The Valuation of Human Capital in New York State Courts

Larry Lichtenstein and Mark P. Zaporowski

New York Economic Review, 2005, vol. 36, issue 1, 3-12

Abstract: Courts are often asked to adjudicate disputes that are economic in nature or have economic components. Attorneys and judges frequently lack formal training in economics and must rely on their intuition to guide their decisions. This shortcoming can lead to poorly reasoned decisions that have inequitable financial consequences. This paper explores the difficulties that the New York State courts have encountered in the valuation of human capital in the form of academic and professional degrees and licenses. This became an important consideration after the 1985 New York Court of Appeals decision in O'Brien v. O'Brien (66 NY2d 576), where the court ruled that human capital acquired during marriage is an asset subject to equitable distribution upon dissolution of the marriage. Prior to this decision, the distribution of marital wealth in divorce was confined to tangible assets. O'Brien opened the door to valuation of intangible human capital, which dramatically increased marital wealth. This ruling has had a profound impact in New York State since it affects all those who obtain education or training during a marriage that ultimately ends in divorce.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:nye:nyervw:v:36:y:2005:i:1:p:3-12

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