Month: September 1999

Autumn 1999 issue of the Expert Witness newsletter (volume 4, issue 3)

Posted on By economica

Contents:

  • The Current Status of Survival of Actions Act Claims
    • by Christopher Bruce
    • In this article Christopher Bruce discusses two trial court decisions concerning the method by which claims for loss of earnings are to be calculated under the Survival of Actions Act. He argues that, although these two decisions clarify many of the outstanding issues in this area, a number of crucial problems remain unresolved.
  • The Calculation of Damages in Sexual Abuse Cases
    • by Matthew Foss
    • In this article Matthew Foss offers a brief review of the academic literature concerning the impact of sexual abuse on the victim’s psychological well-being, education, and earning capacity. This is the first of a two article series. The second part, to be published in the next issue of the Expert Witness, will discuss the response of the courts to these lawsuits.
  • Increased Earnings After Injury
    • by Michael Behr
    • In this article Michael Behr – a forensic economist from Northfield, Minnesota – asks whether or not an injured person has sustained a loss if the injury forces a change in occupation which produces higher income. He argues that any suggestion that injury is beneficial contradicts fundamental economic principles.

Rates of Return to Advanced Education in Alberta

Posted on By economica

by Kelly Rathje

This article was originally published in the winter 1999 issue of the Expert Witness.

Conventional wisdom appears to suggest that, if young Canadians wish to be competitive in today’s economy, they should concentrate on the relatively technical disciplines, such as engineering and business. I have tested this “wisdom” using information about post-secondary education in Alberta.

In my study, I assume that post-secondary education represents an investment that the individual makes in him- or herself. As with any investment, the investor expects to receive a return on that investment. By calculating the implicit “rates of return” on investment in various types and levels of post-secondary education, and then comparing those rates with the interest rate one could expect to receive on a secure financial investment, I hope to answer the question: “does higher education pay off”?

To understand what is meant by a rate of return on “investment” in education, consider the following simple example. Assume that, at age 20, you were told that if you spent $10,000 on a particular investment, you would be paid $500 per year for the rest of your life. It is easy to see that that investment was equivalent to spending $10,000 on a bond that paid 5% interest (for the rest of your life). Similarly, imagine that if you were to spend $10,000 on education at age 20, that education would result in an increase in your income of $500 per year (for the rest of your life). The purchase of that education could be thought of as yielding an annual rate of return of 5%.

I calculate the rates of return on various types of educational investments and compare those rates of return to the interest rates that one can obtain on secure financial instruments. For the latter purpose, I use a real interest rate of 4.25 percent, (the usual discount rate in personal injury assessments). If the rate of return on a particular level of education is greater than 4.25 percent, then I consider that level of education to be a worthwhile investment for the individual.

When thinking of education as an investment, it is first necessary to identify the “costs” of that investment and the benefits. The cost component of my analysis is composed of tuition fees, the costs of books and supplies, and, most importantly, the income that is “given-up” by choosing to attend school rather than enter the labour force. The benefit component is measured by the increase in income from having one level of education rather than another. For example, the benefit of having a bachelor’s degree over a high school diploma would be measured by the difference in the earnings stream, after the completion of the bachelor’s degree, over the earnings stream of a high school diploma holder.

Before the rates of return were calculated, I examined average incomes by level of education. From my results, the average incomes for males are greater at all levels of education (high school to Ph.D. degrees) than for females. High school resulted in the lowest income, followed by trade school, then college. For the different university degrees available, average income increases with education. The Ph.D. graduates earned the highest incomes, for both males and females.

These results were not a surprise, there have been many studies and articles written about the relationship between education and income. Post-secondary education results in increased average incomes, and the higher the level of education, the higher the average income. Also, the male incomes are higher than the female incomes, another result that is not surprising.

Turning to the rates of return, I found that overall, the highest return on investment (that is the highest benefits relative to the costs) results from university education. (See Table 1.) Among university graduates, bachelor’s degrees resulted in the highest rate of return. (See Table 2.)

Table 1: Private Rates of Return from Post-secondary Education: Alberta

Table 1

Table 2: Private Rates of Return from University Education: Alberta

Table 2

Overall, the graduate degrees do not offer rates of return on investment that are as high as the rates earned on undergraduate degrees, either for males or females. Many programs at the graduate degree level did not meet my 4.25 percent benchmark, implying that the cost of obtaining this level of education is not justified by the return on investment.

