Selecting the Discount Rate (2017)

Recently Economica undertook a detailed re-evaluation of our recommendations concerning the discount rate. We argue that plaintiffs have available two alternative methods of investing their awards for future losses. In the first, which we call the annuity approach, plaintiffs use their awards to purchase life annuities or structured settlements. In the second, which we call the active management approach, plaintiffs invest their awards in portfolios of secure financial products, such as government bonds and “blue chip” stocks.
We find that the real rate of return is higher using the active management approach than the annuity approach – approximately 2.5 percent versus zero percent. At the same time, however, the risk that plaintiffs’ investments will be depleted before they die is much greater if plaintiffs manage their investments than if they purchase annuities. Accordingly, it may be that risk averse plaintiffs would prefer to purchase annuities than to manage their own portfolios even if they earn a lower rate of return.
We conclude that, as economists cannot know how risk averse individual plaintiffs are, our role should be to calculate two values for each future loss – one using zero percent and one using 2.5 percent. It will then be for the court to decide which discount rate is relevant to the particular plaintiff facing it.

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Summer 2016 issue of the Expert Witness newsletter (volume 20, issue 2)

Contents: This issue contains two articles. In the first, Christopher Bruce and Derek Aldridge examine the effect of a criminal record on earnings. In the second, Christopher Bruce and Kelly Rathje discuss the structure and content of expert cost of care reports. The Effect of Incarceration on Future Earnings In the first article, Dr. Bruce […]

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The Structure of a Cost of Care Report

Dr. Bruce and Ms. Rathje provide an economist’s perspective on various issues that arise in the presentation of cost of care reports. These include issues such as incremental costs, requirements that will vary over a plaintiff’s lifetime, the approach to ranges of estimates for costs or replacement frequencies, the costs of housekeepers and personal care attendants, and presentation. They also provide a sample calculation, to illustrate the issues discussed in the article.

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The Effect of Incarceration on Future Earnings

In this article, Dr. Bruce and Mr. Aldridge find that the literature regarding the effect of a criminal record on income suggests incarceration has a relatively small effect on lifetime earnings. Those who have been incarcerated tend to have lower levels of income than those without a criminal record, not because incarceration has changed their vocational/economic outcomes, but because they are drawn from a group with relatively low income to begin with. Further, the length of a person’s incarceration (holding the severity of the crime constant) appeared to have little impact on earnings, except in the case of “white collar” crime such as fraud or embezzlement. The literature suggests that individuals with supportive family ties, such as those living with their spouses and children, were the most successful at transitioning back into the workforce. In addition, the likelihood of recidivism decreased as an individual aged (i.e., those 30 and 40 year olds who were incarcerated in their early 20s are not likely to become repeat offenders).

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Spring 2016 issue of the Expert Witness newsletter (volume 20, issue 1)

Contents: This issue contains two articles written by Dr. Christopher Bruce. The first reviews the debate over the use of cross versus sole dependency approaches in the determination of loss of dependency on income; while the second article concerns the reliability of income data drawn from the 2011 census. Cross versus Sole Dependency in Fatal […]

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Are Data from the 2011 Census Reliable?

In this article, Dr. Bruce examines the reliability of the 2011 Census income data. In the past, completion of the long form census was mandatory. In 2011, however, completion of this form was voluntary and the response rate decreased. While this created statistical problems concerning the reliability of the data, Statistics Canada had anticipated these problems and took steps to mitigate them. In his article, Dr. Bruce discusses these problems, and the solutions implemented by Statistics Canada, concluding that the 2011 census remains a reliable, high quality data source. It will remain our primary source of earnings information until data from the 2016 census are released sometime in 2018.

With respect to the 2016 census, we would note that it will be mandatory. Further, Statistics Canada will be sending the long-form section to a greater number of households than in past censuses (one in four households instead of one in five households), and will use income data directly from the Canada Revenue Agency, providing data for 100 percent of households. It is anticipated that because of these changes, the income data from the 2016 census will be the most accurate of any census to date.

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Cross versus Sole Dependency in Fatal Accident Actions

In this article, Dr. Bruce notes that a fundamental assumption in economics is that individuals are rational. Therefore, when an individual is observed to make a voluntary choice, it can be concluded that the individual must have expected that choice to make him/her better off (or at least, no worse off). With respect to fatal accident actions, this implies that if spouses are rational, they must have expected that the decisions they made about spending on one another would make them better off. He then shows that if this proposition is accepted, the sole dependency approach is preferred to cross dependency.

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Spring 2015 issue of the Expert Witness newsletter (volume 19, issue 1)

Contents: The Cost of Household Services, Alberta 2014: A Survey In this issue of the Expert Witness, Christopher Bruce and Russette Pack summarise the results of a 2014 survey they conducted concerning the costs of providing household services in Alberta. They report that the costs of meal preparation, maintenance and repairs, snow removal and lawn […]

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The Cost of Household Services, Alberta 2014: A Survey

Christopher Bruce and Russette Pack summarise the results of a 2014 survey they conducted concerning the costs of providing household services in Alberta. They report that the costs of meal preparation, maintenance and repairs, snow removal and lawn mowing, housecleaning and laundry, and child care have all increased since our last survey; and that the costs of home care and meal preparation have not changed since 2010.

Dr. Bruce and Ms. Pack also discuss two puzzles in the data: Why do housecleaning services cost $10 to $15 per hour more if those services are provided by professional companies than if they are provided by individuals hired from websites such as Kijiji? And why do individuals advertising on Kijiji charge approximately $10 per hour more than the wages paid to employees listed as “light duty cleaners” in the Alberta Wage and Salary Survey.

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Summer 2014 issue of the Expert Witness newsletter (volume 18, issue 1)

Contents: In fatal accident litigation, the plaintiffs are entitled to claim an amount that is sufficient to allow them to maintain the same standard of living as they had enjoyed when the deceased had been alive. In practice, this requires that the court calculate the percentage of the deceased’s after-tax income that would have benefited […]

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The Dependency Rate as a Percentage of After-tax Income: Canada 2008

We examine whether or not the dependency rate increases or decreases as family income increases (or decreases). In particular, some experts have argued that the survivor’s dependency decreases as the deceased’s income increases. For example, whereas the widow of a man with low income might need, say, 80 percent of his income in order to be left in the same financial state as if he had lived, the widow of a wealthy man might need only 50 percent.

In this article, we will show that the dependency rate does not differ significantly from the lowest to the highest quintiles.

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Winter 2013 issue of the Expert Witness newsletter (volume 17, issue 1)

Contents: In Assessment of Personal Injury Damages (5th Edition), we discussed the economic outcomes for aboriginal peoples in Canada. We outlined articles related to this subject, and provided data regarding income, educational attainment, participation, and unemployment rates for aboriginal people in Canada, based on the 2006 census. In this issue, we summarize new data derived […]

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Estimating the Income of an Aboriginal Plaintiff: Recent Evidence

In this article, we discuss the average income, educational attainment, unemployment, and participation rates of aboriginal Canadians (relative to non-aboriginals), as well as the economic outcomes of aboriginal peoples living on reserves. We then outline the adjustments to the income estimates, based on the latest census data, we feel are reasonable.

