How Forensic Economists Define Economic Damage in Civil Lawsuits

Economic damages play a critical role in many legal cases, serving as a quantifiable way to compensate plaintiffs for financial losses incurred due to another party’s wrongdoing. These damages focus on measurable losses, such as lost wages, medical expenses, and property damage, distinguishing them from non-economic damages like pain and suffering. Forensic economists play an instrumental role in determining the appropriate amount of economic damages, using their expertise to provide a precise, objective analysis that supports fair compensation.

This article will explore how forensic economists define and calculate economic damages across various legal cases. By examining different areas of practice, we will provide an understanding of how economists help ensure plaintiffs are compensated for their financial losses.

What Are Economic Damages?

Economic damages are awarded in civil lawsuits to compensate plaintiffs for actual financial losses incurred due to harm caused by the defending party. They are tangible and quantifiable, and they can be measured with objective financial data such as receipts, medical bills, or pay stubs.

There are three main types of damages: economic, non-economic, and punitive. Non-economic damages cover intangible losses like pain, suffering, or emotional distress. Punitive damages are awarded to punish the defendant for particularly egregious or malicious conduct and to deter similar behavior in the future. Economic damages focus solely on the monetary impact of the harm. The purpose of awarding economic damages is to restore the plaintiff to the financial position they would have been in had the harm not occurred.

The Role of Forensic Economists in Determining Economic Damages

Forensic economists play a vital role in legal cases involving economic damages. Their primary function is to evaluate and quantify a plaintiff’s financial losses due to an incident. Using specialized knowledge of economics, finance, and statistics, forensic economists provide expert analysis and testimony to support the calculation of damages. To do so, they follow a structured process to ensure accuracy and fairness in determining economic damages:

• Analyzing Financial Records: This includes reviewing pay stubs, tax returns, medical bills, business income statements, and other financial documents that detail the plaintiff’s losses.
• Projecting Future Losses: In cases where the plaintiff’s injury or harm affects their future earning capacity, forensic economists assess the long-term financial impact. This includes forecasting potential lost wages, future medical expenses, and the cost of long-term care or rehabilitation.
• Adjusting for Inflation and Discounting: When calculating future economic damages, forensic economists must account for inflation and other variables and then use discount rates to reflect the present value of future damages. This ensures the plaintiff is compensated fairly for future losses.
• Providing Expert Testimony: In court, forensic economists often present their findings and explain the methodology behind their calculations. Their expert witness testimony helps judges and juries understand the economic impact of the harm caused to the plaintiff.

Forensic economists calculate damages using objective, data-driven methods, ensuring that the plaintiff’s losses are clearly quantified. Their ability to present complex financial information clearly and understandably is critical to supporting the plaintiff’s case and providing fair compensation.

How Economic Damages Are Defined and Determined in Various Areas of Practice

Each area of legal practice presents unique economic damages that are specific to the type of harm involved in the case. Forensic economists must carefully assess these damages to ensure fair compensation for financial losses. In the following sections, we will review various areas of practice, including hypothetical examples to illustrate the economic damages that can be pursued in each type of case.

Personal Injury & Accident Claims 

In personal injury and accident claims, economic damages are awarded to compensate the plaintiff for financial losses directly related to the injury. Damages in personal injury cases are often significant, as personal injuries can lead to high medical expenses, time away from work, and long-term effects on earning capacity for the injured party.

