About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

40 Ark. L. Rev. 439 (1986-1987)
The Recognition of Human Capital as Property in Divorce Settlements

handle is hein.journals/arklr40 and id is 449 raw text is: The Recognition of Human Capital as Property in Divorce Settlements Allen M. Parkman* I. INTRODUCTION The transformation of the American economy from a manufacturing and agricultural base to one dominated by the service sector' has made the traditional notions of what items should be treated as property in divorce settlements inappro- priate.2 The wealth of an individual, i.e., the value of his property,3 is the value of the income stream that he can antici- pate from the assets that he owns.4 In a manufacturing and agricultural society, the primary forms of wealth are physical assets, such as houses and land, and financial assets, such as * Professor of Management, Anderson Schools of Management, The University of New Mexico. A.B., 1962, Brown University; Ph.D. (Economics), 1973, UCLA; J.D., 1979, New Mexico. 1. At the turn of the century, agriculture and manufacturing accounted for 86% of the gross national product. By 1980, their share of GNP had fallen to 31.4% and the share going to services had risen to 62.6%. R. MILLER, ECONOMICS TODAY 82 (4th ed. 1982). 2. Courts typically use a traditional Black's Law Dictionary definition in holding that earning capacity is not property. See, e.g., Graham v. Graham, 194 Colo. 429, 432, 574 P.2d 75, 77 (1978) (everything that has an exchangeable value or which goes to make up wealth or estate). In economic analysis, an asset, which is another word for property, exists and has value if it produces a future stream of returns, regardless of whether it is exchangeable or not. While these returns will normally be in the form of income, they can also be psychic. See S. DAVIDSON, J. SCHINDLER, C. STICKNEY & R. WEIL, FINANCIAL ACCOUNTING (1976). The prospective nature of value has long been recognized by economists. See I J. BONBRIGHT, THE VALUATION OF PROPERTY 237 (1937). 3. While the equitable distribution statutes in the vast majority of jurisdictions define marital property, the more basic definition of property is usually ignored. See Da Silva, Property Subject to Equitable Distribution, in VALUATION & DISTRIBU- TION OF MARITAL PROPERTY 18-4 (Bender ed. 1984). 4. The relationship between income and the value of assets is discussed in P. SAMUELSON & W. NORDHAUS, ECONOMICS 651 (12th ed. 1985), which states that, The present value of a capital good, or of any asset, is the value today of the stream of future returns. For example, if an asset were expected to generate a return of x in each future year from now to eternity, its value now would be equal to x divided by the relevant rate of interest on similar investments, e.g., V = $100/10% = $1,000. Id. at 652.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most