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Winter 2012 issue of the Expert Witness newsletter (volume 16, issue 1)

Contents: In every personal injury or fatal accident case in which the plaintiff’s loss continues into the future, it is necessary to calculate the rate of interest at which the damages will be invested. This interest rate is commonly called the discount rate. In this issue of the Expert Witness, we provide two articles concerning […]

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Implied Rates of Return on Structured Settlements

In this article, Derek Aldridge and Christopher Bruce contrast our recommended discount rates with those used by one important set of sophisticated investors, the insurance companies who write structured settlements. They find that our recommended rates are greater than those being offered by these companies, suggesting that our rates may be too high.

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The Discount Rate Simplified

In this article, which was written collaboratively by Christopher Bruce, Laura Weir, Kelly Rathje, and Derek Aldridge, we begin by setting out a number of criteria that we believe should be met when selecting the discount rate. We ultimately conclude that a portfolio of Government of Canada bonds of varying maturity dates meets our criteria. We then argue that forecasts of Government of Canada bond rates that are based on historical statistics are unreliable for many reasons. Finally, we argue that the rates of return that are currently available on government bonds represent reliable predictions of future rates. Short-term interest rates can perform this role because they represent rates that are actually available currently; and long-term rates reflect the forecasts that have been made by sophisticated financial institutions that have substantial investments in the market.

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The Cost of Household Services, Alberta, 2010: A Survey

Perhaps the most important difference between this survey and the previous two is that whereas the 1999 and 2005 surveys were conducted primarily using telephone and newspapers, the 2010 survey relied almost exclusively on the internet – either Kijiji and Craigslist or agencies’ websites. We found that, with respect to most of the services that we surveyed, costs had risen approximately in line with average increases in wages across the economy.

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Factors that Influence Retirement

In this article, Derek Aldridge summarises recent research from Statistics Canada concerning factors that influence retirement. He finds support for an assumption that is often made in expert reports: that a plaintiff with substantial residual deficits will likely retire earlier than he or she would have in the absence of the accident.

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Summer 2009 issue of the Expert Witness newsletter (volume 14, issue 1)

Contents: Alternatives to the Minor Injury Regulation by Christopher Bruce In our first article, Alternatives to the Minor Injury Regulation, Chris Bruce identifies numerous alternative policies that could reduce automobile insurance premiums, not by reducing benefits, but by reducing the incidence and severity of automobile accidents. Testifying in Singapore by Derek Aldridge In the second […]

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Winter 2008 issue of the Expert Witness newsletter (volume 13, issue 2)

Contents: Premiums, Profits, and Costs of Business in Alberta’s Automobile Insurance Industry, 1996-2006 by Christopher Bruce and Jason Strauss In February 2008, Economica was retained by the Canadian Bar Association to prepare a series of reports on automobile insurance premiums in five provinces: Alberta, Ontario, New Brunswick, Prince Edward Island, and Nova Scotia. We have […]

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Premiums, Profits, and Costs of Business in Alberta’s Automobile Insurance Industry, 1996-2006

In February 2008, Economica was retained by the Canadian Bar Association to prepare a series of reports on automobile insurance premiums in five provinces: Alberta, Ontario, New Brunswick, Prince Edward Island, and Nova Scotia. We have now completed this work, having prepared two reports on Alberta and one on each of the other four provinces. The first article in this newsletter summarises the main findings of the first of these reports, Alberta’s Minor Injury Regulation: Automobile Insurance Profits, Premium Rates, and Costs.

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Spring 2008 issue of the Expert Witness newsletter (volume 13, issue 1)

Contents: The Discount Rate Revisited (Spring 2008) by Laura Weir, Derek Aldridge, Kelly Rathje, and Christopher Bruce This article reports on our latest survey of discount rates. We conclude that no changes to our existing discount rate assumptions are warranted, though a reduction in our long-term rate may be necessary in the future if the […]

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The Discount Rate Revisited (Spring 2008)

This article reports on our latest survey of discount rates. We conclude that no changes to our existing discount rate assumptions are warranted, though a reduction in our long-term rate may be necessary in the future if the observed long-term rates remain significantly lower than our assumed rate.

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Autumn 2007 issue of the Expert Witness newsletter (volume 12, issue 2)

Contents: The Impact of Childhood Sexual Abuse on the Educational Attainment and Adult Earnings of Canadian Women by Christopher Bruce and Daniel Gordon This article concerns sexual abuse cases and the difficult task of determining the impact that the harm has had on the plaintiff’s earning capacity. Christopher Bruce and his colleague from the University […]

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The Impact of Childhood Sexual Abuse on the Educational Attainment and Adult Earnings of Canadian Women

This article concerns sexual abuse cases and the difficult task of determining the impact that the harm has had on the plaintiff’s earning capacity. Christopher Bruce and his colleague from the University of Calgary, Daniel Gordon, found that, on average, sexual abuse is not associated with lower educational levels or lower adult incomes among victims.

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Spring 2007 issue of the Expert Witness newsletter (volume 12, issue 1)

Contents: Forecasting the long-term interest rate on Government of Canada bonds: “market-based” versus “conservative” investment by Christopher Bruce In the article Christopher Bruce examines a subtle issue relating to interest rates. He explains the difference between the interest rates realised by buying bonds and holding them to maturity, and selling and re-buying before maturity. These […]

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Using the HALS/PALS data sets to estimate a loss of income

In the article Derek Aldridge discusses the potential usefulness of Statistics Canada’s HALS/PALS disability statistics when attempting to estimate a person’s loss of income. His opinion is that while one can use these data sets to predict a loss of income, in most cases these predictions are not helpful for our purposes.

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Forecasting the long-term interest rate on Government of Canada bonds: “market-based” versus “conservative” investment

In the article Christopher Bruce examines a subtle issue relating to interest rates. He explains the difference between the interest rates realised by buying bonds and holding them to maturity, and selling and re-buying before maturity. These approaches will result in different estimates of historical interest rates.

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The Discount Rate Revisited (Summer 2006)

In this article Derek Aldridge reports on our latest survey of discount rates, and outlines the revisions we have made to our standard assumptions. We conclude that some small changes to our short-term discount rate assumption are warranted, though we have not changed our assumptions concerning long-term rates. The overall impact on our calculations will be negligible in most cases.

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The Cost of Household Services, Alberta, 2006: A Survey

The article reports the results of a survey we conducted in late 2005 and early 2006. We obtained housecleaning, handyman, landscaping and snow removal, child care, and home care/meal preparation rates from a large sample of agencies and individuals in both Calgary and Edmonton, and housecleaning rates for smaller samples in Lethbridge, Grande Prairie, and Red Deer. In the article we present our findings and explain how we will apply these results in our calculations.

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Summer 2006 issue of the Expert Witness newsletter (volume 11, issue 2)

Contents: The Cost of Household Services, Alberta, 2006: A Survey by Christopher Bruce and Amelia Lamb The article reports the results of a survey we conducted in late 2005 and early 2006. We obtained housecleaning, handyman, landscaping and snow removal, child care, and home care/meal preparation rates from a large sample of agencies and individuals […]

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Spring 2006 issue of the Expert Witness newsletter (volume 11, issue 1)

Contents: Estimating non-discriminatory lifetime earnings for young females by Christopher Bruce and Kelly Rathje This articles examines the sources of male/female earnings differentials that might arise from differences between the sexes in labour force participation rates, part-time hours, and retirement ages. It concludes that, even in the absence of labour market discrimination, women may earn […]

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Estimating non-discriminatory lifetime earnings for young females

This articles examines the sources of male/female earnings differentials that might arise from differences between the sexes in labour force participation rates, part-time hours, and retirement ages. It concludes that, even in the absence of labour market discrimination, women may earn 25 to 35 percent less than men.

