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Economics and Damages

2 tools in the Finance and Business area.

Economic Damages

Lost earnings and related losses for a personal-injury, wrongful-death or wrongful-termination report: a year-by-year schedule from the date of injury or termination of gross earnings with growth, fringe benefits, income tax, the personal-consumption offset of a death case and residual (mitigation) earnings, plus household services and a life-care or medical item list; the schedule is split at the valuation (trial) date into past losses with prejudgment interest and future losses discounted at the mid-year, by the nominal-rate method, the total-offset rule (growth equal to the discount rate) or a net discount rate, with the implied net discount rate, totals by component, a sensitivity table and a cumulative-value chart. The statistical life expectancy comes from the 2020 United States life tables of the National Center for Health Statistics (males and females, ages 0 to 100); the work-life expectancy is entered. The default case is a 40-year-old man earning 60,000 a year with 3 % growth, 25 % fringe benefits, a 22-year work life, a 5 % discount rate and two years of past loss, whose future earnings the page checks against the closed-form growing annuity.

1 worked example reproduced, listed on the tool page.

Lost Profits and Business Interruption

Commercial damages and insured business-interruption losses from a pasted monthly revenue and cost history. Lost profits: the but-for revenue of the loss period by the before-and-after method (a linear or growth trend fitted to the pre-event history by least squares, with ratio-to-trend seasonal indices), the yardstick method (an entered benchmark series scaled to the plaintiff's pre-event revenue) or an entered projection; the actual revenue of the period; the lost revenue; the avoided (saved) variable costs by an entered variable-cost ratio or a least-squares regression of costs on revenue (slope, intercept, R-squared); extra costs of mitigation and mitigation credits; the loss period from start and end dates with partial months prorated by days; prejudgment interest on the months before the valuation date (simple or compound at an entered rate) and discounting of the months after it, giving the ex post value at the valuation date and, for comparison, the ex ante value discounted to the loss date and carried forward; a sensitivity chart of the result against the assumed growth rate. Business interruption (insurance): the loss of business income for the period of restoration in the gross-earnings form and in the net-income-plus-continuing-expenses form (the two agree by identity), the ordinary-payroll limitation in days, extra expense, the coinsurance requirement and penalty, the deductible and the limit, and the loss payable. Alternatives: the capitalisation of the annual lost-profit stream (diminution in value) and a reasonable royalty as royalty base times rate, with the Panduit and Georgia-Pacific factors named. Money is a plain number in one currency; dates and periods are text. The default is an illustrative 36-month retail history (2021-2023) with a six-month interruption from 1 January 2024, closed for three months and partly open for three, valued on 1 January 2025.

1 worked example reproduced, listed on the tool page.

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