Hypothetical Example: Car Accident
John, a 45-year-old construction worker, was involved in a severe car accident caused by another driver’s negligence. The collision left John with multiple fractures, a head injury, and long-term mobility issues. He underwent emergency surgery, followed by months of physical therapy. Due to his injuries, John cannot return to his physically demanding job in construction. In addition, his household requires outside help to perform tasks he previously managed, such as lawn care and home maintenance. John has also been advised that he may need additional surgeries in the future to address complications from his injuries. He is suing to recover economic damages from the defendant’s insurance company.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Medical Expenses	Costs for treatment, surgeries, hospital stays, medications, rehabilitation.	Medical bills, physician statements, and treatment plans are used to calculate both past and future medical expenses based on necessity and injury severity.	The economist calculates the total amount of John’s hospital stays, surgeries, follow-up appointments, and physical therapy sessions. Medical records detail the care provided and future surgery costs.
Lost Wages	Income lost due to inability to work during the recovery period.	Pay stubs, tax returns, and employment history establish the plaintiff’s pre-injury earnings. Time away from work is verified by medical reports and employer confirmation.	John’s pre-accident earnings are established using his pay stubs and tax returns. The economist calculates how much income he lost during the six-month recovery period where he was unable to work.
Loss of Future Earnings	Income the plaintiff would have earned in the future but cannot due to injury.	Employment records, age, career trajectory, and industry trends are used to project future earnings. Calculations adjust for inflation and potential promotions or career growth.	Since John can no longer work in construction, the economist uses employment records, industry wage standards, and John’s career trajectory to estimate lost future income until retirement age.
Rehabilitation Costs	Expenses for physical therapy, occupational therapy, and other recovery programs.	Invoices from rehabilitation services and medical recommendations for ongoing care are reviewed to calculate necessary rehabilitation costs.	The total cost of John’s physical therapy sessions is calculated based on invoices from his rehabilitation provider. Future rehabilitation needs are projected based on medical expert testimony.
Household Services	Cost of hiring help for household tasks the plaintiff can no longer perform.	Evidence such as receipts from hired help or expert testimony on household needs is used to estimate the cost of replacing these services.	Because John can no longer perform household tasks, the economist reviews invoices for hired help and uses this data to project the cost of ongoing services.
Transportation Costs	Expenses incurred traveling to and from medical appointments.	Travel logs, mileage, and transportation receipts are reviewed to determine the financial burden of transportation related to the plaintiff’s injury.	John’s frequent medical appointments and therapy sessions require travel. The forensic economist calculates transportation costs by reviewing mileage logs and receipts.
Assistive Devices	Costs of medical equipment (e.g., wheelchairs, crutches) needed due to the injury.	Medical reports detailing the necessity of devices and receipts from purchasing these devices are used to calculate their costs.	Medical reports document John’s need for crutches, and possibly a wheelchair for long-term use. The economist reviews the costs associated with these devices and includes them in the calculation.
Future Medical Expenses	Projected costs for ongoing and long-term medical care related to the injury.	Medical expert testimony and treatment plans forecast the need for future care. Costs are adjusted for inflation and based on typical care pricing in the relevant region.	Medical expert testimony indicates that John will likely need additional surgeries, leading to future medical bills. The economist factors in the projected costs of these surgeries, adjusted for inflation.

Medical Malpractice Claims

In medical malpractice cases, economic damages are awarded to compensate a plaintiff for financial losses caused by medical errors, negligence, or failure to provide adequate care. These damages can be significant due to the complexity of medical treatments and the long-term health complications that often arise from malpractice.

Hypothetical Example: Surgical Error
Emily, a 35-year-old accountant, underwent surgery for a routine appendectomy. During the procedure, the surgeon mistakenly severed an artery, leading to internal bleeding. Emily required an emergency second surgery and spent several weeks in the hospital recovering. Due to complications, she developed long-term mobility issues that prevent her from sitting for extended periods, which makes it difficult for her to continue working as an accountant.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Medical Expenses	Costs for corrective surgeries, hospital stays, rehabilitation, and ongoing care.	Medical bills, treatment plans, and expert testimony are used to calculate past medical expenses and future care needs based on the severity of complications.	The economist calculates Emily’s expenses for the original surgery, the corrective surgery, and her extended hospital stay. Future medical care costs are projected as well.
Lost Wages	Income lost due to inability to work during recovery.	Pay stubs and tax returns establish Emily’s pre-injury earnings. Medical reports confirm the time needed for recovery.	Emily’s recovery required three months away from work. The economist calculates lost wages for this period using her salary and tax returns.
Loss of Future Earnings	Income the plaintiff would have earned in the future but cannot due to injury.	Employment records, career trajectory, and industry standards are used to project Emily’s future earnings, adjusting for career advancement and inflation.	Due to long-term mobility issues, Emily can no longer work full-time. The economist projects her lost future income based on her expected career trajectory in accounting.
Rehabilitation Costs	Expenses for physical therapy and ongoing rehabilitation.	Invoices from rehabilitation services and medical recommendations for ongoing therapy are used to calculate costs.	Emily requires long-term physical therapy for her mobility issues. The economist calculates the total rehabilitation costs based on invoices and expert testimony.
Household Services	Costs of hiring help for tasks the plaintiff can no longer perform.	Receipts from hired help or estimates from industry standards are used to project costs of replacing household services.	Emily can no longer perform household tasks due to her mobility issues. The economist includes the costs of hiring help for tasks such as cleaning and grocery shopping.
Assistive Devices and Home Modifications	Costs of medical equipment and home adaptations to accommodate a disability.	Medical records and contractor estimates are used to calculate the cost of assistive devices and home modifications.	Emily needs a wheelchair and home modifications to accommodate her mobility issues. The economist calculates the costs of the wheelchair and the necessary home adaptations.
Transportation Costs	Expenses incurred for traveling to and from medical appointments and therapy.	Mileage logs, receipts for public transport, and travel-related expenses are reviewed to calculate total costs.	Emily has to travel frequently for physical therapy and medical check-ups. The economist calculates transportation costs based on mileage and necessary transportation services.
Future Medical Expenses	Projected costs for ongoing medical care due to complications from malpractice.	Medical expert testimony forecasts future care needs, including surgeries or treatments, adjusting for inflation and typical costs in the region.	Future surgeries may be required to address ongoing complications. The economist estimates future medical expenses based on testimony from medical professionals and inflation.
Loss of Pension and Retirement Benefits	Value of lost pension contributions or retirement benefits due to inability to work.	Financial records and employment history are used to estimate lost retirement contributions and pension benefits.	Emily’s inability to work full-time will impact her pension and retirement benefits. The economist calculates the total loss of these benefits over time.
Loss of Consortium (Economic Impact on Spouse/Partner)	Financial impact due to the spouse’s loss of earnings or household support.	Spouse’s wage records and costs of replacing household assistance are used to calculate financial losses due to loss of consortium.	Emily’s spouse reduced work hours to care for her during recovery. The economist calculates the spouse’s lost wages and costs of hiring help for tasks Emily can no longer do.

