ECONOMIC EXPERT
JOHN F. SASE
PH.D. Economics
   248.569.5228

Valuing Household Services Lost in Cases of Disabling Injury and Death

By Dr. John F. Sase

 

“Fewer than 25 percent of American households are made up of a married man and woman with their children. So what do families look like now? The year 2000 marked the first time that less than 25 percent of American households were made up of a married man and woman and one or more of their children--a drop from 45 percent in 1960. This number is expected to fall to 20 percent by 2010. In real life, in big cities and in smaller towns, families are single moms, they’re stepfamilies, they’re boyfriends and girlfriends not getting married at the moment, they’re foster parents, they’re two dads or two moms, they’re a village. In real life … families are richly diverse.”

--Cris Beam, “The Changing American Family,” American Baby Magazine, May 2005


In cases of wrongful death or debilitating personal injury, the Value of Lost Household Services is a major economic factor. Whether or not these losses are admitted into evidence in any specific case, the Value of Lost Household Services may account for a significant proportion of the total economic loss. This proportion can range from nothing to most of the economic damages in a given lawsuit. Families in the past usually had some members who were not employed full-time. These folks tended to be the caretakers-at-home for the children, invalids, and the elderly. However, due to economic change and opportunities for women in the workplace, most families do not have the luxury of a pair of spare hands. The role of caretaker has become a commercial service obtained in the marketplace.


Many attorneys handle cases of wrongful death, debilitating personal injury that leads to a diminution of capacity, or both. Since the total economic loss in these cases is affected so strongly by the Value of Lost Household Services, we feel that an explanation of the concept of Household Services will be beneficial to our audience of attorneys and other legal professionals. Therefore, this month’s column presents an overview of the valuation of Household Services and a discussion of the inherent problems of measuring them. Also, the commonly accepted methods and data sources used by economists will be addressed.


Forensic Economists rely upon standardized tables that summarize the average hours worked and the hourly Value of Household Services. These tables come to us from survey-sampling and analyses using methodology from the Social Sciences. The sources that are relied upon most are the time-diary data in the American Time-Use Survey (ATUS) and wage surveys, both of which are produced by the U.S. Department of Labor, Bureau of Labor Statistics.


Stratified and segmented samples represent a wide cross-section of the U.S. population. The most notable determinants in the measurement of Household Services are gender, age, and work-status. The nature of these services varies over time and by family situation. Across all age groups in two-adult households, the results of research indicate that women work a greater number of hours of Household Services than do men; no surprise here. Furthermore, this phenomenon endures whether or not there are minor children in the household and whether or not both adults work outside of the home or attend school, full-time, part-time, or not at all. In order to achieve greater accuracy and specificity for individual cases, researchers stratify and segment the large sample by key characteristics. Even with the numerous segments and strata used for these determinations, many exceptions to the norm still exist. In addition, that norm continues to shift over time. Nevertheless, some determinations remain the same, or at least similar.


As an example, let us look at a married male working full-time who has a spouse that is not employed outside of the home and has at least one child who is under thirteen years of age. The man in question averages twenty hours of household-service work per week. In contrast, a married female characterized as a homemaker whose youngest child is under the age of thirteen may perform more than fifty-three hours of such work per week.


Contrastingly, a married male-female couple, each under the age of forty-five and with no minor children, averages twenty-one hours of household services for the female and fourteen for the male. For a similarly situated couple in which both parties are retired, the household work is reported as an average of thirty-three hours for the female and twenty-three hours for the male. 


However, extenuating circumstances provide exceptions, which may include older dependents that are physically or mentally challenged. We generally consider attendant responsibilities for dependent children until their eighteenth birthday. It is important to note that the degree of attendant responsibility for children varies with age.


Therefore, we distinguish among pre-adolescents who are under thirteen years of age, adolescents who are thirteen- through seventeen-years-old, and young adults who are eighteen years old and older. All of these statuses are considered as separate groups.

In measuring the tasks that each of us performs during an average day, two categories of services command center stage in Forensic Economics. These are Household Production and Caring and Helping. Measuring time for other daily tasks, including personal hygiene, dressing, and eating meals, arises only in cases of severe impairment, such as para- or quadriplegic. Any value that is applicable to these tasks is captured in the market-cost of any necessary Attendant Care.


