Measuring Replacement Value of Non-Market Household Services Using New Data Improves Reliability

In many jurisdictions, plaintiffs are permitted to recover the replacement value of lost non-market household services in wrongful death and some personal injury cases. Non-market household services are those services provided by the deceased or injured plaintiff which have economic value to the household but for which no wages were paid, such as cooking and home maintenance. Economists traditionally have used a number of methodologies to compute these values. The latest version of a new U.S. Bureau of Labor Statistics (BLS) study has made the use of some of these methods more reliable when combined with other BLS data on wages.

The new study is referred to as The American Time Use Survey (ATUS) (Note 1). It is published annually and provides current information on how Americans use their non-market time. The new study is based on a larger survey and broader coverage of time utilization. The time for each analysis totals 168 weekly hours (24x7), so there is no omission. The tables provide information on a variety of family

The ATUS information has been incorporated into a new statistical study done by Expectancy Data Corp (ED) (Note 2). This study, which combines the ATUS information with current BLS occupational wage data, provides a reliable benchmark for average replacement cost analysis. This version is the second edition of this study. The prior version relied on an early time use study. The average information in the

Based on our work with the 9/11 Victims Compensation Fund, we rely on the actual estimates of hours contributed to the household, when available, as the basis for determining future replacement value. Estimates of average weekly hours are typically made by the plaintiff's family/household based on the best

When estimates of the hours contributed by the plaintiff just prior to the death or injury are available, they can be combined with current wage rates for comparable occupations to compute the replacement value of lost household services. The more problematic step involves computing FUTURE lost replacement values. Estimates of future hours should consider the changing capabilities of the provider and the needs of the household family members.

The preferred method for determining replacement value of non-market services is still based upon actual hours of service provided to the plaintiff's household. In the absence of specific information, the ATUS information may provide a proxy for actual hours. At least, they provide the economist with a "reality check" on the reported hours. The timely publication of annual ATUS and ED studies increases the reliability of estimates of household services prepared by economists.

1 See, BLS News Release USDL 05-1766 September 20, 2005, "American Time Use Survey - 2004"

2 Expectancy Data Corp., The Dollar Value of a Day, 2003 Dollar Valuations, Shawnee Mission KS, 2005. This company provides a number of statistical studies of demographic and economic trends. These studies are relied upon by many economists.