The Expert Witness: Valuing the Loss of Household Services: 101

By Dr. John F. Sase
with Gerard J. Senick

“Each home has been reduced to the bare essentials – to barer essentials than most primitive people would consider possible. Only one woman’s hands to feed the baby, answer the telephone, turn off the gas under the pot that is boiling over, soothe the older child who has broken a toy, and open both doors at once. She is a nutritionist, a child psychologist, an engineer, a production manager, an expert buyer, all in one. Her husband sees her as free to plan her own time, and envies her; she sees him as having regular hours and envies him.”

–Margaret Mead, “Male and Female: A Study of the Sexes in a Changing World” (William Morrow & Co., 1949)

In depositions involving cases of personal injury or wrongful death, opposing counsel often asks me to explain the valuation of Lost Household Services. Whether or not these losses are admitted into evidence in any specific case, the value of Lost Household Services may, nevertheless, account for a significant proportion of total economic losses. This proportion can range from little or nothing to most or all of the damages in a given lawsuit.

In this month’s column, we will present a broad overview of the valuation of Household Services as we discuss the problems involved in measuring them as well as how the nature of these services vary over time and family situation. In so doing, we will address the commonly accepted methods and types of sources used by economists as well as the degree of certainty of these measurements at any given point in time as well as over a period of time. However, as the topic of Household Services covers an expansive landscape in the fields of economics and allied social sciences, we will only touch slightly below the surface in this segment and save deeper discussion for future columns.

“Normal People are Just People That You Don’t Know That Well.”
 –Jackie “The Jokeman” Martling (Former Head Writer for Howard Stern)

In part, 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 a number of empirical analyses within the social sciences, with each analysis based upon the measurement of tens of thousands of subjects. Generally, this size of a sample represents a cross-section of the U.S. population. However, to achieve greater accuracy and specificity to individual cases, researchers stratify and/or segment the subjects by key characteristics. For example, we may look to a study that: 1) Groups subjects by age groups that include these from eighteen to thirty, thirty-one to forty-five, forty-six to fifty-five, fifty-six to sixty-five, and those beyond the age of sixty-five.

In these studies, we observe that the number of hours of Household Services performed per week varies with age, ability, and attendant responsibilities along with the number and ages of dependent children. Extenuating circumstances provide exceptions that may include older dependents who are physically or mentally challenged. However, we generally consider the attendant responsibilities for dependent children up to their eighteenth birthday. It remains important to note that the degree of attendant responsibility for children varies with age. Therefore, we also delineate preschoolers, pre-adolescents, and adolescents into separate groups.

“My Second Favorite Household Chore Is Ironing. My First Being Hitting My Head on the Top Bunk Bed Until I Faint.”
 –Erma Bombeck, Syndicated Columnist

The most notable determinant in measuring Household Services remains gender. Across all age groups in a two adult households, reported research has found that women perform one-and-a-half to two times the number of hours of Household Services as men. Furthermore, this phenomenon endures whether or not there are minor children in the household and whether or not the two adults work outside the home and/or attend school, full-time, part-time, or not at all. Of course, even with the numerous segments and strata used for these determinations, there exist many exceptions to the norm and that norm continues to shift.

In measuring the tasks that each of us performs during an average day, two categories of services demand center stage in Forensic Economics. These include: 1) Household Production, and 2) Provision of Care. Other tasks that include time for personal hygiene, dressing, and eating meals usually arise only in cases of severe impairment in which the applicable value of these tasks is captured in the market cost of necessary Attendant Care.

The concept of developing standard categories of services suggests that we recognize an optimal number of non-overlapping sub-categories in which each includes a number of hours of service that are relatively equal to hours in the other sub-categories. In effect, we recognize that there remains more than one way to “skin a squirrel” or open a hard-boiled egg. This dilemna resembles the old Sunsweet television commercial that raises the question about prunes. “Are three enough? Are four too many?” At least for many economists (with no aspersion applied as to personal efficacy or “effication”), five sub-categories seem to serve us well for both Household Production and Provision of Care.

Let us begin by deciphering what we mean by Household Production. Generally, this category includes normal work done around the most homes. Therefore, under this heading we may include the following five sub-categories: 1) Housework, 2) Food Preparation, Cooking, and Cleanup, 3) Outdoor Chores Including Care of Plants and Animals, 4) Maintenance of Home and Auto, and 5) Obtaining Goods and Services.