Toxic Tort Claims

Toxic tort claims involve individuals or groups exposed to harmful chemicals or substances, often leading to long-term health issues or property contamination. Economic damages in these cases can be extensive, as exposure may result in chronic illnesses, environmental cleanup costs, or relocation.

Hypothetical Example: Community Exposure to Industrial Chemicals
A small town was exposed to contaminated groundwater due to the illegal dumping of toxic waste by a nearby chemical plant. As a result, several residents developed severe respiratory problems, cancers, and other health conditions. In addition to health issues, property values in the area plummeted, and many residents were forced to relocate for their safety.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Medical Expenses	Costs for diagnosing and treating illnesses related to toxin exposure.	Medical records, expert testimony, and treatment plans are used to assess the cost of past treatments and the need for ongoing medical care.	The economist calculates the total cost of treatment for respiratory conditions, cancers, and other health problems linked to toxic exposure. Future care is projected as well.
Lost Wages	Income lost due to illness or injury caused by toxin exposure.	Pay stubs and employment history are used to determine the income lost during periods of illness.	Some residents were unable to work during their treatment. The economist calculates lost wages by reviewing employment records and tax returns.
Loss of Future Earnings	Income the plaintiff would have earned in the future but cannot due to illness.	Employment records, industry trends, and career trajectory are used to project future earnings, adjusting for inflation and career progression.	Several residents developed long-term health problems, preventing them from returning to work. The economist projects their lost future income based on their employment history.
Property Damage (Diminished Property Value)	Loss in property value due to contamination from toxic exposure.	Real estate appraisals and property assessments are used to calculate the loss in property value.	Property values in the contaminated area plummeted. The economist works with real estate appraisers to determine the total property devaluation caused by the contamination.
Relocation Costs	Expenses related to moving away from contaminated areas for safety.	Receipts for moving expenses and estimates for temporary housing costs are used to calculate the financial burden of relocation.	Many residents were forced to relocate due to the unsafe conditions. The economist calculates relocation costs, including moving fees and temporary housing expenses.
Rehabilitation Costs	Ongoing care and therapy required to treat chronic conditions caused by exposure.	Medical records, treatment plans, and expert testimony are used to calculate rehabilitation costs for conditions like respiratory or neurological issues.	Residents suffering from chronic conditions, such as respiratory illnesses, require ongoing therapy. The economist calculates these costs based on medical reports and expert testimony.
Future Medical Expenses	Projected costs for ongoing medical care related to long-term illnesses.	Medical expert testimony and treatment forecasts are used to project the future costs of medical care, adjusted for inflation.	Many residents require long-term medical care due to the illnesses caused by toxic exposure. The economist estimates future medical expenses, adjusting for inflation and typical care pricing.
Environmental Cleanup Costs	Expenses related to cleaning up or mitigating environmental contamination.	Environmental reports, cleanup estimates, and invoices from contractors are reviewed to calculate costs.	The town incurred significant costs for cleaning up the contaminated groundwater. The economist calculates the total costs of environmental cleanup based on contractor estimates.
Transportation Costs	Travel expenses for residents seeking specialized medical care for exposure-related illnesses.	Receipts, mileage logs, and travel-related expenses are used to calculate costs.	Some residents had to travel out of town to receive specialized medical care. The economist calculates transportation costs, including mileage, lodging, and meals for extended stays.

Employment Claims

Employment claims often arise from wrongful termination, discrimination, or other violations of employee rights. Economic damages in these cases are typically related to lost income, benefits, future earning potential, and reputational damage, which can lead to further financial losses. In some cases, there are additional damages related to job search costs, re-skilling, and lost business opportunities.