The highest returns for males result from the science and technical programs such as commerce, engineering, and science. (See Table 2.) Females, by comparison, receive the highest returns from the commerce, nursing and health programs – again the more technical programs. The same result occurred at the master’s level, where the science and technical programs offered the highest returns for males. For females, commerce offered the highest return. The next highest resulted from the education and social sciences programs – liberal arts programs, rather than the more technical programs. At the Ph.D. level, the humanities program for males and the fine arts program for females result in the highest return on investment. Thus, at the Ph.D. level, the highest returns result from the liberal arts programs, not the science and technical programs that fared well at the undergraduate and master’s levels.

Females generally receive a higher return on investment than males, even though the resulting incomes are lower than for males. The lower average incomes for females means that the amount of income “given up” while attending post-secondary institutes is less for females than for males, making the costs for females lower. Since costs are lower, it does not take as long to recoup the investment.

A surprising result is that the return to college and trade education falls just short of my 4.25 percent benchmark. This implies that an individual considering investing in this level of post-secondary education would receive a higher return on their money by allocating the funds to an alternative investment, or attending university. Although the average incomes do increase with any type of post-secondary education, from an investment perspective, the returns resulting from trade and college education are not as high as from a university education.

My results indicate that individuals planning to “invest” in post-secondary education would receive the highest return from an undergraduate degree, especially the science and technical programs. The increase in income will more than cover the cost of attaining the degree, meaning the investment will “pay-off”. Diploma and certificate programs offered by trades and colleges do increase average incomes, but it is questionable whether or not these “pay off” from an investment perspective based on my assumptions. The average income these graduates receive is higher than income received by high school graduates, but the increase may not cover the entire cost of acquiring the education.

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Kelly Rathje is a consultant with Economica and has a Master of Arts degree (in economics) from the University of Calgary.

Increased Earnings After Injury

Posted on By economica

by Michael Behr

This article was originally published in the autumn 1999 issue of the Expert Witness.

Has an injured person sustained a loss if the injury forces a change in occupation which produces higher income? Definitely. Any suggestion that injury is beneficial contradicts fundamental economic principles.

Resources

Economics allocates resources to competing uses which forces choice. The possession of a higher quantity and quality of resources is the power to realize more valuable choices. Injury, virtually by definition, is a reduction in the quantity or quality of resources possessed by the injured party. Therefore, injury constitutes economic loss.

Cross Section versus Time Series

Sleight of intellect puts damages into time series and concludes that higher post-injury income shows no loss. But the issue in damages is not the time series difference between yesterday without injury versus today with injury. Rather, damages are the cross sectional difference between today without injury and today with injury. Time series violates the required ceteris paribus conditions because the passage of time incorporates many changes in addition to the injury itself, most notably of course, the occupational change producing the higher income.

The naïve are seduced by the replacement of cross section with time series because life is lived in time series, whereas the cross section requires abstraction from experience to comprehend the alternative condition after injury but without the injury. The skilled tortfeasor defendant can be expected to attempt to substitute time series for the cross section if it leads to a lower or negative loss conclusion because of higher post-injury income. That defendant is emboldened by the realization that time series will probably have intuitive appeal to a jury. Plaintiff must therefore be vigilant and unyielding in preserving the cross section. If not, the defendant making an invalid argument to an economically naïve jury has an excellent chance of producing a perverse verdict to the detriment of plaintiff. Perverse verdicts are inconsistent with market values and therefore also reduce the general welfare of society.

Information

The thoughtful may attempt to rebut the above, arguing that information is central to the allocation of resources to their most valuable ends, citing the role of information as a condition of a competitive economic system. Inasmuch as it was the injury that “informed” plaintiff of the higher income opportunity, it is argued the damages should be credited with the higher income itself. This argument contradicts fundamentals underlying a market economic system in a society valuing individual liberty.

Noneconomic Values

The higher income opportunity undoubtedly existed prior to
the injury, but may have been rejected for noneconomic reasons. The disutility of the higher income employment may exceed the value of the higher income itself in the eyes of plaintiff. If so, forcing plaintiff to credit the damage with the higher income is to force plaintiff to substitute uncompensated noneconomic loss for what would otherwise be compensated economic loss.

Antisocial Incentives

Accepting the argument for crediting the damage with the higher income leads to the conclusion that I should waken my sleepy neighbor by disabling him to force him to replace his physical occupation with more sedentary higher employment. Further, he should pay me for this valuable service. This absurdity is a direct incentive to destroy resources, which in a world of resources insufficient to satisfy all competing ends is inimical to the interests of society.

