Glossary
Working terms in forensic economics.
- Daubert Standard
- The federal evidentiary standard for the admissibility of expert testimony, derived from Daubert v. Merrell Dow Pharmaceuticals (1993) and codified in Federal Rule of Evidence 702.
- Frye Standard
- An older evidentiary standard requiring that scientific evidence be 'generally accepted' in the relevant scientific community, still followed in several state courts.
- Present Value
- The current worth of a future stream of cash flows, calculated by discounting at an appropriate interest rate.
- Discount Rate
- The interest rate used to convert future cash flows to present value.
- Net Discount Rate
- The discount rate minus the assumed growth rate, used to convert a constant-dollar future stream to present value.
- Work-Life Expectancy
- Expected years of remaining labor force participation, by age, sex, and education, typically from the Skoog-Ciecka-Krueger tables.
- Earning Capacity
- The plaintiff's ability to earn, grounded in education, training, and labor market data — distinct from actual earnings at the time of injury.
- Lost Earnings
- Actual past and projected future earnings lost as a result of an injury or wrongful death.
- Household Services
- Unpaid domestic services — cooking, cleaning, child care, household maintenance — valued for damages purposes using time-use data and replacement-cost wages.
- Personal Consumption
- The portion of a decedent's earnings the decedent would have spent on themselves, deducted in wrongful death cases where the recovery is for lost support to survivors.
- Life Care Plan
- A document prepared by a qualified life care planner setting out the future medical and attendant care needs of an injured individual.
- Medical CPI
- The medical-care components of the Consumer Price Index published by the Bureau of Labor Statistics, used to project future medical costs.
- Treasury Yield
- The interest rate paid on U.S. government debt securities, the standard risk-free benchmark for discounting future losses.
- Incremental Margin
- The contribution margin earned on incremental sales, used as the correct measure of lost profits damages.
- Fair Market Value
- The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion.
- Fair Value
- A statutory standard of value used in shareholder dissent and oppression cases; differs from fair market value in the treatment of marketability and minority discounts.
- DLOM
- Discount for Lack of Marketability — a reduction in value applied to closely held interests to reflect the absence of a ready market.
- Minority Discount
- A reduction in value applied to a non-controlling interest in a business.
- Control Premium
- An increase in value applied to a controlling interest in a business.
- Capitalization Rate
- The rate used to convert a single period of income into an indication of value, equal to the discount rate less the long-term growth rate.
- Goodwill
- Intangible value associated with a business, separable into enterprise (transferable) and personal (non-transferable) components.
- Collateral Source Rule
- A common law rule precluding the reduction of damages by payments the plaintiff received from sources independent of the tortfeasor, modified by statute in many jurisdictions.
- Mitigation
- The duty of an injured party to take reasonable steps to reduce the loss caused by another's conduct.
- Periodic Payments
- Damages paid in installments rather than as a lump sum, often governed by jurisdiction-specific statutes in medical malpractice cases.
- IRC §104(a)(2)
- The Internal Revenue Code provision excluding from gross income damages received on account of personal physical injuries or sickness.
- IRC §451
- The Internal Revenue Code provision governing the timing of income recognition, central to the analysis of structured settlements.
- Qualified Assignment
- An assignment of a personal injury obligation under IRC §130 that allows the assignee to fund periodic payments without immediate tax consequence.
- Rule 26
- The Federal Rule of Civil Procedure governing the disclosure of expert witnesses and their reports.
- Rule 702
- The Federal Rule of Evidence governing the admissibility of expert opinion testimony.
- BLS
- Bureau of Labor Statistics — the principal U.S. government source for wage, employment, and price data used in forensic economics.
- ECI
- Employment Cost Index — a quarterly BLS measure of compensation cost change, used to project wage growth.
- OEWS
- Occupational Employment and Wage Statistics — the BLS source for wage data by occupation and area.
- ATUS
- American Time Use Survey — the BLS source for household services time data.
- Skoog-Ciecka-Krueger
- The peer-reviewed work-life expectancy tables used in most forensic economic analyses.
- Net of Personal Consumption
- A wrongful death damages measure equal to the decedent's earnings less the share consumed by the decedent personally.
- Loss of Consortium
- A non-economic damages category for loss of the companionship and services of a spouse.
- Hedonic Damages
- An attempt to value the loss of the pleasure of living; rejected in most jurisdictions and not opined upon by Dr. Pettingill.
- Wrongful Death Statute
- The statute defining the categories of recoverable damages in a wrongful death action; varies materially by state.
- Survivor Statute
- A statute permitting recovery on behalf of the decedent's estate, generally for losses suffered by the decedent before death.
- Pecuniary Loss
- Economic loss measurable in dollars, the category of damages a forensic economist addresses.
- Non-Economic Damages
- Damages not measurable in dollars — pain and suffering, loss of enjoyment, loss of consortium — outside the scope of forensic economic opinion.
- Daubert Hearing
- A pretrial hearing on the admissibility of expert testimony under the Daubert standard.
- Voir Dire
- Examination of a prospective expert witness on qualifications, sometimes preceding a Daubert challenge.