Here are some short answers. We will provide detailed ones and their implications in this section.
“Forensic economics” – also known as litigation and courtroom economics – applies economic and business principles to determining economic damages.
It’s a practice within “civil litigation” where plaintiffs make a claim for financial damages due to an alleged injury that arises, for example, from automobile accidents, medical malpractice, wrongful termination, product failures, or breach of contract.
The basic calculation is two develop and compare two scenarios. One pre-event; the other, post-event. The difference in earnings or costs is projected into the future and then discounted to present value.
No, we don’t determine the “value of life.” We estimate the loss of earnings or profits or an increase in costs. Sometimes plaintiff’s in a medical malpractice case where they were injured may make a claim for “pain and suffering” or other non-compensatory damages, like “loss of “consortium. We don’t put a dollar value on these. In some jurisdictions (states), in the case of medical malpractice allows for “the loss of enjoyment of life.” This is called “hedonic damages.” Economists have tools to estimate this.
There are other questions in addition to these three. In this section, we’ll be sharing the types of issues we cover in our practice, for example, the use of race in determining economic damages and the challenge of estimating economic damages for the “gig worker.”
What you’ll see is that when we think about “economic damages,” we also are highlighting the importance of education and training in determining lifetime income, for example, along with other issues, like product design and safety. While our work focuses mainly on making individuals economically whole, it also provides glimpses into how socio-economic forces determine economic outcomes.
Since we testify both for plaintiffs and defendants, “providing convincing evidence” is critically important for our clients as well as our reputations.