Collateral Source

The economic essence of collateral source is compensation for injury occasioned by the injury itself. Generally, defendant is barred from a credit against liability for damage from collateral sources on the grounds that the social interest is served by not allowing a tortfeasor to escape the cost of his acts. This position is consistent with market economics where parties bear the cost of their actions in exchange for reaping the benefits. Although the discovery of a higher income occupation occasioned by an injury is not included as a collateral source in the law, its economic character is that of collateral source. The tortfeasor may not benefit from it as a matter of economics-and ideally in the law as well for whatever reason.

Mitigation

At some point collateral source comes into tension with the economically valid legal requirement that plaintiff must make the best of it under the circumstances. The market expects resources to find their way to their highest and best uses, including those held by injured plaintiff. This works to the benefit of tortfeasor and may include some obligation by plaintiff to move to a more suitable post-injury occupation which may turn out to be higher paying. How much disruption of plaintiff’s life to accommodate his/her injury is a reasonable obligation of plaintiff? Is he/she required to move to another planet, so to speak, to realize the higher income?

The consequence of this tension is that the damage will be bounded by the cross sectional differences between pre-and post-injury income in the pre and post-injury occupations. Inasmuch as the adequacy of plaintiff’s mitigation is inevitably directly or indirectly a jury question, the economist may be well advised to provide a damage conclusion based on the effect of the injury on both the pre-injury earning capacity in cross section and on the higher post-injury earning capacity in cross section. The injury’s hindrance of performance in the higher income employment may actually be greater than its hindrance of the pre-injury occupation in cross section. An expert vocational opinion may be a foundational requirement for each occupation.

If there are retraining or other costs to plaintiff necessary to realize the higher post-injury income, the value of the higher income must, of course, be net of those costs.

Conclusion: The destructiveness of an injury establishes the fact of an economic loss irrespective of pre and post-injury incomes or earning capacity. Plaintiff’s competitive position, and therefore his range of choice in the market is reduced by the injury, legal prohibitions of discrimination against the disabled notwithstanding. The forensic economist’s damage conclusion is, at its core, the value of that reduced range of choice.

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Michael Behr is a forensic economist located in Northfield, Minnesota. He holds a Ph.D. in Agricultural Economics from the University of Wisconsin-Madison. From 1969 to 1983 he was Associate Professor and Professor of Business and Economics at the University of Wisconsin-Superior teaching most undergraduate economics courses and statistics. Tired of University meetings, memos and the same old track by 1983, he resigned his University position for the greater fun and profit of full-time self-employment as a forensic economics sole practitioner. He has been involved in about 1,300 cases, about half of them small business matters with the majority of those farms and other agricultural matters. He may be reached at P. O. Box 430, 813 N. Linden St., Northfield, MN 55057. Phone 507-663-7124. Fax 507-663-1735. mbehr@mrb.com.

The Current Status of Survival of Actions Act Claims

Posted on By economica

by Christopher Bruce

This article was originally published in the autumn 1999 issue of the Expert Witness.

In Duncan v. Baddeley, Alberta Court of Appeal ruled that claims for loss of earnings were to be permitted under the Survival of Actions Act. Since that time, two trial court decisions have commented on the method by which this claim is to be assessed – Duncan v. Baddeley (Justice Doreen Sulyma) and Brooks v. Stefura (Justice Paul Belzil). In this note, I will argue that, although these two decisions clarify many of the outstanding issues in this area, a number of crucial problems remain unresolved.

Issues Clarified

The Duncan and Brooks trial decisions provided clear signals concerning the elements of the Court of Appeal decision that would be given greatest weight. In particular, two paragraphs from the latter decision were quoted by both Sulyma, J. and Belzil, J.

[37] The flaw in the “lost saving” approach is that it is heir-centred, not victim-centred. It asks what the heirs lost, not what the victim lost. But the suit here is not for the loss to the estate, it is a suit by the victim for his loss, a claim that by operation of statute survives his death and can be made by his estate for him. Worse, it has the air about it of an attempt to undermine the statute. As a result of this flaw, the approach will fail to take into account what has been called “discretionary” spending, like holidays and entertainment and other “treats.” It will also fail to take into account gifts to children and spouses, and thereby underestimate even an heir-centred award.