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Death and Retirement: Allowing for Uncertainty

In this article Christopher Bruce explains how experts deal with situations in which there is uncertainty about the plaintiff’s future income path – such as when it is not known whether the plaintiff will recover from his or her injuries. He also comments on an error that experts often make when dealing with such uncertainty.

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Claims by Elderly Parents for Loss of Caregiving by Adult Children

The article addresses the fact that many adult children accept at least some responsibility for the provision of care to their aging parents. This leads to a possible claim by elderly parents for the loss of caregiving services, if an adult child is seriously injured or killed. The purpose of his article is to review some recent research that examines the factors that determine whether an adult child will care for an elderly parent.

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Summer 2005 issue of the Expert Witness newsletter (volume 10, issue 2)

Contents: The Discount Rate Revisited by Christopher Bruce, Derek Aldridge, Kelly Rathje, and Hugh Finnigan In this article we review the recent evidence – both statistical and theoretical – concerning the discount rate (or real rate of interest). We review a number of different interest rates for each quarter since 1995 and find that every […]

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Estimating the Impact of Mid-Career Retraining

In this article we investigate an issue we have not seen raised anywhere else in the literature on personal injury damages: When an individual is injured in their 30s or early 40s, and has to retrain for a new career, will that individual begin in that career at a salary equivalent to those of individuals with the same age as the plaintiff? Or will the plaintiff’s starting salary be more similar to those of younger individuals in the new career – perhaps 25-29 year-olds? The authors present information from a recent study that investigated this question; and comment on the use of this study for personal injury cases.

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The Discount Rate Revisited

In this article we review the recent evidence – both statistical and theoretical – concerning the discount rate (or real rate of interest). We review a number of different interest rates for each quarter since 1995 and find that every series has trended downward virtually continuously over the entire period. We then review the theoretical arguments that have been put forward to explain why this trend has been observed; and ask whether it is better to base a forecast of future rates of interest on the rates that are currently being observed or on averages of historical rates. We conclude that it would be inappropriate to rely on historical figures and instead we recommend use of multiple rates, based on the rates currently available for a variety of short- and long-term government bonds.

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Spring 2005 issue of the Expert Witness newsletter (volume 10, issue 1)

Contents: The Impact of Disability on Earnings: Reliable Data by Christopher Bruce From his analysis in his previous article, Dr. Bruce concluded that, to be reliable, evidence must be based on data sets that meet two criteria: First, the number of observations must be large enough that one can be certain that a representative sample […]

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The Impact of Disability on Earnings: Reliable Data

From his analysis in his previous article, Dr. Bruce concluded that, to be reliable, evidence must be based on data sets that meet two criteria: First, the number of observations must be large enough that one can be certain that a representative sample has been drawn. And, second, the data set must include individuals drawn from all of the comparison groups that are of interest.

In this article Dr. Bruce uses these two criteria to identify a set of research reports that he considers to be reliable; and he summarises the findings of these reports with respect to the impact that each of spinal cord injuries, chronic pain, visual and hearing disabilities, and brain damage have on both education and earnings.

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Winter 2004/05 issue of the Expert Witness newsletter (volume 9, issue 4)

Contents: The Reliability of Statistical Evidence Concerning the Impact of Disability by Christopher Bruce In the article Christopher Bruce provides a caution concerning the acceptance of statistical evidence about disability. Dr. Bruce argues that the courts and opposing counsel do not subject certain types of medical opinion to sufficiently strict statistical standards. Specifically, he shows […]

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Statement of Ethical Principles and Principles of Professional Practice – National Association of Forensic Economics

Economica belongs to an organization of forensic economists known as the National Association of Forensic Economists (NAFE, nafe.net). NAFE has recently published a “Statement of Ethical Principles, and Principles of Professional Practice.” As Economica subscribes to the principles outlined in the NAFE Statement, we have reproduced it here.

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The Reliability of Statistical Evidence Concerning the Impact of Disability

In the article Christopher Bruce provides a caution concerning the acceptance of statistical evidence about disability. Dr. Bruce argues that the courts and opposing counsel do not subject certain types of medical opinion to sufficiently strict statistical standards. Specifically, he shows that evidence based on: (i) the expert’s “experience,” (ii) the expert’s interpretation of third party statistics, or (iii) the expert’s understanding of published statistical reports may be unreliable. In this article, he provides examples of how statistical evidence may fail to meet the standards expected by the courts; and he offers suggestions about how counsel might respond to these deficiencies.

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Autumn 2004 issue of the Expert Witness newsletter (volume 9, issue 3)

Contents: Using family background to Predict Educational Attainment in Canada by Carmen Anderson with Christopher Bruce When a minor has suffered a serious injury, it is necessary to predict what the income level of the plaintiff would have been in the absence of that injury. In most cases, this is done by projecting an education […]

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Using family background to Predict Educational Attainment in Canada

When a minor has suffered a serious injury, it is necessary to predict what the income level of the plaintiff would have been in the absence of that injury. In most cases, this is done by projecting an education level for the plaintiff and using census statistics to project the average income for that education level. This article examines some of the factors that can be used to predict a child’s eventual educational attainment.

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Summer 2004 issue of the Expert Witness newsletter (volume 9, issue 2)

Contents: The Impact of the “Net Income” Provisions of the Insurance Amendment Act, 2003 by Christopher Bruce The article examines the implications of the changes to section 626.1 of the Insurance Act that were introduced in The Insurance Amendment Act, 2003. Dr. Bruce argues that these changes will: (i) require that income taxes be calculated […]

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Addendum: Calculating After-Tax Income Using Tables on Diskette

The article is an addendum to Christopher Bruce’s The Impact of the “Net Income” Provisions of the Insurance Amendment Act, 2003. It shows how to download Tables on Diskette (TOD), a software program provided free of charge by the Canada Revenue Agency. It also discusses how law firms can use this calculator to determine income taxes in litigation purposes.

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The Impact of the “Net Income” Provisions of the Insurance Amendment Act, 2003

The article examines the implications of the changes to section 626.1 of the Insurance Act that were introduced in The Insurance Amendment Act, 2003. Dr. Bruce argues that these changes will: (i) require that income taxes be calculated for every year of both the with-accident and without-accident income streams in all personal injury cases; and (ii) raise the strong possibility that the courts will allow income tax “gross ups” on awards for loss of earnings. He also shows how the income tax gross up is calculated and estimates the overall impact of the revisions on personal injury awards; and he argues that those revisions will have no effect on the manner in which CPP premiums have been treated in Alberta.

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Spring 2004 issue of the Expert Witness newsletter (volume 9, issue 1)

Contents: Forecasting the Rate of Growth of Real Wages (Productivity) by Christopher Bruce Christopher Bruce summarises the most recent theoretical and empirical evidence concerning one of the most controversial, and poorly-understood, components of the calculation of future earnings – the so-called “productivity factor.” He notes that, although the observed rate of increase in earnings is […]

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An Alternative Method for Assessing the Value of Housewife Services

The article develops a new and creative method for assessing the value of the housework provided by women in “traditional” marriages; that is, by women who stay at home full time. Professor Allen is an internationally recognised expert on economic aspects of marriage and divorce. He has, for example, written extensively on the impact of no-fault divorce laws. In this article, he argues that a widely-accepted theory of the manner in which individuals choose their spouses can cast light on the implied value that couples place on the value of housework. Specifically, he notes that many theories of spousal choice predict that individuals will choose mates in such a way that the contributions of the two spouses will be equal. If this is the case, then if the husband is working in the labour market, where he earns $50,000 per year, and the wife is working only at home, the value of her contribution to the marriage must also be $50,000.

