ABSTRACT
Econometrics is the economic methodology for estimating economic variables and models to arrive at scientific econometric conclusions. The scope of economics is very broad. It includes money and banking, finance, labor market, macroeconomics, microeconomics, healthcare, forecasting, international trade, and economic growth and sustainable development. Forensic economics is the application of economic theories and laws to contending positions of economic value in courts of law. As such, the discipline of economics is broadly defined here to include the subcategory of finance.
Perhaps the most contentious set of issues deals with the amount of damages awarded in medical malpractice cases. The most straightforward part of the damage calculation would seem to be adding up the actual out-of-pocket losses that resulted from a negligent injury. These would include lost wages, medical care expenses, and other actual economic losses. Although it is simple in theory to measure economic losses, in reality it can become somewhat complicated when trying to estimate how much people would have earned far into the future, or what medical or long-term care they might need and how much it would cost many years after their injury. As difficult as calculating economic losses are, the more controversial part of calculating damages is estimating the dollar value of non-economic losses. In particular, there is substantial disagreement over the way to measure the “pain and suffering” that resulted from the injury.
Awards can vary substantially, reinforcing the idea that non-economic damage awards can be too arbitrary to be fair. Medical accidents and malpractices have heightened the need for scientific evidence in litigation. The damages for medical malpractices have varied considerably and some states have enacted statutes to reduce variability and cap liability. However, these caps and awards show wide variability as well.
In the 1990s, the US Supreme Court opened the door for expert testimony and scientific evidence to be used in courts of law in order to properly evaluate professional facts for dispute resolution. Incidentally the case that heightened the need for scientific evidence in the courtroom was a medical case, Daubert v Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993). Notwithstanding, judges perform gatekeeping roles to ensure that those with the required expertise from education, practice, or teaching, perform the role of experts on technical matters. The Daubert Standard is now a widely accepted principle of American jurisprudence and lawyers who are not skilled in the quantitative requirements of economics can be at a considerable disadvantage. This chapter is designed to fill a quantitative void in legal issues that appertain to economics.