[42] In sum, Ms. Taylor in her excellent submission persuades me to accept in large the “available surplus” approach accepted by the U.K. Court of Appeal in Harris v. Empress Motors; Cole v. Crown Poultry Packers, [1983] 3 All E.R. 561, and adopted by the British Columbia Court of Appeal in Semenoff et. al. v. Kokan et. al. (1991) 4 B.C.A.C. 191; 84 D.L.R. (4th) 76. But it seems to me that it follows that a further deduction should be for expected income tax…

Lost Savings

In Galand, the Court of Appeal had directed that in Survival of Actions Act cases the estate was to be compensated for the value of the deceased’s (after-tax) income net of “personal living expenses.” Following Galand, some defendants argued that, as all expenditures could be considered to be directed to personal living expenses, the only portion of an individual’s income that would remain after deduction of those expenses was savings. Hence, the Survival of Actions claim was simply for lost savings.

Both Belzil, J. and Sulyma, J. concluded that the Court of Appeal decision in Duncan v. Baddeley required that “personal living expenses” were to be something less than total expenditures on consumption; and that the Survival of Actions claim was to be for something more than “lost savings.”

Available Surplus

In particular, that “something more” was to be calculated by deducting the “available surplus,” as calculated in Harris, from total after-tax income.

Justice Sulyma clarified that the “available surplus” approach was to be employed in the following manner. First, determine the deceased’s expected marital status and expected number of children. Second, estimate the percentage of the after-tax income of the deceased that would have been spent on: items specific to the deceased; and the percentage that would have been spent on items common to all members of the family (often called “indivisibles.”) Third, divide the indivisibles figure by the number of individuals in the family. Finally, deduct the sum of that figure and the figure for the deceased’s expenditures on him or herself from after-tax income. The result is the “available surplus,” that is, the amount to be compensated.

As an example, assume that it has been determined that a deceased male would have married and had two children. Assume also that evidence has been led to indicate that, of his after-tax income, 20 percent would have been spent on items that benefited the deceased alone (for example, expenditures on food and clothing) and that 30 percent would have been devoted to indivisibles. One quarter of the latter, or 7.5 percent, would be attributed to the deceased. Hence, it would be concluded that 27.5 percent of the deceased’s after-tax income would have been devoted to his maintenance and the estate would be compensated for the remaining 72.5 (= 100 – 27.5) percent, (the available surplus).

Two Technical Issues

At least two “technical” issues remain unresolved. First, the court has not turned its mind to the question of how to vary the available surplus over the individual’s lifetime. For example, if it has been assumed that the deceased would have had two children, it would seem reasonable to reduce the available surplus once the children left home. The general assumption is that, for a couple without children, 30 percent of family income is devoted to items that benefit one partner alone and 40 percent is devoted to indivisibles. Hence, once a couple’s children have left home, the available surplus should be assumed to fall from 72.5 percent to 50 percent (= 30 + (0.50 x 40)).

Second, it might be argued that the appeal court’s ruling that the available surplus was to be more than “lost savings” implied that all of the deceased’s expected “savings” should be included in the award. As a significant portion of the indivisibles represents purchases of capital assets, such as the family home, it might be argued that expenditures on those purchases are “savings.” As such, they should not be deducted from the award. This issue has not been resolved.

Two Conceptual Issues

In addition, the Court of Appeal decision in Duncan raises two conceptual issues that have not, as yet, been dealt with satisfactorily. First, that decision concludes both that the award should be something more than lost savings and that the available surplus approach is to be used. But, in certain circumstances, the latter approach yields results that are identical to the lost savings approach.

In particular, assume that the deceased was not married and that evidence has been led to suggest that he or she would never have married. In that case, the available surplus approach requires that all of the individual’s expenditures on personal items, plus all of his or her expenditures on indivisibles, be deducted from after-tax income. But the residual from that calculation is simply the individual’s savings. Does the Court wish us to compensate this individual’s estate for his/her savings, after explicitly rejecting the lost savings approach? The answer is not clear.

Second, note that the Court of Appeal ruled that the lost saving approach was flawed, in large part, because it “… will fail to take into account what has been called ‘discretionary’ spending, like holidays and entertainment and other ‘treats,’ … [and because it] … will also fail to take into account gifts to children and spouses.” [para. 37]

The simplest interpretation that can be given to this wording is that expenditures on holidays, entertainment, and other “treats” are not to be deducted from the estate’s claim. That is, if the lost saving approach is flawed because holidays, entertainment, and other treats are excluded, it surely must follow that, in the non-flawed approach, those items are to be included.

