Modafinil appears to let people cut down on sleep with no obvious side effects. Garrett Jones asks what it would mean for the economy if people stopped sleeping:

Normal microeconomics makes the right answer obvious: A rise in supply pushes down the price of work, so wages will fall. But normal microeconomics only takes you so far: to get at dynamics and interdependence you need some kind of macroeconomics, a tool for seeing the big picture.

So here's what probably happens when drugs make it easier to work more hours: All those extra work hours make capital more valuable, since your assembly line, your delivery truck, your call center can now all produce more output per machine.

What happens when something gets more valuable? People try to accumulate more of it. And what happens when the economy accumulates more capital? All those extra machines probably make workers more productive, boosting labor demand and therefore raising wages.

Matt Yglesias pushes back:

The most important place to start is probably just to remember that the world is a great big place full of enormous diversity. People in certain kinds of high-status professions—CEOs and Ezra Klein and such—will presumably be de facto required to work 18 hour days if they can get by on two hours of sleep. All the way at the other end of the spectrum, people like migrant factory workers in China (or whatever the new China is in terms of sweatshop work) will probably do the same, working super-long workweeks in order to save up money and go back home.

But beyond that . . . I dunno. A larger labor supply could push down wages reversing the historic trend toward shorter working hours in developed countries. But that's a bit simplistic. Wages aren't lower in Boston than in Bangor because of the larger labor supply. Maybe less sleep-deprived workers would be more productive and wages would go up. Maybe consumption of local services would skyrocket (more nights out on the town) and demand for labor would rise. Maybe all those doped-up CEOs working 18 hour days would start spectacularly mismanaging their companies, yet nobody would be willing or able to admit that it would make more sense to put in fewer hours.

I think the demand side is the most interesting piece. What does a world look like in which people don't sleep as much?

The mattress industry is presumably devastated; I'm not going to drop a lot of money on a place where I don't spend much time.

Demand for leisure services, on the other hand, should rise. Bars, restaurants, and television are all dormant during the wee sma' hours of the morning because most people sleep then. If they stop sleeping, there will be enormous pressure for the leisure industry to go 24 hours. That will push up demand for labor in those industries.

Health care delivery would have to change. All of those awake, active people are going to experience more health events in the middle of the night. Unless we stagger the hours of medical service provision, all those people will end up in the emergency room.

Overall, I expect that most non-elite workers will resist the pressure to work longer hours, at least initially. On the other hand, they will want more money to spend on leisure, so they will probably up their hours at least somewhat. I would also expect work to emerge as a way to get away from your family--even a loving couple with two adorable children does not necessarily want to spend fourteen hours a day together. Unless you have extra money to spend on leisure, the end of sleep will put a lot of stress on your marriage.

I'd expect to see more sex, the cheapest form of leisure there is. And some associated rise in spending on this category.

And the resulting children? This is the most interesting question of all. Presumably, we don't give them modafinil, so they'll be sleeping. This means changes to the childcare economy, at a minimum; it should be cheaper to provide nightcare to sleeping kids than daycare to awake ones. Parents might opt to shift work schedules: work while the child is asleep, and spend days with them. Or not, because many people don't like spending fourteen hours in a row with a toddler. I'd imagine there would be social pressure to spend as much time as possible with your kids, with unpredictable results.

It also changes the costs of having children. You get hours of leisure while the tots are sleeping, lowering the leisure cost--but you probably can't leave the house. Arguably, this raises the leisure cost of having children; you're now giving up twice as many leisure hours. On the other hand, if you don't need to sleep, a lot of the burden of childcare becomes less onerous. One could go on and on . . . this would be one of the biggest changes we'd see.

But as Matt says, it's actually really hard to predict how it would all shake out. Though also, really fun to speculate.