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Forecasting the Rate of Growth of Real Wages (Productivity)

Christopher Bruce summarises the most recent theoretical and empirical evidence concerning one of the most controversial, and poorly-understood, components of the calculation of future earnings – the so-called “productivity factor.” He notes that, although the observed rate of increase in earnings is tied to the rate of increase in labour productivity over the very long run, in shorter periods the two rates may differ if there is a significant increase or decrease in the supply of labour. Specifically, he reports that most economists now believe that the slow down in “real” wage growth (the rate of growth in excess of the rate of inflation) in the 1980s and 1990s occurred because of the increase in labour supply that came with the influx of “baby boomers.” That the baby boom is now working its way through the system implies, therefore, that the rate of growth of real wages will increase significantly in the next two decades.

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Winter 2003 issue of the Expert Witness newsletter (volume 8, issue 4)

Contents: Why have automobile insurance premiums been rising? by Christopher Bruce This article attempts to identify the causes of the dramatic increases in automobile insurance premiums that have been reported over the last two years. Policies to deal with rising premiums by Christopher Bruce This article investigates a number of government policies that have been […]

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Autumn 2003 issue of the Expert Witness newsletter (volume 8, issue 3)

Contents: How are Automobile Insurance Premiums Determined? by Christopher Bruce In this article Christopher Bruce Christopher Bruce provides a brief introduction to the process by which automobile insurance premiums are determined. He discusses actuarial rating, rating classes, and experience rating. Economica’s Privacy Policy by Christopher Bruce This article provides a brief description of Economica’s privacy […]

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Experience-Rating of Automobile Insurance: A Good Idea that Won’t Work

In this article Christopher Bruce identifies some of the weaknesses of legislation that requires automobile insurance companies to use “experience rating” – a system in which the only factor that determines your premiums is your driving record.

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Predicting post-secondary education attainment

In this article Mohamed Amery discusses cases involving plaintiffs who are minors, in which it is necessary to predict the level of education that these individuals would have obtained had they not been injured. Mr. Amery’s article provides information concerning indicators that can be used to make this prediction – including the education of the plaintiff’s parents; the level of the plaintiff’s employment while in high school; and whether the plaintiff ever failed a grade.

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Assessment of damages in wrongful birth cases

Gerald Robertson is a Professor of Law at the University of Alberta, and a practising barrister and solicitor in the areas of civil litigation and personal injury. He is co-author of Legal Liability of Doctors and Hospitals in Canada (3rd ed.). He is also a director of the Robertson Personal Injury Newsletter, an on-line weekly digest of all personal injury judgments in Canada decided over the previous week, along with current developments in the area of personal injury litigation. More information about the Robertson Personal Injury Newsletter can be found at www.rpin.ca.

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Selecting the Discount Rate – An Update

This article extends the work done by us in issues 5(3) and 6(4) of The Expert Witness, we conclude that it would be appropriate to revise our existing 2½ and 3½ percent two-part forecast of real interest rates. We propose to use a rate of 2¼ percent for the first five years of all calculations. For all subsequent years we propose to use a rate of 3¼ percent.

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Winter 2002/03 issue of the Expert Witness newsletter (volume 7, issue 3)

Contents: Under-reporting of Income by the Self-Employed by Scott Beesley In this article Scott Beesley discusses a technique that can be used to estimate the extent to which a self-employed worker has under-reported his net business income. Quantifying Soft Tissue Injury in Neck Injured Patients by Gordon McMorland This article was prepared by Dr. Gordon […]

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Quantifying Soft Tissue Injury in Neck Injured Patients

This article was prepared by Dr. Gordon McMorland – a Calgary-based chiropractor and the director of the Canadian Whiplash Centre. Dr. McMorland discusses a new technology that can be used to effectively and objectively assess cervical range of motion and neck strength. Together, these measurements quantify the functional capacity of the neck.

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Summer/Autumn 2002 issue of the Expert Witness newsletter (volume 7, issue 2)

Contents: The Connection between Labour Productivity and Wages by Christopher Bruce In this article Christopher Bruce examines the theory and evidence behind the assertion that wage growth among workers in a specific industry can be linked to the productivity growth of those workers. He finds that there are sound theoretical reasons for predicting that there […]

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Millott (Estate) v. Reinhard – Reconciling “dependency” claims under FAA with “estate claims” under SAA

In this article Derek Aldridge considers one of the most interesting findings from a recent court decision. The issue concerned how to reconcile “dependency” claims under the Fatal Accidents Act with “estate claims” made under the Survival of Actions Act. In the Millott decision, it appears that if a dependant/heir’s share of the estate’s loss of income claim (under SAA) is greater than his loss of dependency on the deceased’s income (under FAA), then he is awarded the SAA amount, but he can also receive any claim for loss of services under FAA.

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Duty to Care for Orphaned Minors

In this article Christopher Bruce considers cases in which the courts have been asked to calculate the loss of dependency of orphaned minors – who have been taken into the care of close relatives. The important issue that is raised by this arrangement is whether the expenditures incurred by the surrogate parents should be set off against the children’s loss of dependency on their natural parent(s).

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The Connection between Labour Productivity and Wages

In this article Christopher Bruce examines the theory and evidence behind the assertion that wage growth among workers in a specific industry can be linked to the productivity growth of those workers. He finds that there are sound theoretical reasons for predicting that there will be very little correlation between an industry’s productivity growth and its wage growth. He also finds that the empirical evidence supports this prediction.

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Spring 2002 issue of the Expert Witness newsletter (volume 7, issue 1)

Contents: Male Versus Female Earnings – Is the Gender Wage Gap Converging? by Kelly Rathje In this article Kelly Rathje examines current and projected trends in educational attainment and labour force participation – two factors which influence earnings. Then, she present the results of some recent research regarding the projected gender wage gap. Next, she […]

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Male Versus Female Earnings – Is the Gender Wage Gap Converging?

In this article Kelly Rathje examines current and projected trends in educational attainment and labour force participation – two factors which influence earnings. Then, she present the results of some recent research regarding the projected gender wage gap. Next, she considers the implications of these results for the estimation of the potential incomes of young females.

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Complementarity in the Retirement Behaviour of Older Married Couples: An Update

In this article Daryck Riddell and Christopher Bruce examine the tendency of workers to make their retirement decisions based on the retirement decisions of their spouses. That is, if a 57 year-old woman’s husband has already retired, that could indicate that she will retire earlier than would otherwise have been predicted. Mr. Riddell and Dr. Bruce report on three hypotheses concerning the likelihood that the retirement ages of spouses will be correlated.

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Winter 2001/02 issue of the Expert Witness newsletter (volume 6, issue 4)

Contents: Selecting the Discount Rate – An Update by Christopher Bruce, Derek Aldridge, Scott Beesley, and Kelly Rathje In this article the consultants at Economica have combined to review the most recent information concerning the “discount rate;” that is, the rate of interest at which plaintiffs are assumed to invest their award. Destruction of evidence […]

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The awarding of costs and payment of legal fees in a case brought before the Court: is there a potential injustice?

