Tuesday, March 11, 2008

Some thoughts on DST

A post at MR and even earlier at Half Changed World got me thinking about DST and its effects on power usage. Here are 2 possible changes:
1. Usage does not change - it stays the same but just slides along by the hour change.
2. It changes at the margins at the beginning and at the end of the day.
Both of these indicate that at best the effects of DST on are small. #2 indicates that as the weeks pass the changes at the margin are not constant across the entire DST period.

A paper by Ryan Kellogg and Hendrik Wolff estimate the effects of DST on energy use based on an "experiment" in Australia when because of the Olympics, 2 states in Australia extended their DST by 2 months. This paper used half hourly data on energy use in the two states in Australia (1 that extended DST and another that did not -- another state which hosted the Olympics was not included. ) This was an impressive attempt at trying to obtain the causal effect of DST. They find that extending DST did not save energy which with some introspection is not unlikely. There were some weaknesses in the paper none of which can be attributed to the authors:
1. The aggregated nature of the data did not allow them to separately identify the effects of DST on residential versus industry energy demand.
2. The two extra months of DST did not allow them to measure the effects of DST over the entire DST period which runs from March through October.
Overall, Figures 3 and 6 in the paper pretty much summarized their findings although they had to estimate whether the increase in consumption early in the day outweighed the savings at the end of the day (Figure 6). The technical details of their estimator was a little overwhelming for me however. The title of the paper is: Does Extending Daylight Savings Time Save Energy? Evidence from An Australian Experiment. Their paper can be found here: http://repositories.cdlib.org/ucei/csem/CSEMWP-163/

Some of the deficiencies in the Kellogg and Wolff data were overcome by Matthew Kotchen and Laura Grant "Does Daylight Savings Time Save Energy? Evidence from a Natural Experiment in Indiana". They take advantage of the fact that some counties in Indiana never observed DST while some did and in 2006 a law forced all counties to comply. This allowed for indentification of the effects of daylight savings. They focus on residential energy use -- their data are the monthly bills of all residential customers in Indiana for three years (2004, 2005, 2006) which allows them to also estimate the effects of DST over the entired period covered by DST. They find that DST actually increases energy usage! This finding made it to the general public on various blogs and news releases. Unfortunately, their findings are marred by an error in their specification. They use interaction variables to identify the effect of DST but fail to include all of the interactions as main effects as well. More on this here. I liked their attempt to confirm their findings using a DOE simulation of home energy use, though. Their findings (?) however are not really representative of the country.
Their paper can be found here (at the time of writing): http://www2.bren.ucsb.edu/~kotchen/links/DSTpaper.pdf

Final thoughts: If all we're interested in are the differences in energy use due to the one hour difference, it seems like we could look at energy use for towns that are sufficiently "close" to the border of different time zones and just look at the differences in differences of those as well. Unfortunately, the dividing line for time zones usually go through rural areas. Perhaps I'm missing something because this seems like another obvious place to look. Another obvious comparison is Arizona with another state since AZ does not observe DST as well (?) The drawback here is that AZ is not comparable to other states since differences in differences will not work in this case.

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