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

Butt, Z., Haberman, S., Verrall, R. J. & Wass, V. (2008). Calculating compensation for loss of future earnings: estimating and using work life expectancy. Journal of the Royal Statistical Society: Series A (Statistics in Society), 171(4), pp. 763-805. doi: 10.1111/j.1467-985X.2007.00539.x

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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.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Butt, Z., Haberman, S., Verrall, R. and Wass, V. (2008), Calculating compensation for loss of future earnings: estimating and using work life expectancy. Journal of the Royal Statistical Society: Series A (Statistics in Society), 171: 763–805, which has been published in final form at http://dx.doi.org/10.1111/j.1467-985X.2007.00539.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Uncontrolled Keywords: Disability-adjusted multipliers; Dynamic multiple-state Markov model; Ogden tables; Personal injury compensation; Work life expectancy (reduction factor)
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Actuarial Science & Insurance
URI: http://openaccess.city.ac.uk/id/eprint/4041

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