In March 2021, concerns about excessive workload among junior analysts at Goldman Sachs once again highlighted the issue of long working hours in the finance industry. This followed previous instances, such as the tragic death of intern Moritz Erhard, which drew attention to grueling work conditions in investment banks. In response, many investment banks implemented "protected-weekend" policies between late 2013 and early 2014, aiming to improve the work-life balance of junior bankers by guaranteeing them free time on weekends, particularly Saturdays.

Professor Deniz Okat and his colleague set out to study the effects of these policies on bankers' working hours and the quality of their work. The main challenge was measuring actual working hours in banks. Such data have never been analyzed by researchers before as it is considered confidential. Prof Deniz and his colleague decided to use a different approach to assess bankers’ working hours. They obtained data on all taxi rides in New York City. This data set includes more than a billion rides over 6 years period. Then they focused on 16 million taxi rides originating from 10 large investment banks in New York City. Some of these investment banks adopted the policy, some others did not. Such variation allowed them to analyze the effect of the protected-weekend policy.

Their analysis revealed several key findings. First, the policy successfully reduced weekend work among bankers, particularly on Saturdays, as expected. However, it also led to longer working hours during non-protected days, especially during summer internship weeks. They observed an increase in late-night weekday rides originating from these banks, suggesting a shift in working hours toward weekdays.

Moving beyond working hours, the researchers examined the effect of the policy on bankers’ performance. They found that the policy adversely affected the quality of work. Analysts at policy banks experienced an increase in forecast errors of nearly 10% compared to other analysts. Additionally, analysts at policy banks exhibited a 1.4% higher tendency to issue herding forecasts post-policy, indicating a convergence of forecasts towards consensus.

Further analysis revealed that the adverse effects of the policy were most pronounced among junior analysts, particularly those with less than two years of experience. These analysts experienced a 12.4% increase in forecast errors and were 3% more likely to issue herding forecasts after the policy. In contrast, senior analysts with more than five years of experience did not show significant changes in forecast errors or herding behavior.

In conclusion, while protected-weekend policies aimed to address concerns about work-life balance in the finance industry, they inadvertently led to longer working hours on non-protected days and lower-quality work, particularly among junior analysts. This highlights the complexities of balancing professional demands with personal well-being in a competitive industry.