The concept of standard categories for services has led to the development of twelve time-use subcategories, seven for Household Production and five for Caring and Helping. We define Household Production as normal work done around most homes. Under this heading, we include work done inside the home; the cooking of food and subsequent clean-up; maintenance of pets, homes, and vehicles; household management; shopping for goods; obtaining services; and travel for household activity.


The Bureau of Labor Statistics reports survey-averages of time worked for each of these subcategories. The Bureau also reports the sizes of the 200 subpopulations studied as well as the size of the responding sample for each. However, Forensic Economists may interview a client or his/her close family member(s) directly when gathering case-specific information. The purpose of such investigations is to ascertain hours for life-situations that fall outside of the normal bounds of the collected data as well as to determine remaining capacity on an item-by-item basis in cases of disabling injury. The goal of this practice is to ensure greater accuracy, objectivity, and transparency in a cost-effective manner.


In some cases, a Forensic Videographer may record a “day in the life” of a client that provides even greater detail as well as a human connection. These recordings may illustrate the magnitude of a physical impairment in a way in which a jury can empathize. For example, in respect to outdoor chores, one might ask the client whether or not s/he still can climb a ladder to repair a gutter or to paint some trim. His/her answer simply may be, “No, it is too dangerous to do with only one good arm.”


In contrast to Household Production, Caring and Helping tends to have a wider swing (a greater variance) than Household Production. Staying with our exemplar client, the shoulder-impairment may produce a wide range of limitations to remaining capacity, depending on a specific subcategory. Caring and Helping includes activities that we group into five subcategories: performing services for household children, household adults, non-household family members and near-family members, travel for household members, and travel for non-household members. In the acts of providing care and help to others, we often find the greatest reduction of activity in the fact that care within the nuclear and extended family turns more to the newly impaired client. Often, these activities require an ability to lift or to help another into a vehicle as well as to drive it.


Thus far, we have reviewed a set of metrics that are commonly employed by economists to measure the Value of Lost Household Services.  However, we face a major challenge to maintain accuracy and objectivity because clients generally self-report much of the information in respect to their remaining capacity. They may do this consciously in order to inflate their losses or unconsciously because they are unaccustomed to thinking of their activities in terms of subcategories and in such detail. Nevertheless, an economist who commences with a solid and detailed framework based upon extensive large-sample research minimizes the effect of any bias contained in this self-reporting. The tables provide a reality-check in the economic determination of losses.


When Forensic Economists consider the hours worked and the dollar value of Household Services, generally we look at family structure as one of the key determinants. Our economy continuously undergoes transformation as the structure of the American household morphs into a wider variety of forms.


Similar changes have occurred over the centuries. These changes have impacted the structure of families and everyday life as we know it. Since familial households and the economy remain inextricably linked, household-structure and the economy coevolve. In order to untangle this ball of string, let us consider that an optimal household-structure exists at any given time and in any corresponding economic condition. Over the past century, economic conditions have caused American households to vacillate between multigenerational, bigenerational, and monogenerational structures.


Putting this into common terms, families have included at least one parent in the primary labor force. Along with them, children, grandparents, aunts, uncles, and other extended-family members who are not primary breadwinners have resided under the same roof. This multigenerational structure has been considered as traditional. It remains prevalent in parts of the United States and throughout most other countries around the world.  


In reference to our opening quote by Cris Beam, the change toward alternate family-structures usually depends upon a combination of economic, political, and social conditions. Given the point of time in the aging of any Baby Boom, a phenomenon occurs during prosperous years in the wake of a major war. Wars tend to delay the formation of families. Therefore, single persons or non-traditional pairs, with or without dependent children, may constitute the predominant household-structure. The result of all of these events is that the science of measuring hours and the value of household services continues to evolve.


We hope that the information presented above has provided a clarification of what can be an obtuse subject. Understanding this subject will help attorneys to communicate more effectively both with their clients and their experts. The dollar amounts from cases involving Household Services may be large and may constitute a major percentage of total economic losses. Therefore, getting more precise and supportable figures increases the probability of settling in arbitration or winning the amount in a jury trial. At the very least, this subject hopefully will lead to meaningful discussions among attorneys and their family members.


John F Sase Ph.D.