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Gender and Race Are Common Denominators in Determining Compensation

Jason Reese

Clients often wonder about how damages and compensation are calculated in the case of a serious car accident or wrongful death. A recent policy blog offered a critique of common methods for determining compensation and the ways that the legal system can undervalue the lives of women and people of color. Certainly, the whole process is imperfect and depends on many factors. It is, however, always pertinent to question whether or not common processes can create unfair disparities in our legal system and also to ask how we can do better for the victims of terrible accidents of many kinds.

Who Determines Compensation?

Forensic economists are essentially scientists who apply economic theories and methods to legal matters. According to the National Association of Forensic Economics (NAFE), these matters include:

  • The calculation of monetary damages in personal and commercial litigation.
  • The analysis of liability, such as the statistical analysis of discrimination, the analysis of market power in antitrust disputes, and fraud detection.
  • Other matters subject to legal review, such as public policy analysis, and business, property, and asset valuation.

Forensic economists play a key role in determining economic damages in cases of personal injury and wrongful death cases, though in cases that go to court, juries are the parties responsible for applying the work of forensic economists to a specific case.

The legal teams of plaintiffs and defendants alike also use the work of forensic economists. In fact, it is not unusual for forensic economists to provide testimony in a case. They often appear last in a line of experts, as their expertise is central to tying together the information and testimony provided by other damage experts testifying in the case.

Compensation by Chart?

A large majority of personal injury cases never go to court. They’re settled between the parties’ attorneys. In these cases, both legal teams are tasked with presenting the case for the amount of compensation due a plaintiff. This can be particularly difficult to do when the person who is seriously injured in a car accident is young, with no work history. When a child dies, how does one value his or her life for compensation purposes in a wrongful death lawsuit? How are lost lifetime earnings calculated?

Again, the work of forensic economists is important. Legal teams will be using charts, formulas, or advice provided by forensic economists. Many of these calculations include factors such as gender, race, and projected educational attainment. In fact, the use of gender as a factor for determining compensation due to an accident victim is referred to as “industry standard,” a practice in which 92% of forensic economists say they engage. Another 44% say they use race in their calculations.

What’s interesting is the increasing number of personal injury cases that see these kinds of calculations thrown out when brought into a courtroom. Some judges are beginning to reject the argument that lifetime earnings should be differentiated based on subgroups. These judges believe calculations for determining compensation in this way are problematic and set up a systemic bias against women and people of color.

Forensic economists say they are just dealing with reality. In the world of personal injury law, where a traumatic brain injury forever alters lifetime earning potential or a dangerous product results in a wrongful death, how better to determine the money that person would have earned than to look at the average earnings of other people with similar characteristics? Many would say we should look at average earnings, without qualifying these numbers by factors such as race or gender.

Problems with Future Lost Earnings Determinations

Critics say using gender and/or race in determining compensation simply takes the results of years of discrimination and injects them into the present day. If a female child was injured in a tragic car accident in the 1960s, and her future earnings potential was calculated using salary information for women at that time, her lifetime earnings would likely have drastically undervalued the compensation due to her. This is true because of dramatic social shifts in society occurring throughout the 1960s and 1970s, and the increasing numbers of women who attended college and sought careers outside of the home.

Those who oppose such formulations also point to cases with nearly unfathomable results. The Washington Post uncovered public documents for a fatal car accident case in which demographic information was used in determining compensation. In this car accident, a six-year-old girl died, as did the male fetus of a pregnant woman involved in the crash. At the end of the day, the compensation for the male fetus was 84% higher than it was for the six-year-old girl. This happened despite testimony that noted the girl’s above average intellect and academic performance. A chart on future earnings simply cannot cover all the factors that truly play a role in an individual’s lifetime earnings.

All Clients Deserve Fair Compensation for Injuries

At Wagner Reese, we’ve served clients from all walks of life. If we have learned anything during our decades of work, it’s that victims of negligence and recklessness are left incredibly vulnerable and in great need of the compensation and damages for which we fight. So many of our clients face challenges that are hard for the rest of us to understand—they are physically and emotionally drained. Many times, they are struggling simply to survive.

All victims of medical malpractice, car accidents, truck accidents, and other kinds of accidents resulting in serious injury or loss of life deserve to be compensated fairly. The personal injury attorneys at Wagner Reese know your life and the lives of your family members rely on fair treatment by the legal system. We believe in raising the integrity of the law and staying focused on what is important—our clients. If you have been injured due to the wrongs of another person or company, call us today for a FREE consultation: (888) 204-8440.


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