Forensic Economic Evaluations

What is a forensic economist?

A forensic economist is the expert who turns an injury, a death or the loss of a job into one figure for the court: the earnings and benefits the person will not receive, the unpaid work the household has lost and the future care that will have to be paid for, each projected over the years it runs and expressed in today's dollars.

The inputs are records, not an examination. The earnings come from pay records and tax returns, the ability to work from the vocational expert where it is disputed, and the care needs from the life care plan; the report then shows every assumption beside its source, so an opposing economist can substitute a different figure and see exactly what changes.

What does a forensic economic evaluation quantify?

A forensic economic evaluation quantifies four categories of loss: lost earnings and earning capacity, fringe benefits, lost household services and the cost of future care. Lost earnings and lost earning capacity come first: the loss already incurred is read from pay records up to the valuation date (a date such as the trial date, where past loss ends and future loss begins), while the loss still to come is a projection that rests, when the ability to work is disputed, on the vocational opinion; the earning capacity versus lost earnings guide separates the two. Fringe benefits ride on that earnings stream: health coverage, retirement contributions and the employer's payroll taxes are added to the wage. Lost household services stand apart from paid work: cooking, cleaning, yard work, child care and the other tasks the person can no longer do are priced at what hiring them out would cost, the analysis the household services practice prepares. Future care enters as a schedule rather than an estimate: the life care plan supplies each item with its frequency and unit cost, and the economist projects and discounts that schedule; the future medical costs guide follows the hand-off.

In a wrongful death case the projection covers the decedent's earnings and benefits, less the share the decedent would have spent on personal consumption, together with the household services the decedent would have provided. In a wrongful termination case the loss is the pay and benefits that went with the job, divided at the valuation date into back pay and front pay, and the earnings from replacement work, actual or expected, are set against both.

Which assumptions decide the present value?

Three assumptions decide the present value of a future loss: how long the loss runs, how fast it grows and the rate at which it is discounted. A future loss is a stream of yearly amounts, while the award that replaces it is usually paid once, as a single sum, so the stream has to be reduced to that sum, its present value.

How long an earnings stream runs comes from worklife expectancy tables, such as those Skoog, Ciecka and Krueger published in the Journal of Forensic Economics, which give the years in the labor force statistically remaining to someone of the person's age, sex, education and labor force status, rather than from a fixed retirement age; a care or household services stream runs instead to a horizon tied to the person's life expectancy. How fast the amounts grow comes from published series rather than from the person's best year: the Bureau of Labor Statistics' Employment Cost Index for wages, for example, and the medical care component of its Consumer Price Index for care costs. The net discount rate is the discount rate, often drawn from U.S. Treasury yields matched to the length of the loss, less the growth rate; the present value method page explains how each rate is chosen and where the forum prescribes the approach. Reasonable economists choose differently, so the report shows the sum across a range of each assumption and lists every input with its source. The damages calculation explainer walks through the arithmetic, and the damages estimator lets counsel try the inputs at a planning level.

How a forensic economic engagement proceeds

Scope, conflicts and the fee are settled in writing before any file is opened, and the data arrives next: the earnings history in its records, and the vocational opinion or the life care plan the damages rest on, because the economic analysis begins where those opinions end. Six steps then follow, listed below in order; the engagement process page walks through each step in turn.

Typical timeline

A complete report is typically 30 to 60 days from receipt of complete records; rebuttal and supplemental analyses follow the opposing reports, and each phase's duration is on the timeline page. Where the analysis rests on a vocational or life care opinion, the window starts once that opinion is final.

What a forensic economic evaluation costs

The fee follows the scope retained, and each category of loss claimed widens it: every category is another stream to model, a contested assumption adds a sensitivity range, and an opposing report adds a rebuttal phase. A fee schedule and a written estimate for that scope come before any work begins. The cost drivers and the billing terms are on the cost page.

What does a forensic economist deliver?

A forensic economist delivers up to four things: the written report, a written rebuttal of an opposing calculation, testimony at deposition and trial, and a supplemental report when the inputs change. The written report is the primary one: it separates the loss already incurred from the loss still to come, discounts the second to the valuation date, names its sources and its discounting method, and shows how far the total moves when each assumption moves, so a reader can rebuild the figure from the report alone. The economist who wrote the report is the one who gives deposition and trial testimony on it, and the supplemental report is served when new earnings records arrive or the vocational or life care opinion changes.

Who hires a forensic economist?

Plaintiff counsel retains an economist to state the loss; defense counsel retains one to test the figure claimed or to prepare an independent one. Kincaid Wolstein Vocational and Rehabilitation Services (KWVRS) provides forensic economic analysis with its affiliated firm, Kincaid Wolstein Economics. The retaining side chooses the question; the method, the tables and the sources are the same either way, so a figure prepared for one side has to survive the audit the other side's economist will give it. The economist does not decide whether the person can work or what care the person will need; the vocational expert and the life care planner do, and the economic report takes their findings as given. The forensic economics article explains the discipline and the qualifications to look for, and the damages expert guide says which of the three experts a case needs.

Case Types

Forensic Economics by Case Type

How forensic economics applies to the specific demands of each case type: methodology, deliverables, and what counsel should expect.

Forensic Economics by State