Estimating Personal Consumption with and without Savings in Wrongful Death Cases

By Ajwa, Martine T.; Martin, Gerald D. et al. | Journal of Forensic Economics, Winter 2000 | Go to article overview

Estimating Personal Consumption with and without Savings in Wrongful Death Cases


Ajwa, Martine T., Martin, Gerald D., Vavoulis, Ted, Journal of Forensic Economics


I. Introduction

In wrongful death cases, forensic economists consider personal consumption costs of a decedent when determining economic damages. Examples of personal consumption costs used by only one person include food, apparel, health care, entertainment, and personal care products. These personal consumption costs are typically deducted from income because they would otherwise have been used exclusively by the decedent and their deduction should allow the family to maintain a comparable standard of living.

Many forensic economists have, in the past, attempted to quantify personal consumption costs, but most have ignored a household's savings as a form of delayed consumption. However, it is logical to assume that a portion of the household's savings, whether consumed before or after retirement, would have been consumed exclusively by the decedent just as any other portion of a household's income. By ignoring savings as delayed consumption, the economist's deductions for a decedent's consumption will be too low. This study will present consumption tables which both include and exclude various forms of savings.

Prior studies which have attempted to quantify personal consumption costs are numerous. A seminal study by Earl Cheit (1961) calculated the percentage of income consumed by the head of the family by family size. Since then, new data have become available that allow the calculation of consumption not only for the head of a family, but for each parent and child. These data are available

through the Bureau of Labor Statistics' Consumer Expenditure Surveys. Indeed, Nelson and Patton (1984) recognized that these Consumer Expenditure Surveys could be used to measure personal consumption as a function not only of family size, but also of income level. They found that income for adult males and females varied inversely with family size and with income level (Patton and Nelson, 1991; Lierman, Patton & Nelson, 1998). It is understandable that each member in a large family would consume a smaller portion of income than those in a small family. However, for higher income families, a portion of income appears to be set aside for savings. And if savings represents delayed consumption for these higher income families, then the figures that have been presented in previous studies understate consumption.

II. Data

The most recent consumer expenditure survey data made available by the Bureau of Labor Statistics are for 1997. The tables used in this study can be easily downloaded from the internet at http://stats.bls.gov:80/csxcross.htm. Their tables 37-40 show the average expenditures in households of various sizes by before-tax income levels. We have ignored consumption for households of one person not only because we typically see lawsuits by those who lived with decedents but also because we would expect that person to consume all his income either as immediate consumption items or later as savings. Even excluding the one person households, there are 59,664 consumer units reporting in these tables.

Similar to the Patton-Nelson studies, we have divided consumption across adult males and females. However, considering that the Consumer Expenditure Surveys also account for expenditures on children under age 18, we have added a third category of consumption attributable to children. This figure may not be exact as the average number of children in households of two persons is 0.1, in households of three persons is 0.8, in households of four persons is 1.7, and in households of five or more persons is 2.9. For simplicity, we have assumed that there are two adults in each household with the remaining number of persons represented by children.

The Consumer Expenditure Survey lists the average expenditures by an "average" household meeting both household size and income bracket criteria. These expenditures are broken down into categories. We have aggregated male, female, and children's expenditures very similarly to Patton and Nelson (1991):

1. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Estimating Personal Consumption with and without Savings in Wrongful Death Cases
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.