But the available surplus approach excludes these expenditures from the claim. The percentage of income that is devoted to expenditures exclusively for the benefit of the deceased includes expenditures that the deceased would have made on holidays, entertainment, etc. And the available surplus approach explicitly deducts expenditures made for the sole benefit of the deceased. Again, the Court ruling is found to be internally inconsistent.

Conclusion

The long saga that was initiated with the Court of Appeal ruling in Galand continues. Although the recent trial court decisions in Duncan and Brooks provide some clarification concerning the manner in which Survival of Actions Act claims are to be calculated, many issues remain to be resolved. Further rulings, perhaps from the Court of Appeal, will be required before a clear picture emerges.

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Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).

The Calculation of Damages in Sexual Abuse Cases

Posted on By economica

by Matthew Foss

This article was originally published in the autumn 1999 issue of the Expert Witness.

In the last decade, there has been a dramatic increase in the number of sexual assault victims who have sued their abusers in tort. The purpose of this article is to offer a brief review of the academic literature concerning the impact of abuse on the victim’s psychological well-being, education, and earning capacity. A second article, to be published in the next issue of this newsletter will discuss the response of the courts to these lawsuits.

Caveat

Any survey of the sexual abuse literature must begin with a caveat concerning the reliability of the research – that being that much of this research is unreliable due to the use of naïve or biased techniques.

One type of research investigates samples of adult patients in therapy. Since participants in these surveys are already in treatment, there is little doubt that the studies will find that the victims of abuse have disorders. In most cases, adequate control groups are not used to compare the results with, nor are measures taken to find the proportion of sexual abuse victims that sought out clinical treatment. Therefore, most of the results from these studies are questionable at best.

The other major type of research is biased in the other direction. Samples from the general population are taken. Although this gives a slightly more representative sample, in that it has a built-in control group, those that might have been most seriously affected by sexual abuse, the patients at mental institutions, are excluded.

Also, many of these samples use data that were not collected using consistent definitions of sexual abuse. Koverola et al argued that making a distinction based on the severity of the type of sexual abuse is arbitrary, and is likely meaningless. The magnitude to which intercourse is more damaging than manual penetration is difficult to determine, if it exists.

Moreover, the data are often based on subjective recall by survivors, with no objective methods to validate responses. Wachtel and Scott assert that many studies do not differentiate between the different forms of child sexual abuse, nor have they used a standardized outcome measure for cognitive or psychological functioning.

Wachtel and Scott further argue that researchers have an incentive to exaggerate the consequences of the sexual abuse. Their reason for this is to induce more support. If the effects are seen to be minor, then the need for response is also small

Impacts on Psychological Well-Being

Finkelhor and Browne reviewed the child sexual abuse literature. They found that at least eight non-clinical studies had reported that women within the general population, with a history of child sexual abuse, had identifiable mental health problems. They also found that only one study that attempted to find mental health impairment, in a non-clinical sample, had failed to find it.

According to the authors, among the more commonly found problems were: depression, self destructive behavior, anger and hostility, poor self esteem, feelings of isolation, difficulty trusting others, marital and relationship problems, and a tendency towards revictimization. Moreover, Finkelhor and Browne found that child sexual abuse was frequently cited as a background to substance abuse, prostitution, multiple personality disorders, and borderline disorder.

They further found that five empirical studies had shown that child sexual abuse was associated with increased likelihood of subsequent victimization Moreover, sexual abuse victims were more likely to be in abusive relationships. Their hypothesis was that sexual abuse makes victims more vulnerable to abusive individuals, or perhaps unable to anticipate dangerous sexual situations.

Conte, Berliner, and Schuerman employed a sample of 369 child sexual abuse victims that were assessed at the time of disclosure, and seen at a sexual abuse center. Two measures were used to assess the subjects, a symptom checklist was completed by the health care worker and a child behavior profile was completed by the non-offending parent. The victims ranged in age from four to seventeen years of age. The definitions of sexual abuse and their reported frequencies, within the sample, included: oral sex, 18% of the population; vaginal-penile intercourse, 19% of the population; and fondling, 62% of the population.

