A comparison of two alternative methods for determining loss of future earnings following personal injuryí

Abstract

The law provides that any person injured through the fault of another can claim monetary compensation in the form of damages. Restitutio in integrum defines the objective and measure of damages. Damages in respect of loss of future earnings comprise the product of an estimated annual loss and an estimated number of years purchase. Estimates are made by means of intuition and precedent with little reference to labour economics. Damages calculated under an alternative methodology incorporating age-earnings profiles and conditional employment rates are compared with damages awarded in 100 adjudicated cases to reveal systematic and substantial under-compensation under the court method.