Abstract

The methodology of using a net discount rate (“NDR”) to calculate the present value of future labor earnings is now over 50 years old. First found in public health economics, the earnings NDR later reached forensic economics where it was adapted to other calculations such as the present value of medical costs. At first, some forensic economists embraced the historically determined wage NDR arguing that it was simple, fair, and 0% since annual wage growth and interest rates had been fairly equal to that time. The 0% wage NDR did not sit well with some other forensic economists, and so a discourse began in the literature regarding its numeric value. Largely missing from the debate has been an analysis of the historically determined NDR, as it has been constructed and used, as a legitimate present value methodology. Building upon the initial criticisms of the NDR by Jones (1985, 1986) and the recent work of Foster (2015), this article examines the historical wage NDR method and concludes that, for several reasons, it is theoretically faulty, empirically inconsistent, and not relevant to forensic economics.

Abstract

Regardless of the time period studied since the 1970s ended, without adjustments for structural factors, both real and nominal interest rates across the spectrum of maturities exhibit non-stationary processes with a unit root. Consequently, simply employing past means of either real or nominal yields losses a degree of credibility. Focusing on the period of the “Great Moderation,” employing structural break analysis can remove the non-stationarity so that forensic economists can chose not to use more complex ARIMA models, stochastic properties of interest rates, or estimating methods more complex than these. Rather, following the analysis in this paper, forensic economists can employ one of a small number of discount rates from a not too distant past time period that reflect systematic variations more likely to be consistent with predictable future interest rates.

Abstract

This article presents a framework for computing damages in Nebraska personal injury and wrongful death cases. The analysis is based on statute, common law, case law, jury instructions and practice. Elements unique to personal injury and wrongful death cases are discussed, as well as elements common to both. The role and requirements for damage experts are examined, as are the work product and likelihood of deposition and testimony.

The associates listed here have become NAFE members since the last issue of the JFE.

Scott Angelius

215 E. Oklahoma Ave.

Knoxville, TN 37917

scott@damageguide.com

(512)797-9509

RoseMary Avery

Cornell University

Dept. of Policy Analysis & Mgt.

2301 G MVR Hall

Ithaca, NY 14850-2824

rja7@cornell.edu

(607) 255-2578

Peter Desmond Bates

Bates Forensic Valuation Ltd.

PO Box 35246

Browns Bay

Auckland 0753

New Zealand

info@bates.net.nz

64(9)4820209

Gregory Billings

100 Fort Dr., NE, Apt. 5

Washington, DC 20011

billings.g@gmail.com

(202)440-7714

Ike D. Braden

35 Windward Loop

Kalispell, MT 59901

bradenav8r@msn.com

(406)890-9390

Blake James Briles

575 S. Freedom Blvd., #207

Provo, UT

Editors' Note

Retiring the Historical Net Discount Rate

Abstract

An Alternative Estimation Technique for Determining Discount Rates and Earnings Growth Rates in Wrongful Death and Personal Injury Cases

Abstract

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Nebraska

Abstract

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Rhode Island

Abstract

Update to Assessing Economic Damages in Personal Injury and

Wrongful Death Litigation: The State of Idaho

Abstract

Update to Assessing Economic Damages in Personal Injury and

Wrongful Death Litigation: The State of Utah

Abstract

Update to Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Mississippi

Abstract

Update to Assessing Economic Damages in Personal Injury and

Wrongful Death Litigation in Florida

Abstract

How Our Days Became Numbered

Taxes and Value: The Ongoing Research and Analysis Relating to the S Corporation Valuation Puzzle

NAFE Members Directory

Editors’ Note

Life-Cycle Estimates of Earnings Growth by Education and Gender

A Closer Look at Race, Ethnicity, and Gender Neutral Models

Personal Consumption and Single Persons: An Update

Editors’ Note