Economic values of sleep: monetary compensation for sleep hours

Abstract This study explores how subjective well-being (SWB) is influenced by the quantity and quality of sleep. We measure the degree of impact by considering the effect of household income on SWB based on individual-level survey data. Our study revealed four key findings. (1) Sleep hours are positively correlated with SWB, while bedtime is negatively associated with SWB. This trend persists even after controlling for self-reported health status. (2) The effect of sleep hours persists after controlling for endogenous biases using instrumental variables, whereas the bedtime effect disappears. (3) The marginal effect of an additional hour of sleep decreased as sleep hours decreased and became negative from eight to nine hours. Thus, SWB is maximized at eight hours of sleep. (4) The effect of an additional hour after four hours of sleep is equivalent to that of a 39-percentage point increase in household income on SWB. This percentage declined to 29 (after five to six sleep hours), 18 (after six to seven sleep hours), and seven (after seven to eight sleep hours).