Thursday 8 January 2009

Calculating compensation for loss of future earnings: estimating and using work life expectancy

an article by Zoltan Butt, Steven Haberman and Richard Verrall (City University) and Victoria Wass (Cardiff Business School) in Journal of the Royal Statistical Society: Series A (Statistics in Society) Volume 171 Issue 4 (2008)

Abstract

Where personal injury results in displacement and/or continuing disability (or death), damages include an element of compensation for loss of future earnings. This is calculated with reference to the loss of future expected time in gainful employment. We estimate employment risks in the form of reductions to work life expectancies for the UK workforce by using data from the Labour Force Survey with the purpose of improving the accuracy of the calculation of future lifetime earnings. Work life expectancies and reduction factors are modelled within the framework of a multiple-state Markov process, conditional on age, sex, starting employment state, educational attainment and disability.

[Read before The Royal Statistical Society on Wednesday, 16 January 2008, the President, Professor D J Hand, in the Chair]

© 2008 The Royal Statistical Society and Blackwell Publishing Ltd


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