Time is Money? A Law and Economics Approach to ‘Loss of Time’ as Non-Pecuniary Loss
RILE Working Paper No. 2012/01
16 Pages Posted: 16 Feb 2012 Last revised: 2 May 2013
Date Written: March 19, 2012
In this paper I analyze, from a Law and Economics perspective, whether the mere loss of time should be regarded as a compensable non-pecuniary loss. I spend attention to the debate between the Prevention Theory and the Insurance Theory and argue that non-pecuniary losses in general should be included in tort damages. They should be assessed on the basis of the resources the victim is willing to spend ex ante on accident avoidance. Subsequently I discuss economic literature, both theoretical and empirical, regarding the value of time. In my view, the results of this literature are too complicated to be employed in a tort claim, because much of the required information will not be available. Instead, I propose a simple estimation of a possible non-pecuniary value of time. Given the limited need for accuracy in each and every individual case, and the desire to avoid systematic errors in assessing tort damages, I do believe that the non-pecuniary aspect of loss of time should be included in tort damages, but that one may suffice with rather general amounts. I suggest that these amounts should be in the order of €1.50 to €3.50 per hour.
Keywords: Law and Economics, loss of time, non-pecuniary losses, tort damages
JEL Classification: K13
Suggested Citation: Suggested Citation