The results, as measured by the symptom checklist completed by the health care workers, showed that 18.7% of the sample had signs of depression, 32.8% exhibited low self esteem, and 15.4% had signs of academic problems. The authors found that victims of child sexual abuse differed from a comparison group, in a statistically significant manner, in a number of areas. These areas included: a lower self-esteem, more aggressive behavior, more fearful, and more difficulty in concentrating.

Wachtel and Scott concluded that there were three types of effects. The first of these are direct impacts, such as anxiety and low self-esteem. Second, there may be manifestations of these direct impacts, like school problems or sleep disorders. Finally, symptoms may arise from unsuccessful or dysfunctional attempts to cope. Among these are delinquency and prostitution.

Sauzier, Salt, and Calhoun used a sample of children entering the Family Crisis Program. Examining the preschool children in their study, they found that compared to a control group of “normal” children, their sample exhibited significantly higher overall pathology, and more specific difficulties. Most importantly, cognitive ability was significantly lower for the sample group than for the ‘normal’ group. However, there were not significant differences with respect to antisocial behavior, intellectual deficit, and hyperactivity.

Looking at a pre-adolescence group, the seven to thirteen year olds, a similar trend was evident. The abuse victims exhibited more psychopathology than did the normal group. However, in this age group, both academic disability and learning disability were not statistically different from the treatment group.

Sauzier, Salt, and Calhoun reached several postulates as a result of their study. First, children that suffered physical injuries during the sexual abuse were at greater risk for exhibiting behavioral problems. Moreover, those suffering aggression would be likely to be hostile and have fears about the aggressiveness of others. They observed that the age of onset and the duration of abuse were not related to negative effects on the child.

Suprisingly, they found that children who were sexually abused by stepfathers exhibited lower self-esteem than those children that were abused by their biological fathers. Their explanation for this result was that children with stepparents were more likely to have suffered from disrupted family environments. Angry reactions on the part of the mother after learning of the abuse were related to lower self-esteem, as should be expected.

Nash, Zivney, and Hulsey investigated a sample of 102 randomly selected sexual abuse cases that were being treated at a clinic in Dallas. The results of their study showed that children who were abused by more than one perpetrator were the most likely to suffer impairments. Other factors that made the abuse more likely to generate severe outcomes included: the earlier the abuse started, the greater the number of incidents, and the frequency not the duration of the abuse.

Crucially the authors found that the prognosis was worse when the family had been disrupted. They concluded that a child facing sexual abuse might be a product of a very neglectful household. Given this factor, it may be very difficult to determine where the effects of the neglect end and the effects of the sexual abuse begin.

Wachtel and Scott argue that it is important to examine the environment within which child sexual abuse occurs. Factors that often are associated with child sexual abuse are physical abuse, neglect, and parental alcoholism. It may be that the apparent symptoms of the abuse would have arisen even if the abuse had not occurred, because of the presence of these other negative influences on the child’s well-being. Furthermore, even if these other factors did not themselves “cause” psychological harm, they may have inhibited the victim’s ability to cope with abuse.

Wachtel and Scott also argue that if we accept that child sexual abuse is a complex situation that includes other factors beyond the sexual abuse, then we need to re-examine the question that we are asking. Instead of asking does child sexual abuse result in negative outcomes for victims, or what are the impacts of child sexual abuse, the questions need to be refined. Questions such as what effects are specific to child sexual abuse, and what are the incremental effects of child sexual abuse when neglect or physical abuse are also present, need to be examined.

Finkelhor and Browne argued that most studies were better at establishing the fact that sexual abuse constitutes a risk factor for later long-term effects than at determining the magnitude of the risk. They argued that less than one third of victims of child sexual abuse show serious psychopathology, although the remaining two thirds are not symptom free.

In an attempt to determine what the more significant factors were that made a victim more likely to suffer more serious outcomes, Finkelhor and Browne considered several possible factors. They cited Russell’s finding that 59% of victims suffering completed or attempted intercourse, or oral sex said that they were extremely traumatized. They also argued that not all studies established a difference between the impacts of abuse by a relative compared to a non-relative. Their speculation was that this distinction might not model the closeness of the relationship. It may be possible that a friend of the family may have more of a bond with the child than a distant relative.

