We have all heard Benjamin Franklin’s famous saying: “Time is Money”. However, when it comes to calculating economic damages, usually people tend to think of only income and benefits as having value. The time one spends providing services for their household can often be overlooked, specifically in injuries that result in death.
Each member of a household contributes time to the home, whether it’s doing laundry, paying bills, cooking meals, etc. Although families do not usually keep detailed records tracking time spent on all their household activities, there is reliable data from the American Time Use Survey that can be used to estimate this.
Most often, the Loss of Household Services is calculated as a damage to the surviving members of a household when a member passes away. Based on the employment status, gender, and household makeup of the decedent, economists can estimate the Loss of Household Services using the “Dollar Value of a Day” which “calculates a market estimate of the value attained with time use or the cost needed to support or replace time use.” For example, a married woman who is employed full-time and has children between ages 6-12 in the home, spends on average 20.45 per week in household production and an additional 8.5 hours per week on caring and helping for household members. If these services were to be replaced due to death it would cost over $21,000 per year.
While damages resulting from a loss of household services are predominantly seen in wrongful death matters, there is case law (Overly v. Ingalls Shipbuilding, Inc.) for calculating household services as a component of future damages in “lost years” cases in which the Plaintiff will have a reduced life expectancy which will prevent him/her from providing these services.
Unlike income, the household services do not end when a person retires. In fact, data show that retired individuals provide more household services than they would while employed. To account for the likely health ailments preventing an individual from performing his or her regular household activities, economists calculate household services damages up to what is referred to as a healthy life expectancy. A healthy life expectancy is the number of years an individual is in good health and their activities are not limited in any way. If you have any questions regarding Household Services, please contact K2 Economics for a free consultation.