Forensic Economics as defined by the National Association of Forensic Economics (nafe.net) is the scientific discipline that applies economic theories and methods to matters within a legal framework. Forensic economics covers, but is not limited to:
- The calculation of pecuniary 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.
In a 2012 paper by Eric Zitzewitz entitled “Forensic Economics,” Journal of Economic Literature 2012, 50(3), 731-769, published by the American Economic Association, "Forensic Economics" was defined as the application of economics to the detection and quantification of harm from behavior that has become the subject of litigation.
The only difference between these two definitions is that one suggests the application of science is itself a scientific discipline. Notwithstanding this distinction, both definitions refer to the application of economics. While courts may dictate what economic issues are to be addressed, the economic science that is applied must be that which is taught and practiced in the world at large. Clearly, it is not a set of theories and methods that only exist for litigation purposes. This fact is an important one for those interested in entering the profession to recognize.
Examples of Applications of Economics in Litigation
- Economic Damages in Injury and Death
- Antitrust liability and economic damages
- Unfair Practices in International Trade
- Economic Damages in Copyright Violation and Patent Infringement
- Contract Violations
- Economic Damages Related to Physical and Emotional Abuse
A graduate degree in the relevant sub-field of economics is the usual qualification for an economist offering to serve as an economic expert in litigation. The National Association of Forensic Economics is a good reference for trained economists interested in learning the idiosyncrasies of litigation.
Recent 3-Ring Binders and Books
- Determining Economic Damages, by Gerald D. Martin, James Publishing, Inc., 1988-2011.
- Economic/Hedonic Damages, by Michael Brookshire and Stan V. Smith, Anderson Publishing 1990.
- Economic Foundations of Injury and Death Damages, Roger T. Kaufman, James D. Rodgers, and Gerald D. Martin Editors, Edward Elgar Publishing Company, 2006.
- Measuring Loss in Catastrophic Injury Cases, Kevin Marshall and Thomas R. Ireland and John O. Ward Editors, Lawyers and Judges Publishing Company, 2006.
- NAFE, National Association of Forensic Economics
- AREA, American Rehabilitation Economics Association
- AAEFE, American Academy of Economic and Financial Experts
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