They did find that the use of force was an important traumatic factor. Victims that suffered physical coercion had increased trauma. The duration of the abuse was associated with increased trauma in only three of eight studies that examined this relationship. Perhaps this is due to the fact that duration does not always capture frequency. For example, it is possible that an abusive situation might last for a period of years with only two or three incidents. Compare this to a situation where the abuse takes place over a week but involves a dozen or more instances of sexual abuse

The Effects on Education and Standard of Living

Reyome studied the school performance of sexually abused and neglected children. These were compared with non-abused children drawn from two groups -from families on public assistance and from lower middle-class families. Information was gathered on the cognitive achievement of all the subjects.

When school-based measures were used, the sexually abused children were more likely to have received lower grades than the control groups. Spelling and math achievement exhibited the largest differences. Moreover, almost half of the sexually abused students had repeated a grade, compared to less than one-third of the matched public assistance, and one-sixth of the matched lower middle class students.

Macmillan argued that the consequences of abuse included both the amount of education a victim hopes to attain, and the amount of time and energy that is given to schoolwork. This lowered investment in education was expected to both lower grades and interfere with the level of education that a victim would attain. Moreover, he argued that since educational attainment is a key determinant of occupational status, victimization would have the effect of lowering occupational status.

To test his model, Macmillan made use of two data sources: the U.S. National Youth Survey, a longitudinal study involving 1725 youths aged 11-17 that took place over a ten year period; and the Canadian General Social Survey (1993).

Using the National Youth Survey, Macmillan reported that adolescent victimization has a negative impact on earnings. Using three measures of violent victimization, he found that earnings per hour were one dollar lower for those that were victims. However, he did not find, when looking only at sexual assault, that there was a statistically significant difference over non-victims.

When Macmillan used the GSS data, he found that sexual assault victims suffered an income deficit of about $6000 per year. Again, the data supported his model showing that an additional year of education was associated with an increase in income of $1500 per year.

Macmillan further tested to see whether there was an impact of age of the victim at the time of abuse. His findings were that when the victim was in adolescence during the victimization, annual income was decreased by $6000 using CGSS-93 data. This is compared to an annual decrease of $3700 when the victim was eighteen or nineteen at the time of the violence. Macmillan argued that this again was consistent with the life course model. The greatest damage to earnings is done during adolescence, when the victimization has more impact on the socio-economic life course.

Summary

Briefly, I believe that the following conclusions can be drawn from a review of the academic literature:

  • Not all victims of sexual abuse suffer long-term, observable psychological harm. Indeed, as many as two-thirds of victims show no significant effects.
  • Abuse may be more harmful if it is prolonged or violent.
  • Victims suffer from depression, anger, hostility, marital problems, and self-destructive behavior.
  • Victims of sexual abuse are at increased risk for further sexual assault, such as rape; and show a high risk for substance abuse and prostitution.
  • In many cases, it is not clear whether it was the sexual abuse itself, or the unhealthy psychological climate in which the child lived that led to the perceived psychological damage. Many victims of sexual abuse live in dysfunctional families, often with long histories of substance abuse and marital discord.
  • Evidence of the long-term effects of abuse on educational attainment and labour market earnings is not strong. Some studies have found significant effects, but the number of statistically reliable studies is extremely small.

References

Asher, S.J. “The Effect of Childhood Sexual Abuse: A Review of the Issues and Evidence” In Walker, L. E. A. (Ed) Handbook on Sexual Abuse of Children, (New York: Springer Publishing Company, 1988) pp. 1-17

Bagley, C. and K. King Child Sexual Abuse: The search for healing, (London: Tavistock/Routledge, 1990)

Bell, D. and K. Belicki “A Community-Based Study of Well-Being in Adults Reporting Childhood Abuse” Child Abuse and Neglect Volume 22 No. 7 (1998) 681-684

Cantwell, H.B., “Sexual Abuse of Children in Denver, 1979, Child Abuse and Neglect, 5, (1981), 75-85.

Chandy J. M., R. Wm. Blum., M.D Resnick, “Gender-specific Outcomes for Sexually Abused Adolescents” Child Abuse and Neglect, Volume 20 No.12, (1996), 1219-1231

Conte J. R. and L. Berliner “The Impact of Sexual Abuse on Children: Empirical Findings” In Walker, L. E. A. (Ed) Handbook on Sexual Abuse of Children, (New York: Springer Publishing Company, 1988) pp. 72-93

Conte, J. R., L. Berliner, and J. Schuerman, Impact of Sexual Abuse on Children, unpublished: University of Chicago School of Social Service Administration, (1986).

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Matthew Foss was an MA student in the Department of Economics at the University of Calgary