This article shows that there may be a potential injustice due to the tax treatment of an employee-plaintiff versus a corporate-defendant. We show that the costs imposed on a losing employee-plaintiff impose a greater burden than the same level of costs imposed on a losing corporate defendant. This is because the employee-plaintiff must such pay costs with after-tax dollars, but the corporate defendant can use before-tax dollars.

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Destruction of evidence

In this article Christopher Bruce discusses situations in which information required to establish negligence remains in the possession of one of the parties. In the absence of any penalties, a party who believes that this evidence may suggest that he or she should be held liable will have an incentive to destroy the evidence.

The purpose of Dr. Bruce’s article is to develop a model of the legal process that will offer insight into the determination of legal remedies for the destruction of evidence by a defendant. He bases this model on the assumption that the first role of such remedies must be to discourage the defendant from destroying any information that might reasonably be expected to assist the court in the determination of liability.

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Autumn 2001 issue of the Expert Witness newsletter (volume 6, issue 3)

Contents: The Deduction for “Expenses Related to Earning Income” in Rewcastle by Christopher Bruce and Derek Aldridge In this article Christopher Bruce and Derek Aldridge discuss the court’s decision in the recent case of Rewcastle v. Sieben. The case concerned an estate claim brought under the Survival of Actions Act. In his decision, Justice Hutchinson […]

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No-Fault Automobile Insurance

In this article Christopher Bruce and Angela Tu Weissenberger respond to a recent paper which recommends that Alberta adopt a no-fault automobile insurance system. In their response, Dr. Bruce and Ms. Tu Weissenberger examine the deterrent effect of tort rules; the high cost of no-fault insurance systems; arguments concerning the role of lawyers; evidence concerning the costs of bodily injury claims; and evidence concerning insurance fraud. They identify several weaknesses in the usual arguments that are made in support of a no-fault regime.

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The Deduction for “Expenses Related to Earning Income” in Rewcastle

In this article Christopher Bruce and Derek Aldridge discuss the court’s decision in the recent case of Rewcastle v. Sieben. The case concerned an estate claim brought under the Survival of Actions Act. In his decision, Justice Hutchinson introduced a new method for calculating the deduction for “expenses directly related to earning income.” In their article Dr. Bruce and Mr. Aldridge summarise Justice Hutchinson’s method and comment on its broader applicability.

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Summer 2001 issue of the Expert Witness newsletter (volume 6, issue 2)

Contents: The Deduction of Accelerated Inheritance by Christopher Bruce In this article Chris Bruce discusses a requirement established by the Court of Appeal in its October 17, 2000 ruling in Brooks v. Stefura. This was that “accelerated inheritances” should be deducted from each plaintiff’s dependency award. The Court did not, however, state clearly what it […]

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Case Comment: Boston v. Boston

The Supreme Court of Canada recently ruled in the case of Boston v. Boston. This was a case involving the variation of spousal support at the time of the husband’s retirement. He retired in 1997 and began to receive his pension. He applied to have the original support payment reduced, on the grounds that he was now paying support from his pension, which had already been considered in the original division of assets. It was argued that the wife had traded off her right to half the pension, and in return had received the bulk of the physical and other assets. He succeeded in having the monthly payment lowered from $3,200 to $950, but the Ontario Court of Appeal increased the figure back to $2,000. The husband was appealing that last OCA decision in the Supreme Court.

The SCC’s decision allowed the husband’s appeal and restored the motions judge’s decision to reduce support to $950 per month. This was in my view correct, as it would appear to be unjust that the wife should receive half of an asset at separation, and then be allowed to claim part of the husband’s half of that asset later.

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Avoiding Overlap Between Fatal Accident Act and Survival of Actions Act Claims

This article points out that while the method set out by the Court of Appeal in Brooks v. Stefura does prevent double-recovery, it does not prevent double-payment, that is, the payment of the same dollar to one plaintiff under the FAA and to another under the SAA. The text of the judgment makes it clear that the Court does not wish this to occur. The article suggests a refinement of the Court’s method which would prevent such double-payments. Four detailed examples are provided.

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The Deduction (?) of “Accelerated Inheritance” (Scott Beesley’s view)

In this article Scott Beesley discusses a requirement established by the Court of Appeal in its October 17, 2000 ruling in Brooks v. Stefura. This was that “accelerated inheritances” should be deducted from each plaintiff’s dependency award.

The Court did not, however, state clearly what it meant by “accelerated inheritances,” nor did it specify how those inheritances were to be calculated. In this article, Scott offers some observations that may cast some light on these issues.

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The Deduction of Accelerated Inheritance

In this article Chris Bruce discusses a requirement established by the Court of Appeal in its October 17, 2000 ruling in Brooks v. Stefura. This was that “accelerated inheritances” should be deducted from each plaintiff’s dependency award.

The Court did not, however, state clearly what it meant by “accelerated inheritances,” nor did it specify how those inheritances were to be calculated. In this article, Chris offers some observations that may cast some light on these issues.

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Spring 2001 issue of the Expert Witness newsletter (volume 6, issue 1)

Contents: Estate Claims Following the Appeal Court Decisions in Duncan and Brooks by Derek Aldridge In this article Derek Aldridge, investigates a number of issues concerning the valuation of estate claims under the Survival of Actions Act. These issues arise from two recent decisions of the Court of Appeal, in Duncan v. Baddeley and Brooks […]

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Evidence About “Customary Practice”

In this article Christopher Bruce summarises some recent research that suggests that doctors systematically err when estimating the standards of “ordinary, or common, practice.” In particular, this research finds that doctors overestimate the speed with which patients are treated and diagnosed in emergency rooms. Hence, they systematically bias malpractice suits in favour of plaintiffs.

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Estate Claims Following the Appeal Court Decisions in Duncan and Brooks

In this article Derek Aldridge, investigates a number of issues concerning the valuation of estate claims under the Survival of Actions Act. These issues arise from two recent decisions of the Court of Appeal, in Duncan v. Baddeley and Brooks v. Stefura.

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Winter 2000 issue of the Expert Witness newsletter (volume 5, issue 4)

Contents: Incorporating the Effect of Reduced Life Expectancy into Awards for Future Costs of Care by David Strauss, Robert Shavelle, Christopher Pflaum, & Christopher Bruce In this article David Strauss, Robert Shavelle, Christopher Pflaum, and Christopher Bruce argue that the method used by most economists and actuaries for calculating life expectancy among the seriously disabled […]

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Evaluation of Harm to a Class of Individuals

In this article Kelly Rathje explains how the estimates of damages can be improved if the plaintiff is one of a class of individuals who have been affected by the same harm. In such cases, a statistical technique known as econometrics can be employed to compare the earnings capacity of the victims of the harm with the earnings capacity of a randomly selected sample of individuals who have not been so-harmed. This technique can be used, for example, to determine the impact of sexual abuse on a students at an orphanage or residential school.

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Incorporating the Effect of Reduced Life Expectancy into Awards for Future Costs of Care

In this article David Strauss, Robert Shavelle, Christopher Pflaum, and Christopher Bruce argue that the method used by most economists and actuaries for calculating life expectancy among the seriously disabled is flawed. They argue that this method leads to the systematic overestimation of costs of future care. They show, for example, that the costs of care for plaintiffs with cerebral palsy are commonly overestimated by 10 to 15 percent. Strauss and Shavelle are able to provide life expectancy data that correct for this error.

