It’s almost here.
Lasting 24 hours and one second, December 31st will be longer than almost every other day. The reason is the leap second.
Where are we going? To lowering our transaction costs.
The Reason For the Leap Second
Although one day and night are supposed to last for 86,400 seconds, the total is closer to 86,400.002. Because of that (approximate) .002 difference between our clocks and the earth, the time creeps away from where we think it should be. Doing nothing, eventually we would be having lunch in the moonlight.
The solution is the leap second. Added 27 times since 1972, the leap second will again materialize on Saturday, December 31st. At 23.59.59, the clocks will go to 23:59:60 rather than 00.00.00. My leap second on the U.S. East Coast will be at 18:59:59.
Actually, based on the the earth’s rotation, every day is a different length:
During the 19th century, people in the U.S. disagreed about the time. In one town it could be 12:00 and just a few miles away, 12:05. Imagine the problem the discrepancy creates. When to meet for lunch? How to validate the time of a contract? Which time to use for train arrivals? While the four time zone solution initially came from the railroads in 1883, it took until 1918 for the Congress to agree.
We could say that leap seconds also help us to standardize our time.
Our Bottom Line: Transaction Costs
Standardization is all about transaction costs. Referring to the extra tasks that a purchase or a contract or even a phone call require, transaction costs involve the time and energy we sacrifice to get something done.
Centuries ago in Europe, merchants traveling from town to town had no common system of measurement. So, at each stop, they had to connect a price to a certain quantity. The time and energy they wasted was their transaction cost.
Transaction costs decreased when everyone everywhere agreed what a meter and what a pound would equal. Similarly, transaction costs are diminished with the same language and currency and time. And they go down even more from the standardization created by the EU, the eurozone and the euro. (At this point some might say there can be too much standardization.)
But I guess we’ve taken a giant leap. And that returns us to where we began.
My sources and more: For all you want to know about leap seconds, I recommend timeanddate.com and this article from Quartz. But the very best was this podcast and this blog from NPR’s Radio Lab on standardization.