Equivalence Scales, Costs of Children and Wrongful Death Laws

Abstract

Wrongful death laws in the United States contain a concept of ‘net income', loosely defined as the deceased’s income minus his personal expenses. The family’s compensation is determined by a welfare comparison, obtained by introspection on the part of the judge or jury, but incorporating net income information that may be supplied by an economist. The relationship between equivalence scale and net income calculations are discussed, along with implications of equivalence scale identification problems for wrongful death compensation calculations. The net income concept is shown to be very closely related to the calculation of the costs of children.