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Autumn 2000 issue of the Expert Witness newsletter (volume 5, issue 3)

Contents: Selecting the Discount Rate by Christopher Bruce In this article we begin by providing clear definitions of a number of fundamental concepts. These include: real interest rate; nominal interest rate; discount rate; real return bonds; and core rate of inflation. We then summarise the recent statistical data for various measures of inflation and interest […]

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Selecting the Discount Rate

In this article we begin by providing clear definitions of a number of fundamental concepts. These include: real interest rate; nominal interest rate; discount rate; real return bonds; and core rate of inflation. We then summarise the recent statistical data for various measures of inflation and interest rates in Canada. Finally, we use those data to calculate the “real interest” rate and to forecast a long-run discount rate. We conclude from this analysis that that rate appears to be 4.0 percent. However, as there has been some recent volatility in interest rates, we propose to revisit our forecast a year from now.

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Combining Occupational Options

In this article, Christopher Bruce notes that it is often not clear at the time of trial what occupation the plaintiff would have entered had he or she not been injured, or what occupation he/she will now enter. In these cases, it is common for the vocational expert to offer a menu of possible occupations that are consistent with the plaintiff’s observed interests and aptitudes. In his article, Dr. Bruce looks at how one could combine these occupations (and the corresponding incomes) in order to determine an average, expected income for the plaintiff.

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Case Comment: Madge v. Meyer

This article concerns a case in which there was no apparent loss of income following a farm owner’s injury. Mr. Beesley notes that it is critical to separate the farm income generated through the assistance of a friend or family member from the income earned by the injured farm owner. If the income generated by an unpaid (or underpaid) worker is attributed to the injured owner then the injured person’s loss of income could be greatly underestimated.

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Spring 2000 issue of the Expert Witness newsletter (volume 5, issue 1)

Contents: The Impact of Disability on Earnings: Results of the Health and Activity Limitation Survey by Christopher Bruce, Derek Aldridge, & Kris Aksomitis This article presents some information from Statistics Canada’s Health and Activity Limitation Survey (HALS). Although HALS was one of the most comprehensive surveys ever conducted on the effects of disability, Statistics Canada […]

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The Impact of Disability on Earnings: Results of the Health and Activity Limitation Survey

This article presents some information from Statistics Canada’s Health and Activity Limitation Survey (HALS). Although HALS was one of the most comprehensive surveys ever conducted on the effects of disability, Statistics Canada has chosen to publish results from that survey in a form that is not of great value to litigators. Accordingly, HALS has become one of those sources that is referred to far more often than it is employed.

Economica has obtained access to Statistics Canada’s electronic records of over 100,000 individual questionnaires from HALS. This has allowed us to estimate income and education levels for each of four levels of disability, for both males and females, cross-categorised by four levels of education and four age groups. In their article, Christopher Bruce, Derek Aldridge, and Kris Aksomitis report the statistics derived from this process. Although the statistics reported there are too aggregated to allow practitioners to estimate damages in specific cases, they can act as a check to see whether the damages calculated in any particular case are “reasonable.”

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Winter 1999 issue of the Expert Witness newsletter (volume 4, issue 4)

Contents: Fatal Accident Dependency Calculations by Derek Aldridge In this article Derek Aldridge examines the difference between using the sole- and cross-dependency approaches when estimating the loss of income dependency following a fatal accident. Chris Bruce wrote about this issue three years ago in the Expert Witness (Volume 1, Number 4). Derek’s article emphasises the […]

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Recent Canadian Court Decisions Concerning the Impacts of Child Sexual Abuse on Earnings

In this article Christopher Bruce and Matthew Foss discuss the response of the courts to lawsuits for loss of income resulting from sexual abuse. This is the second part of an article that began in the previous Expert Witness – in which Matthew Foss reviewed the academic literature concerning the impact of sexual abuse on the victim’s psychological well-being, education, and earning capacity.

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Fatal Accident Dependency Calculations

In this article Derek Aldridge examines the difference between using the sole- and cross-dependency approaches when estimating the loss of income dependency following a fatal accident. Chris Bruce wrote about this issue three years ago in the Expert Witness (Volume 1, Number 4). Derek’s article emphasises the specific differences between the calculations in the two different approaches.

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Autumn 1999 issue of the Expert Witness newsletter (volume 4, issue 3)

Contents: The Current Status of Survival of Actions Act Claims by Christopher Bruce In this article Christopher Bruce discusses two trial court decisions concerning the method by which claims for loss of earnings are to be calculated under the Survival of Actions Act. He argues that, although these two decisions clarify many of the outstanding […]

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Rates of Return to Advanced Education in Alberta

This article, by Kelly Rathje, is based on the thesis she wrote for her M.A. in economics from the University of Calgary. Her thesis concerns the costs and benefits of post-secondary education. In particular, she views education as an “investment” in oneself. The costs of that investment are tuition, books, and foregone income. The benefits are measured in terms of increased income. On this basis, she can compare the relative “rates of return on investment” for various types and levels of education.

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Increased Earnings After Injury

In this article Michael Behr – a forensic economist from Northfield, Minnesota – asks whether or not an injured person has sustained a loss if the injury forces a change in occupation which produces higher income. He argues that any suggestion that injury is beneficial contradicts fundamental economic principles.

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The Current Status of Survival of Actions Act Claims

In this article Christopher Bruce discusses two trial court decisions concerning the method by which claims for loss of earnings are to be calculated under the Survival of Actions Act. He argues that, although these two decisions clarify many of the outstanding issues in this area, a number of crucial problems remain unresolved.

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The Calculation of Damages in Sexual Abuse Cases

In this article Matthew Foss offers a brief review of the academic literature concerning the impact of sexual abuse on the victim’s psychological well-being, education, and earning capacity. This is the first of a two article series. The second part, to be published in the next issue of the Expert Witness, will discuss the response of the courts to these lawsuits.

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Summer 1999 issue of the Expert Witness newsletter (volume 4, issue 2)

Contents: Advice for Experts Facing Cross-Examination by Steve Babitsky and James Mangraviti, Jr. This article was written by Steve Babitsky and James Mangraviti, Jr. of SEAK Inc., a consulting firm in Massachusetts. Their article contains some excellent advice for experts who are testifying in court. The Role of Expert Evidence by Christopher Bruce In this […]

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Spring 1999 issue of the Expert Witness newsletter (volume 4, issue 1)

Contents: Issues Arising in the Calculation of Damages under the Survival of Actions Act (Part 2) by Scott Beesley This is a continuation of a previous article by Scott Beesley concerning some issues that arise in assessing claims under the Survival of Actions Act. He now discusses the methodology of the calculation, the connection between […]

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Issues Arising in the Calculation of Damages under the Survival of Actions Act (Part 2)

This is a continuation of a previous article by Scott Beesley concerning some issues that arise in assessing claims under the Survival of Actions Act. He now discusses the methodology of the calculation, the connection between Survival of Actions Act and the Fatal Accidents Act, and the recent decisions in Brooks v. Stefura and Duncan itself.

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Winter 1998 issue of the Expert Witness newsletter (volume 3, issue 4)

Contents: Issues Arising in the Calculation of Damages Under the Survival of Actions Act (Part 1) by Scott Beesley In this article Scott Beesley discusses the issues that arise in the calculation of damages under the Survival of Actions Act. Mr. Beesley addresses the possible size of the “necessities” deduction. Duty of Care by Christopher […]

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The MacCabe Judgment: Allowing the Use of Earnings Statistics for Males When Estimating the Future Income of a Female

In this article, Derek Aldridge explains how the MacCabe judgment is important from the economist’s view. What does the judgment imply about future cases involving injured or deceased females? There are many questions unanswered.