Hypothetical Example: Wrongful Termination with Reputational Damage
Sarah, a 40-year-old marketing manager, was wrongfully terminated after raising concerns about discriminatory practices in her company. After her termination, her boss shared disparaging information about Sarah’s actions with others in the industry, damaging her professional reputation. As a result, Sarah lost her job and was denied a job opportunity with another company due to her damaged reputation. Additionally, she incurred the costs of searching for a new job and had to take courses to improve her qualifications. She also lost valuable stock options, health insurance, and retirement contributions that she would have earned at her former job.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Lost Wages	Income lost due to wrongful termination or discrimination.	Pay stubs, tax returns, and employment records are used to calculate the plaintiff’s past wages. Employment history and expert testimony help verify lost income.	Sarah lost six months of wages due to her wrongful termination. The economist reviews her pay stubs and tax returns to calculate the amount of lost income during that period.
Loss of Future Earnings	Future income the plaintiff would have earned had they not been terminated.	Employment history, career trajectory, and industry standards are used to project future earnings, adjusting for inflation and potential career growth.	Sarah was on track for a promotion before her termination. The economist uses employment records and industry wage standards to project the loss of future earning capacity.
Loss of Benefits	Loss of benefits such as health insurance, retirement contributions, etc.	Benefit statements and employment records are used to calculate the value of lost benefits, including health insurance premiums and retirement plan contributions.	The economist calculates Sarah’s lost health insurance benefits, retirement contributions, and other lost perks based on her benefit package at the company.
Reputational Damage	Financial losses due to reputational damage that affects future job opportunities.	Job application rejections, industry reports, or communication between companies can be used to demonstrate reputational damage affecting job prospects and earning potential.	Sarah was denied a job opportunity because her former boss damaged her reputation within the industry. The economist calculates the value of the lost job opportunity.
Job Search Costs	Expenses incurred while searching for a new job, including career coaching or travel.	Receipts for job search-related expenses, such as travel or career services, are reviewed to calculate total costs.	Sarah incurred costs for travel and hiring a career coach to assist in finding a new job. These costs are calculated and included in the damages.
Training and Re-Skilling Costs	Costs of acquiring new skills or training to switch careers due to reputational damage.	Tuition receipts, certification fees, and training program costs are reviewed to calculate total re-skilling costs.	Sarah had to take a course to improve her qualifications for new job opportunities. The economist includes these re-skilling costs in the damages calculation.
Loss of Business Opportunities	Loss of future business revenue or clients due to termination or reputational damage.	Business records, contracts, or past earnings are used to project lost business opportunities and income.	Sarah was set to secure several new clients before her termination. The economist calculates the projected revenue loss from those missed opportunities.
Loss of Stock Options or Equity	Value of stock options or other equity-based compensation that was lost due to termination.	Financial statements, stock option agreements, and compensation packages are used to estimate the value of unvested stock options or equity.	Sarah had stock options that were set to vest in the next year. The economist calculates the financial impact of losing this equity due to her termination.

Business Valuation & Lost Profits

In business valuation and lost profit lawsuits involving disputes, contract breaches, or other legal claims that affect profitability, economic damages typically include lost profits, diminished business value, and increased operational costs. Forensic economists are essential in quantifying these financial losses by analyzing financial records, business forecasts, and market data to determine the full impact of the defendant’s actions on the business.