When we interview a client or his/her close family member, we seek to elicit the most case-specific information possible in order to ensure objectivity and transparency in a cost effective manner. Obvious to most of us, performing a “day in the life” of a client may provide greater detail and precision. However, in most cases such an effort remains very costly and presents an undue burden to plaintiffs as well as to defendants. Therefore, using categorized tables of values along with an application of what the Nobel laureate German physicist Werner Karl Heisenberg described as the Uncertainty Principle, we strive to make as perfect of determination as possible in an imperfect world while remaining subject to reasonable budget constraints.

As a quick review of the Uncertainty Principle within our Forensic Economic application, let us say that it remains a conundrum to precisely determine a value at a point in time while simultaneously determining an associated value over time. Heisenberg described this conundrum as the inverse relation between two related determinations. In simpler terms, a trade-off persists. To achieve greater efficiency and precision in determining the value at a point in time generally demands giving up the same quality for a value over time, and vis-à-vis.

While we let this thought “bake your noodle,” as the Oracle happed to say in the sci-fi film “The Matrix” (Village Roadshow Pictures, 1999), let us move our discussion down a notch to the practical measurement of services. In the measurement of Housework, we generally inquire about a client’s ability and propensity to perform chores such as vacuuming, washing the inside of windows, and doing the laundry. Laundry activities provide us with a simple, yet clear, illustration of how we might measure a person’s remaining capacity after an injury. Assume for a moment that a severe injury to one’s shoulder has left a client impaired to the extent that his/her physician has restricted the client to lifting a maximum of five pounds. If this client had previously carried a ten-pound basket of laundry to the laundry room downstairs, the new weight restriction suggest that, at best, s/he would need to make two trips of five pounds each. As a result, the restriction doubles the time necessary to perform this laundry and therefore takes valuable minutes away from some other endeavor. In effect, the client’s remaining capacity for carrying laundry has been reduced to 50% of the previous due to the injury. An alternate method of valuation may suggest the necessity of hiring another person at a market wage to do the client’s laundry.

We can apply similar inquiry and measurement to other areas of Household Production. However, the same physical impairment may produce lesser or greater consequences for other services. For example, in respect to Outdoor Chores, we might ask the client whether or not they can still climb a ladder to repair a gutter or paint some trim. His/her answer simply may be, “No, it is too dangerous to do with only one good arm.” However, when addressing the question of steaming a few servings of broccoli, we may find that the impairment has little or no effect upon his/her ability.

In contrast to Household Production, the Provision of Care tends to have a wider swing (greater variance) than Household Production. Staying with our exemplar client, the shoulder impairment may produce a wide range of effects on remaining capacity, depending on a specific sub-category.

The Provision of Care category generally includes activities that can be grouped into the sub-categories of: 1) Child Care, 2) Child Guidance, 3) Playing with Children, 4) Transporting Children, and 5) Providing Care to Others. In the act of Providing Care to Others, we often find the greatest reduction in activity as care within the nuclear and extended family turns more to the newly impaired client. However, this constitutes a relative matter that may require further investigation.

We have reviewed a set of metrics that are commonly employed by the Economics profession to measure the value of lost Household Services. However, a major challenge lies in maintaining objectivity and accuracy because clients generally self-report much of the information in respect to their remaining capacity. However, an Economist that commences with a solid and detailed framework based upon extensive large sample research can generally minimizes the effects of the bias of this self-reporting.

In forthcoming columns, we will explore the effect that changes in work life, family structure, and other factors that define our way of life in America. We will address topics such the economic cost born by families when the mothers of preschoolers return to work. Also, we will focus on the special problems that now arise due to economic changes that may return us to more traditional multi-generational households with additional adult members providing Household Services.

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Dr. John F. Sase of SASE Associates, Economic Consulting and Research, earned his MBA at the University of Detroit and his Ph.D. in Economics at Wayne State University. He is a graduated of the University of Detroit Jesuit High School. Dr. Sase can be reached at (248) 569-5228 and by e-mail at drjohn@saseassociates.com.
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a Supervisory Editor at Gale Research Company (now Cengage) for more than 20 years. Currently, he edits books for publication and gives seminars on writing. Mr. Senick can be reached at (313) 342-4048 and by e-mail at gary@senick-editing.com.