. If these drugs become widely available then workers who are willing to use them will easily out-compete those who do not. In addition, if the drugs are expensive then it will further increase inequality between those who can afford them and those for whom the price is prohibitive. However, a Google search of various dubious websites suggest the current drugs retail for around $5 a day. At that price, even those working at minimum wage would find it worthwhile to buy the pills.

The final argument against is that a rapid introduction of these pills would amount to an increase in the labour supply and cause a fall in hourly wages or unemployment. However, it's likely that individuals would generally still see an increase in their overall income and their additional leisure time (2 hours extra) would allow this to be translated into an increase in demand in the economy through increased consumption.

Overall the transition to a sleepless world seems beneficial to humanity. There's nothing special about the 7 hours of sleep we get right now and I think people would rightly be opposed to a change that made everyone spend an extra hour asleep every day.

Caveats:
  • I've never used Modafinil. This is because I don't know where to buy it, I have some moral qualms about using it when the rest of the world is not and because it is still a bit early to conclude that there are no long term health effects;
  • Some people I've talked to have raised the issue of environmental damage. I think the total environmental impact of a sleepless world could be positive or negative but surely the damage would be lower per unit of output (because there are a lot of fixed carbon outputs per work day such as commuting and building overheads). At the very least, a sleepless world looks like a more environmentally friendly growth strategy;
  • This argument is premised on the safety of these drugs. Clearly the calculus will change if they are shown to have negative long term consequences;
  • For those people who already work long hours with little sleep, these drugs should at least make that lifestyle less dangerous. There is convincing evidence that chronic lack of sleep is harmful in normal circumstances;
  • The precise amount of sleep that a Modafinil user can get by with seems to vary but all sources I've seen suggest it is dramatically lower;
  • The short term costs of a rapid change might be substantial so gradual adoption is probably preferable from the standpoint of welfare.