Hypothetical Example: Breach of Contract Affecting a Small Business
A marketing firm had a contract with a major client, but the client abruptly terminated the agreement without cause, violating the terms of the contract. As a result, the marketing firm lost significant revenue expected from the deal. The breach also caused reputational damage, which led to the firm losing out on other potential contracts.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Lost Profits	Income the business would have earned had the breach or damage not occurred.	The economist reviews financial records, contracts, and forecasts to calculate how much profit the business would have made if the contract had been fulfilled.	The economist calculates how much revenue the marketing firm would have generated over the contract’s duration and compares it with historical earnings to determine lost profits.
Diminished Business Value	Loss in the value of the business due to reputational damage or operational disruptions.	Business valuation methods, such as discounted cash flow, are used to calculate how the breach or damage impacted the overall value of the business.	The economist uses business valuation models to estimate the reduction in the firm’s overall market value due to the reputational damage caused by the contract breach.
Loss of Business Opportunities	Loss of future revenue from missed opportunities caused by the defendant’s actions.	The economist analyzes business development records, sales forecasts, and contracts to estimate the value of potential future deals that were lost.	The marketing firm lost out on potential contracts with other clients due to reputational damage. The economist calculates the revenue that would have been generated from those deals.
Increased Operational Costs	Additional costs incurred to mitigate the effects of the breach or damage.	Financial records, expense reports, and invoices are used to assess the increased costs of running the business during the period of disruption.	The firm had to hire extra staff to compensate for the revenue loss and handle additional marketing efforts. The economist calculates these increased operational costs.
Lost Future Growth	Revenue and profits the business would have earned from expansion or scaling.	Business plans, market trends, and growth projections are used to calculate the financial impact of missed growth opportunities.	The firm was planning to expand into a new market, which was delayed by the breach. The economist calculates the lost future revenue from the delay in market expansion.
Loss of Goodwill	Intangible value lost due to damage to the business’s reputation or customer loyalty.	Customer retention data, brand value, and historical earnings are used to estimate the loss of goodwill.	The firm’s reputation was damaged, affecting client retention. The economist estimates the financial value of lost goodwill based on historical client loyalty and brand metrics.
Wasted Investments	Financial resources invested into projects that were abandoned due to the breach.	Investment reports, financial records, and project data are used to determine how much capital was wasted on disrupted or abandoned projects.	The firm had invested in a new software platform for the client whose contract was breached. The economist calculates the wasted investment in that project.
Increased Borrowing Costs	Higher costs of borrowing funds due to financial strain caused by the breach.	Loan agreements, interest rate comparisons, and financial statements are used to calculate the additional costs incurred from borrowing money.	The firm took out a high-interest loan to cover expenses during the breach period. The economist calculates the additional borrowing costs due to the higher interest rate.
Contractual Penalties or Fines	Penalties the business incurred due to inability to fulfill other contracts.	The economist reviews contract terms and penalty clauses to calculate fines paid or penalties incurred due to the breach.	Due to the breach, the firm couldn’t meet its obligations under another contract, resulting in penalties. The economist calculates the financial impact of the penalties incurred.
Lost Intellectual Property Value	Loss of value from intellectual property devaluation (e.g., patents, trademarks).	The economist assesses intellectual property valuation and market trends to determine the lost value of the IP caused by the breach.	The firm developed proprietary software for the client, which was abandoned after the breach. The economist calculates the value of the lost intellectual property.
Supply Chain Disruption Costs	Financial losses due to interruptions in the supply chain, such as increased costs.	The economist reviews supply chain records and increased costs to calculate the impact of the disruption.	The breach caused a supply chain disruption, forcing the firm to pay higher prices for materials to meet deadlines. The economist calculates the increased supply chain costs.
Loss of Key Personnel	The financial impact of losing essential employees or executives.	Recruitment costs, salary history, and the value of key personnel are used to calculate the cost of replacing lost employees and the operational impact.	The breach caused the firm to lose a key executive, leading to increased recruitment costs and loss of valuable client relationships. The economist calculates the financial loss.
Loss of Competitive Advantage	Loss of a strategic advantage in the marketplace due to the breach.	Market data and industry trends are used to assess the lost value of a business’s competitive advantage in its market.	The breach caused the firm to lose a key contract, reducing its market share. The economist calculates the financial impact of losing market share and competitive advantage.
Relocation Costs (if applicable)	Expenses related to relocating a business due to damage or harm caused.	Invoices for moving expenses and estimates for setting up the new business location are reviewed to calculate total costs.	The breach forced the marketing firm to move to a different location to access new clients. The economist calculates the costs of relocation, including moving fees and setup expenses.

Real Estate Disputes

Real estate disputes often arise from contract breaches, property defects, zoning issues, or other legal conflicts related to property transactions. In these cases, economic damages are typically awarded to compensate for financial losses related to the property, such as diminished value, repair costs, and lost profits from failed transactions.

