Get rich in your sleep

I think it is a dream of many people to get rich in their sleep. Well, good news, that is possible according to a study by Joan Costa-Font and her collaborators.

Ok, I admit it’s not quite ‘getting rich’ and not exactly ‘in their sleep’ but bear with me and my poor attempt at generating clickbait.

The researchers were interested in identifying the influence sleep plays on labour market outcomes, and the wages people earn. This isn’t as easy as you might think because sleep varies from person to person and throughout the lifetime of each person. Younger and older people sleep more and, obviously, parents of young children (particularly mothers) sleep less. Furthermore, there is potentially a link between wages and sleep because people who have higher-paid jobs tend to sleep less because their job is time demanding.

There are lots of other factors that could potentially mess up any investigation of how sleep affects labour market outcomes, but thanks to the German Socio-economic Panel, these can be avoided to a large extent. The panel interviews Germans annually about their lives, including their health and work and, crucially, since 2008 also about their sleep habits. This data allows us to track individuals over time and check how sleep changes and how that affects their work.

And the results are quite dramatic, I think. The average person sleeps about 49 hours per week (7 hours per day). Increasing sleep time by just one hour per week (2% more sleep) increases average weekly wages by 3.4%. At the same time, people who sleep more see a slight reduction in hours worked, indicating that the benefit of additional sleep is driven by becoming more productive.

Being well-rested has so many benefits for you, and the health benefits are well documented, but if you are interested in a good book on the topic, I recommend Life Time by Russell Foster. But it seems that being well-rested is also good for your finances and your career. By being more productive at work, you start to enjoy work more and get raises and promotions more easily. And by being well-rested, people who previously weren’t willing to get a job now have the energy to do so. Labour market participation increased by 1.6% for people who slept one hour per week more. This increase in labour market participation seems to be driven mainly by women and in particular mothers who feel like they can get a job while previously they were too exhausted to take care of the kids and go to work.

Personally, I have no respect for people who brag about how little sleep they need or how much their job prevents them from sleeping. Investment bankers always seem to think that pulling long hours is a badge of honour, while I think it is plain stupid, makes them less productive and lowers the quality of their work. Instead, I would recommend introducing sleep pods and other facilities to take 20-minute power naps during the day. That is probably one of the best investments a company can make to increase productivity.