Personal Consumption and Personal Maintenance Estimates Using Empirically Based Expenditure Allocation Rules: Updated using 2021-2023 Consumer Expenditure Survey Data

Plaintiffs are typically not compelled to invest lawsuit proceeds from injury cases in any predetermined way. Due to the nature of legal fictions and the imprecision of court guidelines, however, present value computations are often subject to differing interpretations of how to meet economic expert reliability standards. The Uniform Prudent Investor Act, while originating in trust law, can be used to support expert economic opinions as to reliable present value lump sums in these lawsuits. This manuscript, like the paper by Breeden and Brush (2008, J. Legal Economics 14(3)), explores potential applications of “prudent investor” statutes – which control how fiduciaries may manage assets under their charge – to forensic economic damages calculations in personal injury cases. The current paper, unlike Breeden and Brush (2008), holds that a present value discounting method based on a laddered portfolio of U.S. Treasuries satisfies the prudent investor rule, whereas the former paper asserts that some mix of bonds and risky assets (such as stocks) is appropriate.