The value of time is a relevant aspect of economic valuations of life. The value of time affects the optimum combination of inputs in home production, the investments made by a household for its economic improvement, the household's supply of labor for market employment and its demand for goods, and other household economic decisions. This paper introduces a whole-time methodology useful to forensic economics in valuing a number of economic losses associated with personal injury. The whole-time approach originates the concept that since all of the uses of time have a direct bearing on economic value in life, the whole amount of time available for productive use is a direct input to (or a subset of) the totality of life's economic value. Within the wholetime concept, personal injury economic damages are the measurable changes in economic welfare as result of a reduction in the productive use of time because of injury.
A pre-cursor methodology in the forensic economic literature addressing economic valuation of life is hedonics. The methodology of hedonics was one of the first attempts to incorporate the totality of life's economic value in the calculation of personal injury damages. Unlike the whole-time concept, the hedonic approach is unable to make direct assignment of economic value to specific time. However, the hedonic methodology, like the whole-time concept, incorporates the principle that the economic value of time is relevant to the totality of life's economic value.1 While there are variants to the hedonic methods, the approach most commonly discussed (the willingness-to-pay method) assumes that the economic behavior of a population in the avoidance of death provides insight to the totality of economic value assigned by the population to life. There are hedonic models that do not segment economic values in life and other models calculate a residual enjoyment of life as the difference between the estimate of the totality of life's economic value and other measurable economic values based in time such as earnings and household work services. In summary, the common feature of all hedonic models is their beginning at the highest level of economic valuation, the totality of life's economic value, before addressing subset economic values in life. In contrast, the whole-time concept begins at the root level of economic valuation-how an individual values time for production and consumption-to work upward towards (but not necessarily reaching) the totality of life's economic value.
The purpose of this short paper is to introduce the whole-time concept in forensic economics and to offer, as a simple example, a method for estimation of economic damages specific to a personal injury plaintiff that includes both work and non-work time. We begin the paper with an introduction to the microeconomic foundations of the whole-time concept. We show the change in economic welfare resulting from injury and the whole-time method of economic restoration. Before concluding, we present a hypothetical calculation of wholetime economic damages resulting from an injury reducing the productive use of time.
Dr. Gary R. Albrecht has more than 25 years of experience specializing in Economic Forecasting and Forensic Economics. The Director of Econometric Modeling at the University of Kansas, his research has been published in the Journal of Forensic Economics, Journal of Legal Economics, Trial Briefs, and The Earnings Analyst.
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