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Using Industry Growth Rates to Update Census Occupational Earnings Figures

In this article Kris Aksomitis discusses the method used to adjust average income figures derived from the Census from past dollars to today’s dollars. He compares average incomes taken from the 1996 Census with adjusted figures from the 1991 Census to illustrate the accuracy of these adjustments.

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Summer 1998 issue of the Expert Witness newsletter (volume 3, issue 2)

Contents: The Effect of Alcoholism on Earning Capacity by Nicole MacPherson In this article Nicole MacPherson investigates the effect of alcoholism on earning capacity. She has found that alcoholism has both direct and indirect effects on earnings. Ms. MacPherson brings to our attention both the obvious and overlooked effects of alcoholism. Applying Economic Analysis to […]

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Doctors Are Not Experts on Life Expectancy

In this article David Strauss and Robert Shavelle argue that physicians are usually not experts on life expectancy. They note, however, that doctors’ opinions regarding life expectancy have been relied on by the courts. They identify the different roles of physicians and actuaries in life expectancy determination.

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Not All “Bears” Are Bordering Extinction

In this article Heber Smith explains how the claimant converts his or her award to income for the future. He contrasts mutual funds, with high returns and perhaps less stability, with annuities, having lower returns and lower risk. This discussion leads into future articles regarding strategies of structured settlements.

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Applying Economic Analysis to Tort Law

In this article Christopher Bruce expands the use of economic analysis in tort law. Dr. Bruce identifies the distinguishing characteristics of the economic approach versus the more traditional methods of legal analysis. This is the first of a series of articles to follow regarding the economic analysis of torts.

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The Effect of Alcoholism on Earning Capacity

In this article Nicole MacPherson investigates the effect of alcoholism on earning capacity. She has found that alcoholism has both direct and indirect effects on earnings. Ms. MacPherson brings to our attention both the obvious and overlooked effects of alcoholism.

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Spring 1998 issue of the Expert Witness newsletter (volume 3, issue 1)

Contents: The Role of the Expert Witness in Developing “New” Law by Christopher Bruce In this article Christopher Bruce explores the role of the expert witness. He delineates both the advantages and disadvantages to the legal system when an expert adopts a “constructive” rather than a “passive” approach. While recognising the pitfalls with either approach, […]

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Outstanding Issues in the Valuation of Household Services

In this article Therese Brown and Christopher Bruce wrap up the series of five articles on household services which have been presented in our newsletter. They deal with several of the issues which have not been dealt with specifically in previous articles. Included are the following: the suggested approach when a plaintiff is still able to undertake a particular household activity, albeit more slowly than previously; a discussion of how long to run the loss of household services; and the effect of retirement on the loss of household services.

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BOOK REVIEW: The Expert: A Practitioner’s Guide, (Carswell) 1997

Christopher Bruce reviews this collection of 27 essays concerning expert testimony, each essay having been written by one or more experts in the relevant discipline. The purpose of the book, according to the foreword, is to provide trial lawyers with a basic understanding of both “… the role of the expert in the legal process … [and] … the fundamental concepts of the discipline within which the expert operates.”.

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Unresolved Issues in the Valuation of Estate Claims Under Survival of Actions

In this article Derek Aldridge expands upon previous articles in our newsletter which have arisen from the Duncan v. Baddeley court of appeal decision. He raises several questions concerning the calculation of losses in light of this decision, and suggests that it may not be possible to resolve these issues until it is determined whether the Court’s goal is one of compensation or deterrence.

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The Role of the Expert Witness in Developing “New” Law

In this article Christopher Bruce explores the role of the expert witness. He delineates both the advantages and disadvantages to the legal system when an expert adopts a “constructive” rather than a “passive” approach. While recognising the pitfalls with either approach, he points out the potential benefits that may accrue when the specialist is allowed to bring his/her expertise to bear, shedding light upon the complexities of personal injury litigation.

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Winter 1997 issue of the Expert Witness newsletter (volume 2, issue 4)

Contents: Determination of the Hourly Cost of Household Services by Therese Brown and Audrey Hallson Therese Brown and Audrey Hallson, in the fourth of a five-part series of articles, discuss the estimation of an appropriate hourly rate in cases which involve the loss of household services. This discussion details rates gleaned from a 1997 survey […]

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D’Amato v. Badger – Complications Arising when the Plaintiff is a Business Partner

In this article Christopher Bruce and Scott Beesley bring clarity to some of the complex issues that surround the loss of income which arises when the proprietor of a small business is injured. In particular, they deal with the situation encountered in the recent Supreme Court decision of D’Amato v. Badger, in which D’Amato was a partner in a small business. The issue of compensation became clouded because D’Amato, through his partner’s generosity, was in receipt of a wage post-accident that exceeded the value of his contribution, given his compromised condition.

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The Role of the Occupational Therapist in Personal Injury Litigation – Part 2

In the second of her two-part series on the role of occupational therapists in personal injury litigation, Lorian Kennedy explains that the occupational therapist is well placed, in terms of both her/his education and expertise, to assess the loss of functional capacity of a plaintiff, after an accident, to undertake household services.

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Determination of the Hourly Cost of Household Services

Therese Brown and Audrey Hallson, in the fourth of a five-part series of articles, discuss the estimation of an appropriate hourly rate in cases which involve the loss of household services. This discussion details rates gleaned from a 1997 survey of household providers which was conducted by Economica.

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Notable Judgments in the Valuation of Household Services

Therese Brown, in the third of a series of articles on household services, reviews various judgments which are of interest in this area. She discusses the substantiation of the loss, as well as the issue of replacement cost. It is also noted that assumptions based on traditional beliefs may prove to be erroneous.

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Using Male Earnings Data to Forecast the Future Income of Females

In this article Derek Aldridge deals with the subject of the “wage gap” between men and women. He discusses the rationale used to explain this difference in earnings and why it might be inaccurate to base a prediction of the future earnings of young women on women’s historical earnings. He suggests that there is considerable support for the use of male earnings data which have been adjusted to reflect the extent to which a female’s career path may differ from that of the average male.

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Summer 1997 issue of the Expert Witness newsletter (volume 2, issue 2)

Contents: Implications of Duncan v. Baddeley by Christopher Bruce This article deals with the impact of the recent Alberta Appeal Court decision in Duncan v. Baddeley. Christopher Bruce discusses the implications of this decision for: fatal accident actions in which there are no dependants; the selection between the Fatal Accidents Act and the Survival of […]

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The Children of Immigrants – How Do They Fare?

In this article, Therese Brown notes various factors which may enhance or impede the socio-economic progress of the children of immigrants. Considerable evidence suggests that the positive effects associated with foreign parentage overwhelm all other factors. For that reason, the children of immigrants tend to exhibit higher potential earnings than do their counterparts with native-born parents.

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Structured Settlements: Case Suitability

In this article, Heber Smith discusses criteria which are useful in the determination of the suitability of structured settlements. Amongst other benefits, Revenue Canada may make a significant imputed contribution to a personal injury settlement through reduced taxation. He identifies those instances in which this tax contribution may be of particular significance.

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Issues in Loss of Income Calculations for Self-Employed Individuals

In this article, Scott Beesley outlines various factors which complicate the assessment of the loss of income for self-employed individuals. After clearly laying out the potential pitfalls in these cases, he reviews a number of approaches which might be employed to maximise the accuracy of these estimates.

