Valuing Higher Education in Lost Income Claims


A typical lost earnings analysis endeavors to value the personal income that was lost due to injury or loss of employment opportunities.  This is more challenging when income is not yet established, e.g. when the injured Plaintiff has yet to enter the workforce or there is evidence that the Plaintiff would have otherwise altered their expected income, potentially through the pursuit of higher education.

Many might assume that the more education a Plaintiff is expected to obtain, the greater their lost earnings will be (all other things equal).  However, there are other factors that should be considered before such a conclusion can be reached.  Depending on the nature of the increased education, the opportunity cost of forgoing income while additional education is pursued, and the changed worklife expectations, there is potential for additional education to have a de minimis or even negative effect on earnings when appropriate discounts to present value are applied.  A more thorough discussion with a specific illustration is available in this related article on the impact of education in lost income claims.

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