Economic damages in a wrongful death case are calculated forward from the date of death to the end of the decedent's projected worklife and, in some states, to the end of the decedent's projected life expectancy for household services and other contributions. The calculation is not a simple multiplication of current salary by remaining years of work. It requires projecting earnings growth, accounting for the probability that the decedent would have continued working throughout the projected period, applying worklife expectancy tables rather than raw life expectancy, and reducing the resulting stream of future losses to a present value using a discount rate that accounts for the difference between the time value of money and expected wage growth. Each of these methodological steps is contested by opposing experts at trial, and the trial outcome on economic damages often turns on which expert's methodology the jury finds more credible.
Lost Earnings Capacity: The Starting Point
The foundation of the economic damages calculation is the decedent's lost earnings capacity, not their actual earnings at the time of death. Capacity, not realization, is the measure: a plaintiff must prove what the decedent would have earned over their remaining worklife had they survived. For a decedent who was employed at a stable wage at the time of death, the calculation begins with verified earnings records, including W-2s, tax returns, and employer compensation statements, and projects those earnings forward at a defensible wage-growth rate using Bureau of Labor Statistics data for the relevant occupational category and industry.
For decedents who were not employed at the time of death, the calculation is more challenging but not foreclosed. A young decedent who had not yet entered the workforce, or a stay-at-home parent whose earnings capacity was not being realized at the time of death, has a compensable economic loss based on what they would have earned. For a young decedent, the economist uses educational attainment, projected educational completion, and the earnings distribution for workers at that educational level in the relevant geographic and demographic cohort to establish a baseline earnings figure.
For a stay-at-home parent, the lost earnings capacity calculation is paired with the household services calculation, which measures the market replacement cost of the domestic labor the decedent was providing. Treating the stay-at-home parent's loss as purely a household services replacement cost, without also quantifying the earnings capacity foregone during the child-rearing years, undercounts the total economic loss. The economist should address both streams of loss and explain how they interact during the child-rearing period and how the earnings capacity loss resumes at full weight once the economist assumes the parent would have returned to the workforce.
Household Services: Replacement Cost Methodology
Household services are the non-market labor contributions the decedent provided to the household: cooking, cleaning, childcare, home maintenance, errands, financial management, and similar tasks. The loss is measured by the market replacement cost of those services, not by the cost to the family of actually replacing them (which may be higher or lower depending on how the family responds to the loss). The forensic economist typically uses Bureau of Labor Statistics American Time Use Survey (ATUS) data to establish average time spent on household activities by people of the decedent's age, sex, and household composition, and then prices those hours using market wage rates for the equivalent commercial services.
The defense will challenge household services calculations on two grounds: that the time estimates from ATUS data are averages that do not reflect the specific decedent's actual contributions, and that the market wage rates used to price the services overstate the replacement cost because some of the services could be obtained at lower cost through informal means. Plaintiff's counsel should supplement the ATUS baseline with testimony from family members and close household contacts who can describe the specific decedent's actual contributions in detail. The combination of statistical baseline and individualized testimony is more defensible than either alone.
Worklife Expectancy vs. Life Expectancy
The economic damages period for lost earnings ends at the projected end of the decedent's worklife, not their natural life expectancy. Worklife expectancy accounts for the probability that a person of the decedent's age, sex, and labor force status would have remained in the workforce during each future year, incorporating probabilities of withdrawal from the workforce for unemployment, disability, and retirement. The most commonly used worklife expectancy tables in forensic economic analysis are the Skoog-Ciecka-Krueger (SCK) worklife tables, updated periodically, and the BLS occupational projections for specific industries.
For a decedent at age 35, worklife expectancy and life expectancy produce materially different loss periods. A male decedent at 35 may have a life expectancy to age 78 but a worklife expectancy that effectively ends at 65, after accounting for the probability of retirement and disability withdrawal during the intervening years. The defense will press for the shorter loss period; plaintiff's counsel should work with the economist to select worklife tables that are appropriate for the decedent's specific occupational profile and labor force attachment history.
The Discount Rate Debate
Future losses must be reduced to present value to reflect the fact that a dollar received today is worth more than a dollar received in the future. The discount rate used for this reduction is one of the most contested methodological questions in forensic economics. A higher discount rate produces a lower present value and therefore a lower damages award. The choice of discount rate is not standardized across jurisdictions or economic experts.
Three approaches are used in practice:
- Net discount rate approach: The economist applies a single net discount rate that represents the difference between the expected market rate of return on safe investments and the expected growth rate of the wages being discounted. If wages are expected to grow at 3 percent annually and the safe investment return is 4 percent, the net discount rate is approximately 1 percent. This approach simplifies the calculation but requires agreement on both the growth and return assumptions.
- Total offset approach: In some jurisdictions, courts accept the total offset approach, which assumes that the rate of wage growth equals the discount rate, producing a net discount rate of zero and allowing the economist to sum future undiscounted losses without a present value reduction. Alaska uses this approach.
- Gross present value approach: The economist separately applies a wage growth rate to project future earnings and then separately discounts those projected future earnings to present value using a market return rate. This approach makes the two assumptions explicit and visible, which is useful for cross-examination preparation but creates more attack surface for opposing experts.
Know which approach is accepted in the trial court's jurisdiction before retaining the economist, and retain an expert who has testified in that jurisdiction before.
Non-Economic Damages and the Damages Model Presentation
The forensic economist's report covers economic damages only. Non-economic damages, including loss of companionship, loss of guidance and consortium, and the grief and sorrow of surviving beneficiaries, are argued to the jury through the beneficiaries' testimony and plaintiff's counsel's closing argument, not through expert opinion in most jurisdictions. Structure the trial so that the economist's presentation on economic damages is complete and precise, and that the non-economic damages argument flows directly from the human story of what the family lost rather than from expert quantification.
For the choice-of-law framework that determines which state's wrongful death statute governs economic and non-economic damages in multi-state cases, see the wrongful death section. For how structured settlement planning affects the present-value analysis when a wrongful death case settles before trial and the family considers periodic payment structures, the liens and settlement archive covers annuity structures and tax implications of wrongful death settlement proceeds.