Time is Money? A Law and Economics Approach to ‘Loss of Time’ as Non-pecuniary Loss
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Louis Visscher
Abstract
Accidents may cause what is commonly referred to as a ‘loss of time’. People obviously do not really lose time, but rather the opportunity to spend their time in the way they prefer. This article focuses on the non-pecuniary aspect of such loss. Due to its unobservable and subjective character, it is not possible to exactly assess this loss in individual cases. This paper therefore proposes a method to provide an assessment of the ‘average’ opportunity cost resulting from having to spend one’s time in a less preferred way. After providing examples of how the law deals with loss of time, the paper discusses the law and economics approach to non-pecuniary losses in general and concludes that the resources potential victims are willing to spend on loss avoidance form a good basis for the assessment of damages for such losses. Theoretical economic research which seeks the non-pecuniary value of time in hourly wage rates is rejected and an overview of empirical research regarding the value of leisure time, and the value of travel time saving, shows that this research produces widely diverging amounts. The present contribution, by contrast, proposes to use the concept of the Quality Adjusted Life Year (QALY) to provide a workable assessment of average damages for loss of time. It does so by assuming that a mere loss of time affects the victim’s level of happiness, which in turn affects his QALY-level. This results in average damages for loss of time of € 2.64 per hour.
Acknowledgement
I would like to thank the participants in the annual conference of the European Association of Law and Economics (2012), the Midwestern Law and Economics Association (2012) and the Asian Law and Economics Association (2013) in general, and Alexandre Biard, Shahar Dillbary, Michael Faure, Magdalena Flatscher-Thöni, Vania Karapanou, Sonja Keske and two anonymous referees specifically for their valuable feedback.
I thank the Erasmus School of Law Research Programme Behavioural Approaches to Contract and Tort (BACT) for the financial support.
© 2014 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontmatter
- Frontmatter
- Articles
- The Product Liability Directive – More than two Decades of Defective Products in Europe
- Time is Money? A Law and Economics Approach to ‘Loss of Time’ as Non-pecuniary Loss
- Development of Employer’s Vicarious Liability: A Chinese Perspective
- Case Commentaries
- Sufficiently Serious Breach of a Rule of Law Intended to Confer Rights on Individuals
- Motor Vehicle Operational Risk and Awarding Damages in the Event of a Traffic Accident
- Book Reviews
- Michael Lobban/Julia Moses (eds), The Impact of Ideas on Legal Development (Cambridge University Press, 2012), Comparative Studies in the Development of the Law of Torts in Europe, vol 7, xxx + 300 pp. ISBN 978-1-107-02711-4 (hardback).
- Paul Mitchell (ed), The Impact of Institutions and Professions on Legal Development (Cambridge University Press, 2012), Comparative Studies in the Development of the Law of Torts in Europe, vol 8, xii + 240 pp. ISBN 978-1-107-01900-3 (hardback).
- John Bell/David Ibbetson, European Legal Development: The Case of Tort (Cambridge University Press, 2012). Comparative Studies in the Development of the Law of Tort in Europe, vol 9, xii + 213 pp. ISBN 978-1-107-02177-8 (hardback).
Artikel in diesem Heft
- Frontmatter
- Frontmatter
- Articles
- The Product Liability Directive – More than two Decades of Defective Products in Europe
- Time is Money? A Law and Economics Approach to ‘Loss of Time’ as Non-pecuniary Loss
- Development of Employer’s Vicarious Liability: A Chinese Perspective
- Case Commentaries
- Sufficiently Serious Breach of a Rule of Law Intended to Confer Rights on Individuals
- Motor Vehicle Operational Risk and Awarding Damages in the Event of a Traffic Accident
- Book Reviews
- Michael Lobban/Julia Moses (eds), The Impact of Ideas on Legal Development (Cambridge University Press, 2012), Comparative Studies in the Development of the Law of Torts in Europe, vol 7, xxx + 300 pp. ISBN 978-1-107-02711-4 (hardback).
- Paul Mitchell (ed), The Impact of Institutions and Professions on Legal Development (Cambridge University Press, 2012), Comparative Studies in the Development of the Law of Torts in Europe, vol 8, xii + 240 pp. ISBN 978-1-107-01900-3 (hardback).
- John Bell/David Ibbetson, European Legal Development: The Case of Tort (Cambridge University Press, 2012). Comparative Studies in the Development of the Law of Tort in Europe, vol 9, xii + 213 pp. ISBN 978-1-107-02177-8 (hardback).
