Date of this Version
Ellis, Kathleen. Splitting the Bill: Estimating Personal Consumption in Case of Wrongful Death. University of Nebraska-Lincoln. 2018.
In cases of wrongful death, the decedent’s survivors may sue alleged responsible parties for lost financial support. Forensic experts estimate a deceased individual’s personal consumption rate in order to separate the portion of the decedent’s income spent on him- or herself from the amount available as financial support for dependents. This paper enhances the prevailing estimation process by regressing consumption rates over individual households surveyed by the United States Bureau of Labor Statistics in its annual Consumer Expenditure Survey. We contend that this method improves the precision of estimates by accounting for the inherent heterogeneity in consumption among households with otherwise similar characteristics while furthering the methods and purpose which have guided personal consumption estimation for over two decades.
In a structure reminiscent of those used by Krueger (2015) and by Patton, Nelson and Lierman (1998), we regress a natural-log-on-natural-log model of personal consumption rate on household income, as well as on the number of dependent children living in the household. The estimated personal consumption rates produced in this analysis are distinctly flatter with respect to income than those of past research using BLS CE microdata. Additionally, the number of children in a household is shown to have greater effect on personal consumption than previously exhibited.