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Implications of Duncan v. Baddeley

This article deals with the impact of the recent Alberta Appeal Court decision in Duncan v. Baddeley. Christopher Bruce discusses the implications of this decision for: fatal accident actions in which there are no dependants; the selection between the Fatal Accidents Act and the Survival of Actions Act; and the valuation of the “lost years” deduction in both fatal accident and personal injury actions.

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Predicting the Adult Earning Capacity of Minors

In this article Faizal Sharma sheds light upon the complex issue of predicting the potential income stream of a minor who has been injured. He explains that recent studies show a stronger correlation between parents’ income and that of their children than had previously been expected. The child’s level of education is positively correlated with the parent’s education and is negatively affected by being part of a non-traditional family.

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Spring 1997 issue of the Expert Witness newsletter (volume 2, issue 1)

Contents: Predicting the Adult Earning Capacity of Minors by Faizal Sharma In this article Faizal Sharma sheds light upon the complex issue of predicting the potential income stream of a minor who has been injured. He explains that recent studies show a stronger correlation between parents’ income and that of their children than had previously […]

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The Role of the Occupational Therapist in Personal Injury Litigation – Part 1

Lorian Kennedy, in the first part of a two-part series, outlines why an occupational therapist’s education and competencies lend themselves especially well to skills assessment in personal injury cases. In particular, demand for the services of occupational therapists has grown in relation to determination of suitable compensation for the loss of an individual’s capacity to perform household services. Reports by these professionals, in addition, may include assessment of an individual’s functional ability in relation to self-care, leisure, and paid work.

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The “Lost Years” Deduction

In this article Christopher Bruce deals with the current issue of appropriate compensation for the “lost years” of a plaintiff with reduced life expectancy. One of the approaches discussed includes the view that the plaintiff should be compensated for the lost earnings which remain after the cost of necessities is deducted. Further clarification is required on this issue to establish an estimated cost for “necessities.”

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Determination of Contribution to Household Services

In this article, various complexities arising from the determination of the loss of household services in personal injury or fatal accident actions are explored by Therese Brown in the next article. While it is pointed out that information specific to the individual is preferable, average statistics are frequently relied on as well.

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Lost Years Maybe, Lost Care – Never

In this article Heber Smith discusses the importance of providing adequate compensation for an injured plaintiff for whom a diminished life expectancy is projected. He reviews Revenue Canada changes, which have reduced the risk of the insurer, thus making them more willing to negotiate in these matters.

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Winter 1996 issue of the Expert Witness newsletter (volume 1, issue 4)

Contents: Calculation of the Dependency Rate in Fatal Accident Actions by Christopher Bruce In this article Christopher Bruce deals with the topical issue of alternative approaches to the calculation of the dependency rate. He argues here that determination of whether a sole dependency method, a revised dependency method, or a revised cross dependency method is […]

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The Valuation of Household Services – Conceptual Issues

In this article Therese Brown explores various complexities arising from the determination of the loss of household services in personal injury or fatal accident actions. While it is pointed out that information specific to the individual is preferable, average statistics are frequently relied on as well.

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The Income Tax Gross-Up on a Cost of Care Award

In this article Derek Aldridge and John Tobin discuss the various factors that affect the size of the tax gross-up on a cost of care award. Factors range from the plaintiff’s taxable income (including investment income from the award), to the proportion of the tax-creditable expenses, to the time path of the consumption of his/her cost of care award. Depending on these various factors, it is clear that the gross-up may be significant, thus making this calculation very worthwhile.

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Calculation of the Dependency Rate in Fatal Accident Actions

In this article Christopher Bruce deals with the topical issue of alternative approaches to the calculation of the dependency rate. He argues here that determination of whether a sole dependency method, a revised dependency method, or a revised cross dependency method is appropriate will depend upon the nature of the marriage of the couple in question.

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Autumn 1996 issue of the Expert Witness newsletter (volume 1, issue 3)

Contents: Damage Calculations in Fatal Accident Actions After Galand by Christopher Bruce This article is Christopher Bruce’s second of two reports on the ramifications of the Alberta Court of Appeal decision in Galand Estate v. Stewart. The article in this issue considers the implications of Galand for the calculation of damages. Employment of Persons With […]

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Employment of Persons With Disabilities: The Employment Equity Act 1986 to 1996

In this article, Gordon Wallace and Gail Currie of The Vocational Consulting Group show that the federal government’s employment equity program, introduced in Bill C62 (January 1985), has not reduced the impact of personal injury accidents on plaintiffs’ earning capacity.

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Damage Calculations in Fatal Accident Actions After Galand

This article is Christopher Bruce’s second of two reports on the ramifications of the Alberta Court of Appeal decision in Galand Estate v. Stewart. The article in this issue considers the implications of Galand for the calculation of damages.

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Summer 1996 issue of the Expert Witness newsletter (volume 1, issue 2)

Contents: Fatal Accident Cases After Galand by Christopher Bruce In this article Christopher Bruce discusses the theoretical arguments raised by Mr. Justice Coté’s decision that an estate is able to rely on the Survival of Actions Act to sue for a deceased’s loss of earning capacity. Adjusting Claims for Hours Devoted to Household Chores by […]

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Distinguishing Between Loss of Income and Loss of Earning Capacity: The B.C. Case of Pallos v. I.C.B.C.

In this article Scott Beesley provides an analysis of the implications of the British Columbia case, Pallos v. I.C.B.C. In Pallos, the B.C. Court of Appeal ruled that although the plaintiff had returned to his former employer, earning as much as he had prior to the accident, his injuries acted to reduce his future “earning capacity.” He was awarded $40,000 on this head of damages. Mr. Beesley shows that the approach adopted in Pallos is an extension of a widely-used concept, “weighted average.”

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Spring 1996 issue of the Expert Witness newsletter (volume 1, issue 1)

Contents: Shortened Life Expectency: The “Lost Years” Calculation by Scott Beesley In this article Scott Beesley analyses the impact which a reduced life expectancy has on the plaintiff’s claim for loss of future earnings – the “lost years deduction.” In a future issue, this discussion will be extended to the calculation of losses in fatal […]

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Loss of Earnings for Wrongful Confinement and Wrongful Sterilization: The Case of Leilani Muir

In this article Christopher Bruce offers a brief comment on the case Muir v. Alberta, in which damages were awarded to the plaintiff because she was wrongfully confined in a home for the mentally defective and was wrongfully sterilized. However, the court denied her loss of earnings claim.

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What is a “Discount Rate”?

In this article Christopher Bruce provides a simple introduction to a concept which litigators must use every day – the discount rate, or “real rate of interest.” This article is the first in a series which will discuss the underlying concepts employed in the derivation of the lump sum values of future streams of losses.

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The Annuity Solution to Fund Cost of Future Care

In this article Heber Smith provides the first in a series of articles concerning the intricacies of structured settlements. His article addresses such topics as annuity titles and rights, the specifics of structured settlement annuities, new developments in structured settlements and the creative use of annuities in remediating personal loss actions.

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Shortened Life Expectency: The “Lost Years” Calculation

In this article Scott Beesley analyses the impact which a reduced life expectancy has on the plaintiff’s claim for loss of future earnings – the “lost years deduction.” In a future issue, this discussion will be extended to the calculation of losses in fatal accident actions in which the deceased has left no dependents – following from the Alberta decisions in Galand and Duncan.

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