Hypothetical Example: Breach of Contract in a Commercial Real Estate Sale
A property developer entered a contract to purchase a commercial building, but the seller failed to disclose that the property was not zoned for commercial use. As a result, the developer could not use the property as planned, leading to significant financial losses, including the cost of rezoning efforts, lost rental income, and diminished property value due to legal issues.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Diminished Property Value	Loss in property value due to legal or zoning issues affecting the property.	Real estate appraisals, zoning data, and market comparisons are used to assess how much the property’s value has decreased due to the undisclosed zoning issue.	The developer’s commercial building was worth significantly less due to zoning restrictions. The economist calculates the lost property value based on market data and zoning restrictions.
Lost Rental Income	Income lost due to the inability to rent out the property because of legal or zoning issues.	The economist reviews prior rental agreements, local rental market data, and property management records to calculate the rental income that was lost due to the dispute.	The developer was unable to lease the property for commercial use as planned, causing a significant loss in rental income. The economist calculates the lost revenue based on market rates.
Repair and Renovation Costs	Costs incurred to repair defects or bring the property up to code for its intended use.	Receipts, contractor estimates, and invoices are used to calculate the cost of repairs or renovations necessary to make the property suitable for its intended use.	The developer had to spend significant money to renovate the property and attempt to bring it up to code for commercial use. The economist calculates the total renovation costs.
Increased Financing Costs	Higher costs of financing or borrowing due to delays or complications caused by the dispute.	Loan agreements, interest rates, and financial records are used to assess any increased borrowing costs the plaintiff incurred because of the property dispute.	Due to delays caused by the zoning issue, the developer had to secure additional financing at a higher interest rate. The economist calculates the increased borrowing costs.
Loss of Business Opportunities	Revenue lost from missed opportunities due to delays or restrictions on property use.	The economist reviews business plans, contracts, and market projections to calculate the revenue the plaintiff would have earned had the property been available for commercial use.	The developer missed out on other business opportunities due to the delays caused by the zoning issue. The economist calculates the lost revenue from those missed opportunities.
Carrying Costs	Ongoing expenses like property taxes, insurance, and maintenance while the property cannot be used.	The economist reviews tax statements, insurance premiums, and maintenance invoices to calculate the total carrying costs incurred during the dispute period.	The developer continued to pay property taxes and insurance premiums during the dispute period. The economist calculates the total carrying costs based on financial records.
Lost Sales Proceeds	Income that would have been earned from selling the property, delayed or blocked by the dispute.	Sale agreements, market data, and comparable property sales are reviewed to estimate the lost sales proceeds.	The developer had a buyer for the property but lost the deal due to the zoning issue. The economist calculates the lost sales proceeds based on market data and comparable sales.
Interest on Delayed Payments	Financial losses due to delayed payments related to the property dispute.	Payment schedules, contract terms, and interest rates are reviewed to calculate the financial impact of the delayed payment.	The developer experienced a significant delay in receiving payment from a buyer due to the zoning issue. The economist calculates the interest lost due to the delay.
Loss of Use	Revenue lost due to the inability to use the property as intended.	Business plans, property usage reports, and financial projections are reviewed to determine the revenue lost from not being able to use the property.	The developer planned to use the property for leasing but couldn’t due to zoning issues. The economist calculates the lost revenue from not being able to lease the property.
Environmental Remediation Costs	Expenses related to cleaning up undisclosed environmental issues on the property.	Environmental reports, contractor estimates, and invoices are used to calculate remediation costs.	The developer discovered soil contamination that required costly cleanup. The economist calculates the total remediation costs based on contractor estimates and environmental reports.
Mitigation Costs	Expenses incurred to mitigate the damage caused by the defendant’s actions.	Receipts, invoices, and expert assessments are reviewed to calculate mitigation costs such as securing temporary housing or facilities.	The developer leased temporary facilities while the zoning issue was resolved. The economist calculates the mitigation costs based on the temporary leasing invoices.
Lost Financing or Investment Opportunities	Loss of financing or investment support due to the property dispute.	Loan agreements, investment contracts, and financial forecasts are reviewed to calculate the lost capital or financing opportunities.	Investors pulled out of the project due to uncertainty caused by the zoning dispute. The economist calculates the value of the lost financing and investment opportunities.
Penalties for Breach of Other Contracts	Financial penalties incurred for breaching other contracts due to delays from the property dispute.	The economist reviews contract penalty clauses and invoices for fines or penalties paid due to missed deadlines or obligations.	The developer breached another contract due to delays from the zoning dispute, leading to penalties. The economist calculates the total cost of the penalties based on contract terms.
Diminished Loan Capacity	Reduction in the plaintiff’s ability to borrow funds due to the property dispute.	Loan records, financial statements, and credit reports are reviewed to assess the financial impact of reduced borrowing capacity.	The developer’s inability to use the property reduced cash flow, which negatively impacted their loan capacity. The economist calculates the financial impact of diminished loan capacity.

Sexual Assault & Abuse

In civil cases involving sexual assault and abuse, plaintiffs can seek compensation for economic damages related to the physical and emotional harm they suffered. Civil suits allow the victim to hold the perpetrator, and potentially third parties (such as employers or institutions), accountable for the financial losses incurred due to the abuse. These damages often cover medical treatment, lost wages, and the cost of long-term psychological care.

