Economic Damages Valuation / Present Value Calculations

Economic Damages has been defined as objectively verifiable monetary losses including, but not limited to, reasonable charges necessarily incurred for medical, hospital, nursing and rehabilitative services and other health care services, burial and memorial expenses, loss of income and past and future impairment of earning capacity, reasonable and necessary expenses incurred for substitute domestic services, recurring loss to an estate, damage to reputation that is economically verifiable, reasonable and necessarily incurred costs due to loss of use of property and reasonable costs incurred for repair or for replacement of damaged property, whichever is less.

Valuation of economic losses related to specific events such as auto accidents, employment termination, breach of contract, to name a few, has developed into the applied field that has come to be known as forensic economics. The economic consequences resulting from employment events such as discrimination, harassment, and wrongful termination can be substantial and long lasting. Accurate projection of pre- and post event earnings streams must be based upon understanding the individual’s pre- and post event earning capacities, and also the way the person’s earning capacity interrelates with the marketplace.

Determining the Present Value of economic losses provides the equivalent
lump-sum value today of expected future cash flow calculated according
to a specific discount rate.

Types of economic damages typically reduced to present value:

  • Past and Future Wage Loss
  • Past and Future Benefit Loss
  • Past and Future Household Service Contribution Loss
  • Past and Future Medical Care Costs