TEA: Volume 2 (1999)

TEA.2.0 – 1999. The Earnings Analyst  2: 116pp.

TEA.2.1 – A Conceptual Framework for Valuation in Economic Testimony: Market Tests, Revealed Preferences, and Value Inferences.  Thomas R. Ireland.  The purpose of this paper is to provide insight into why economic theory gives economic experts a comparative advantage when valuation is complex. Consideration is then given to how economic experts go about preparing loss assessments in ordinary personal injury and wrongful death circumstances. The paper ends with a consideration of the question: When is it appropriate for area-specific experts such as Vocational Experts to provide wage loss analysis?

TEA.2.2 – O*NET Issues For Rehabilitation Economists.  Billy J. McCroskey and Kenneth L. Dennis.  The Occupational Information Network (O*NET) purports to be a replacement for the Dictionary of Occupational Titles. The O*NET 98 Data Dictionary was developed under a contract between the US Department of Labor, Employment and Training Administration and Trefoil Corporation, Orono, ME, in cooperation with Aquirre International and the National O*NET Consortium. Version 1.0 has been revealed by this study to be a valid and reliable source of occupational information. It was described as a collection or composite of other occupational information and therefore not descriptive of any specific job. The O*NET 98 development effort attempted to provide a comprehensive database that described occupations, worker skills, knowledge, abilities, and work place requirements for jobs in all sectors of the United States economy. As an automated replacement for the outmoded Dictionary of Occupational Titles (U.S. Department of Labor 1991), it was expected to provide the flexibility needed to capture rapidly changing job requirements into the 21st century.

TEA.2.3Estimating the Economic Loss of a Sole Proprietor: An Analysis of Alternative Methodologies.  Edward J. Mathis and Judith Ann King.  When an economist is called upon to serve as an expert witness in calculating the lost earnings of a sole proprietor of a closely held business (self-employed individual), strong forces pull in different and occasionally opposite directions. While equality under the law might suggest that a single formula be established and applied to all cases, justice demands that the unique nature of the individual’s ability and effort levels be recognized. To this end, the forensic economist is to use relevant and reliable data, as well as a relevant and reliable methodology to assess to value of the loss. This paper is divided into three sections. The first section delineates the economic components of the loss. The second section considers the completeness, relevance, and reliability of four methodologies suggested in current literature. The third section presents economic value added, economic value added (EVA) (a proprietary valuation methodology that is similar to economic profit and trademarked by Stern Stewart), and evaluates this approach on the same criteria. Following the third section, in appendix B, is a comparison of the results produced by each method of calculation.

TEA.2.4Mitigation Earning Capacity.  David Toppino.    In cases involving wrongful termination, sexual harassment, employment discrimination, medical malpractice, personal injury, product liability and marital dissolution, the plaintiff’s mitigation earning capacity is a critical earnings loss factor. A vocational expert (VE) is generally responsible for evaluating pre and post incident earning capacity and can often clarify issues related to the nature of the mitigation effort. There are three primary vocational methodologies used to assess mitigation earning capacity. The first was defined by Everett Dillman as a functional loss of earning capacity model (Dillman 1987). The second paradigm is called the vocational rehabilitation model, and was perhaps best described by Robert Metcalf, a founder of the American Rehabilitation Economics Association. Here, the VE contrasts a) pre-incident demonstrated earnings to post incident demonstrated earnings, if applicable, and b) pre-incident earning capacity, if applicable, to post incident earning capacity. The third general methodology is a medical impairment model which assumes the percentage of medical impairment corresponds to loss of earning capacity (LOEC). Depending on the nature of the incident, there may be as many as six primary sources of data useful in the determination of mitigation earning capacity. Used in combination with public wage rate data from the Bureaus of the Census and Labor Statistics, the VE can develop a powerful process to validly and reliably establish the plaintiff’s mitigation earning capacity.

TEA.2.5“Lost Earning Capacity” vs. “Expected Lost Earnings” in Wrongful Death Analysis.  Thomas R. Ireland.    The term “personal injury litigation” is often used to include both personal injury litigation involving individuals who have survived their injuries and wrongful death (or “survival action”) litigation involving individuals who have not survived their injuries. However, substantial differences exist in the standards for loss recovery between personal injury litigation and wrongful death litigation. (Survival actions involve many differences that will not be treated in this paper.) In a personal injury action, the loss recovery language often specifies that individuals may recover for the lost “earning capacity” that results from injuries and for lost ability to produce nonmarket services. In a wrongful death action, the standard for recovery is the loss by survivors of financial support and nonmarket services the decedent would have provided to survivors if death had not occurred. This paper considers the distinction between “expected lost earnings” and “lost earning capacity” as they apply to wrongful death litigation. In general, it concludes that the standard must be “expected lost earnings,” but considers special circumstances in which the loss of earning capacity by a decedent may represent a loss to survivors.

TEA.2.6Book Review: “Expert Economic Testimony: Reference Guides for Judges and Attorneys” by Thomas R. Ireland, Stephan M. Horner, James D. Rodgers, Patrick A. Gaughan, Robert R. Trout, and Michael J. Piette (Lawyers & Judges Publishing Co., Inc., 1998).  Mark Kuga.    Book review of Expert Economic Testimony: Reference Guides for Judges and Attorneys by Thomas R. Ireland, Stephen M. Horner, James D. Rodgers, Patrick A. Gaughan, Robert R. Trout, and Michael J. Piette. Lawyers & Judges Publishing Co., Inc., 1998.

TEA.2.7Software Review: “PC-Economist 98” Developed and distributed by Melvin C. Fredlund (1999).  Gerald R. Schneck.   Software Review of PC-Economist ’98 by Melvin C. Fredlund (Developer and Distributor); Advocate Software; 1208 Rockledge, Suite 8; Walnut Creek, CA 94595-2815 (925-256-6661)