Hypothetical Example: Workplace Sexual Assault
Jessica, a 28-year-old employee at a law firm, was sexually assaulted by her supervisor. The assault led to physical injuries, mental health issues, and the need for medical treatment. Jessica also had to take an extended leave from work due to trauma, causing her to lose wages and miss career advancement opportunities. In addition to suing her supervisor, Jessica filed a civil lawsuit against the company for failing to take adequate action after she reported prior inappropriate behavior by the supervisor.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Medical Expenses	Costs for medical treatment and counseling related to physical injuries and emotional trauma from the assault.	Medical bills, treatment plans, and expert testimony are used to calculate past and future medical expenses related to both physical and mental health treatment.	Jessica’s medical bills included the cost of emergency care and ongoing counseling for emotional trauma. The economist projects future therapy costs based on her treatment plan.
Lost Wages	Income lost due to the victim’s inability to work during the recovery period.	Pay stubs, tax returns, and employment records are reviewed to determine how much income the victim lost during the time they were unable to work.	Jessica was unable to work for three months after the assault due to trauma. The economist calculates her lost wages based on her salary and the time away from work.
Loss of Future Earnings	Income the plaintiff would have earned in the future but cannot due to trauma or injuries.	Employment records, career trajectory, and industry wage data are used to project the future earnings the victim would have made had they continued working.	Jessica missed a promotion due to her absence, affecting her future earning potential. The economist projects her lost future earnings based on her career advancement plans.
Loss of Benefits	Value of lost health insurance, retirement contributions, or other employment-related benefits.	Employment records and benefit statements are reviewed to calculate the value of lost benefits during the time the victim was unable to work.	Jessica’s health insurance lapsed during her absence, and she lost retirement contributions. The economist calculates the value of these lost benefits.
Psychological Treatment Costs	Costs of long-term therapy or counseling needed to recover from emotional trauma.	Invoices from therapists and expert testimony are used to estimate the costs of ongoing therapy and mental health care.	Jessica requires long-term therapy to cope with the trauma of the assault. The economist calculates her future psychological treatment costs based on her current therapy plan.
Diminished Earning Capacity	The long-term reduction in the plaintiff’s ability to work or earn income due to emotional or physical trauma.	Career records and medical testimony are used to determine how the trauma has affected the victim’s ability to perform at work and earn at their pre-assault capacity.	Due to ongoing emotional trauma, Jessica is unable to return to full-time work. The economist projects her diminished earning capacity based on her reduced work hours and salary.
Educational Disruption Costs	Financial losses caused by the disruption of education or professional development due to the trauma.	Tuition receipts, missed scholarship opportunities, and career development plans are reviewed to calculate the financial impact of missed education or development.	Jessica missed out on a professional development course that would have advanced her career. The economist calculates the cost of the course and any missed scholarships.
Relocation Costs	Expenses incurred for moving to a new location to escape the perpetrator or recover from the trauma.	Moving invoices, lease agreements, and travel expenses are reviewed to calculate the costs of relocating to a safer environment.	Jessica moved to a different city to avoid her supervisor and start fresh. The economist calculates the total relocation costs, including travel and new housing expenses.
Loss of Consortium (if applicable)	Financial losses experienced by the victim’s spouse or partner due to the impact of the assault on their relationship.	Employment records and caregiver expenses are reviewed to calculate the financial loss incurred by the spouse or partner.	Jessica’s partner took time off work to care for her during her recovery. The economist calculates the financial impact of lost wages and caregiving costs.
Loss of Childcare or Household Services	Costs of hiring help for duties the victim can no longer perform due to trauma.	Invoices from hired help or service contracts are reviewed to calculate the cost of hiring outside help for household or childcare duties.	Jessica hired a nanny to care for her child because she was unable to perform childcare duties. The economist calculates the cost of childcare services based on local rates.
Security Costs	Expenses related to installing security systems or hiring protection to ensure personal safety.	Invoices for security system installation and monitoring or security personnel are used to calculate the total cost of enhancing safety measures.	Jessica installed a home security system to feel safer after the assault. The economist calculates the costs of installation, monitoring, and additional security measures.
Career Counseling or Job Training	Costs for career counseling or job training if the victim has to change professions due to trauma.	Receipts for counseling services, job training programs, and certifications are reviewed to calculate the costs of a career change.	Jessica sought career counseling and training to switch fields, as returning to her previous job was too traumatic. The economist calculates the cost of career counseling and training programs.

Child Abuse & Neglect

Civil cases involving child abuse and neglect allow plaintiffs or their families to seek compensation for economic damages related to the harm caused. These cases may be brought against individuals, such as caregivers, or institutions like schools, foster care agencies, or daycare centers that failed in their duty to protect the child. Economic damages in these cases can cover medical expenses, therapy, educational disruption, and long-term care needs.

