Economic Loss calculations involve the difference between what a person could have earned if not for the event that is being litigated and what the person can earn. These events include personal injury, medical malpractice, wrongful termination and wrongful death cases. The Earnings Analyst uses the vocational assessment to compare the pre-event earning capacity to the post-event earning capacity.

Often we compute the loss of wages and benefits over the remainder of the Work Life Expectancy (WLE). State laws affect how these calculations often needs be performed. These influences may not always agree with economic theories. For instance, in Pennsylvania, the future lost earnings are calculated with an “offset method,” which states that the rate of interest is assumed to be equal to the interest rate. In Michigan, a 5% single discount rate is used to calculate the Net Present Value of a future lost earnings stream. 

Although dollars are not exchanged in the same way as in regular employment situations, the performance of household chores has economic benefits. If for some reason work and services in the household can no longer be performed there is a market where persons who are willing to perform those various household services can be hired to perform. The lost value over the healthy life expectancy can be significant.