“Reading in word units is the most important characteristic of the mature reader,” says David Jury in his book, About Face: Reviving the Rules of Typography.

A beginning reader reads in a linear way, word by word. A mature reader reads in word groups in a series of quick back and forth movements across a line of text. Between these jumps, called saccades, our eyes stop for a fraction of a second. These stops, or fixations, may occur many times a second. The more proficient a reader is, the longer are the jumps and the fewer the stops.

In eye-movement tests, upper case letters require far more fixation points than do lower case letters, adding to the time required to read.  Experiments by Tinker and Patterson in 1928 found that reading all caps was 11.8% slower than reading lower case. A later study, which measured longer reading periods, found all upper case to be 19% slower for reading periods of five and ten minutes, and 13.9% slower for reading periods of twenty minutes. Presumably, as the reading period lengthened, the readers grew more accustomed to reading all caps, which may suggest one reason that reading upper and lower case mixed is easier and quicker to read—we are used to it.
On the other hand, some studies indicate that the distinctive word shapes produced by the ascenders and descenders in lower case lettering also play a part in quick word recognition.

It’s interesting that if we cover the top half of a line of lower case lettering, it is almost impossible to read. But if we cover the bottom half, it is still possible to read the text, suggesting that the upper parts of the letters and the ascenders are especially important in word recognition.

Regardless of the reason for it, reading text in all caps can increase the time necessary to read a message, whether it’s on a book page or on a sign.

Upper case takes up 40-50% more area. This reduces the number of words perceived within each eye fixation, which may explain the increased number of fixations required for all caps.  Line spacing needs to be increased slightly with all upper case for it to be legible. The result is that signs in all upper case tend to look more filled, busier, more crowded, than the same amount of copy in mixed case.

In sign work, it is important for a viewer to read messages easily and quickly. Anything we as designers can do to speed up and facilitate the process is going to be of benefit.