Hypothetical Example: Negligence by a Daycare Center
A 7-year-old child, Evan, was left unsupervised at a daycare center and suffered physical abuse from another child. As a result of the trauma, Evan required both medical treatment and long-term therapy to cope with emotional issues. The child’s educational progress was also disrupted, and his parents incurred additional expenses for a private tutor to help him catch up in school. The family filed a civil suit against the daycare center for failing to provide adequate supervision and protection and are now seeking compensatory damages.

Economic Damages	Definition	How Forensic Economists Determine the Plaintiff’s Right to Each Damage	Hypothetical Example
Medical Expenses	Costs for medical treatment related to physical injuries suffered due to the abuse or neglect.	Medical bills, treatment plans, and expert testimony are used to calculate past and future medical expenses necessary to treat the child’s injuries.	Evan required immediate medical treatment for his injuries. The economist calculates the total cost of the treatment, including any projected future medical care.
Therapy and Counseling Costs	Expenses related to long-term psychological therapy for the trauma caused by the abuse.	Invoices from therapists and expert testimony are used to estimate the cost of ongoing therapy for the child’s emotional recovery.	Evan required long-term counseling to deal with the trauma of the abuse. The economist projects the future cost of therapy based on the current treatment plan.
Educational Disruption Costs	Financial losses related to the child’s disrupted education, including tutoring or special education services.	Invoices from tutors or special education providers are reviewed to calculate the cost of educational services required to help the child recover academically.	Due to emotional trauma, Evan fell behind in school. The economist calculates the costs of private tutoring to help him catch up academically.
Loss of Future Earning Capacity	The reduction in the child’s potential future earnings due to the long-term effects of the abuse or neglect.	Employment data, career projections, and educational disruption records are reviewed to estimate the child’s diminished ability to earn in the future.	The abuse caused long-term emotional trauma that may affect Evan’s ability to work in the future. The economist calculates the potential loss of earning capacity.
Relocation Costs	Expenses related to moving the child to a safer environment if the abuse occurred in the home.	Moving expenses, new housing costs, and travel expenses are reviewed to calculate the total relocation costs incurred by the family.	Evan’s family moved to a new home to escape the harmful environment. The economist calculates the relocation costs, including moving fees and the cost of new housing.
Loss of Childcare Services	Costs related to replacing childcare services if the abuse occurred in a daycare or similar facility.	Invoices from alternative childcare services are reviewed to calculate the cost of replacing the negligent facility with safer childcare options.	Evan’s family had to find a new daycare center after the abuse incident. The economist calculates the cost of the new childcare service based on market rates.
Long-Term Care Costs	Costs for ongoing or lifelong care if the child suffers permanent disabilities due to the abuse.	Medical expert testimony and care provider invoices are used to project the future costs of long-term care or specialized education services.	Evan requires long-term care due to emotional and physical trauma. The economist calculates future care costs based on medical recommendations and current service provider rates.
Rehabilitation Costs	Costs for physical or emotional rehabilitation services required to help the child recover from injuries or trauma.	Invoices from rehabilitation providers and medical testimony are reviewed to calculate current and future rehabilitation costs.	Evan needs specialized rehabilitation services to recover from emotional and physical trauma. The economist calculates the cost of the treatment based on rehabilitation provider invoices.
Increased Educational Costs	Additional costs incurred for private schooling or special education programs.	Private school tuition receipts and special education program costs are used to calculate the increased educational expenses.	Due to trauma, Evan requires specialized private schooling with additional support services. The economist calculates the total cost of private tuition and special education.
Loss of Parental Earnings	Financial losses incurred by parents who take time off work to care for the child due to trauma.	Employment records, pay stubs, and tax returns are reviewed to estimate the wages lost by parents who must reduce work hours to care for the child.	Evan’s parents reduced their work hours to provide additional care for him. The economist calculates their lost wages based on employment records and salary information.
Specialized Equipment Costs	Costs for medical equipment, assistive devices, or home modifications due to the child’s disabilities.	Medical recommendations, equipment provider invoices, and home modification costs are reviewed to calculate the expense of necessary devices or home changes.	Evan’s trauma resulted in mobility issues, requiring a wheelchair and home modifications like ramps. The economist calculates the total cost of the equipment and home modifications.

We Define and Calculate Economic Damages in Civil Lawsuits Throughout North America

Understanding how forensic economists define and calculate economic damages is essential to ensuring just compensation for financial losses. Whether it’s a case of personal injury, business disputes, or long-term trauma from abuse, each type of damage must be carefully assessed to ensure the plaintiff’s future well-being. Forensic economists provide the expertise needed to review financial records, medical reports, and market data to determine the true financial impact of the harm caused.

Contact The Knowles Group today for a complimentary case consultation if you are a plaintiff seeking compensation or a defendant needing an accurate assessment of potential damages.