--- title: "Economics Expert Witness Allowed to Calculate the Plaintiff’s Decreased Earning Capacity" meta: "og:description": "Economics expert witness' testimony is focused on calculating decreased earning capacity of the Plaintiff and not on the cause of that decrease in earning capacity" "og:title": "Economics Expert Witness Allowed to Calculate the Plaintiff’s Decreased Earning Capacity" author: "Expert Witness Profiler" description: "Economics expert witness' testimony is focused on calculating decreased earning capacity of the Plaintiff and not on the cause of that decrease in earning capacity" --- # Economics Expert Witness Allowed to Calculate the Plaintiff’s Decreased Earning Capacity Posted on December 9, 2024 by Expert Witness Profiler This matter arises from an automobile accident in Valparaiso where one of the Plaintiffs, Terry Larson, sustained serious injury. His wife, Jayne, also seeks damages for a loss of consortium. Larson disclosed that he expected [Stan Smith](https://expertwitnessprofiler.com/expert-witness/Stanley-Smith/1515469) to testify “regarding the economic harm caused by the injuries that Plaintiff suffered as a result of the April 30, 2020 crash. Smith’s economic analysis addresses Plaintiff’s loss of income and loss of household services.”  In his August 2023 report, Smith listed two categories of expert testimony: (1) an estimate of Larson’s loss of wages and employee benefits and (2) an estimate of Larson’s loss of housekeeping and household management services. To reach these conclusions, Smith reviewed the following materials: (1) the individual tax returns for Terry and Jayne Larson from 2015 through 2022; (2) the S Corporation tax returns for Larson-Danielson Construction from 2015 through 2022; (3) the W-2s for Terry Larson from 2015 through 2022; (4) the Complaint; (5) Plaintiff, Terry Larson’s Answers to Defendants’ First Set of Interrogatories; (6) Plaintiff, Terry Larson’s Supplemental Answers to Defendants’ First Set of Interrogatories; (7) Plaintiff, Jayne Larson’s Answers to Defendants’ First Set of Interrogatories; (8) the deposition of Terry Larson taken on August 31, 2021; (9) an informational interview with Terry Larson dated September 10, 2021; and (10) the case information form. Defendants challenged the methodology of Smith’s opinions and alleged that they lack foundation in sufficient facts and data. ## **Economics Expert Witness** [Stan Vladimir Smith,** **Ph.D.](https://expertwitnessprofiler.com/expert-witness/Stanley-Smith/1515469) is a nationally renowned economist who received his Ph.D. from the University of Chicago. He is President of Smith Economics Group, Ltd., headquartered in Chicago, IL, which provides economic and financial consulting nationwide. He has worked as an economic and financial consultant since 1974, after completing a Research Internship at the Federal Reserve, Board of Governors, in Washington, D.C. [Get the full story on challenges to Stan Vladimir Smith’s expert opinions and testimony with an in-depth Challenge Study.](https://app.expertwitnessprofiler.com/login?eId=1515469) ## **Discussion by the Court** Smith noted that he relied upon Larson’s statements concerning his employment history, future plans, and the effects of the accident on Larson’s ability to work. He added that Larson also had reported a shift from being a full-time, salaried employee to being a part-time, hourly employee by 2023. #### **Methodology** As far as methodology, Smith stated he relied upon data from the National Center for Health Statistics to estimate Larson’s remaining life expectancy. Smith then outlined his use of data from the Bureau of Labor Statistics and the Federal Reserve for “past wage growth, interest rates, and consumer prices” to generate an estimated real wage growth rate of 0.95% per year, real discount rate of 1.20% per year, and annual inflation rate of 2.51%. Smith also outlined his methodology for calculating Larson’s estimated loss of tangible housekeeping chores and household management services using Bureau of Labor Statistics data, information collected from the interviews of Larson, and practices recommended by economist Dr. Gerald Martin. ### **Defendants’ Position** Defendants argued that while Smith “may be qualified to offer testimony as to the amount of an alleged economic loss”, he lacked a sufficient factual basis or reliable methodology to testify that Larson “suffered an economic loss related to the April 30, 2020, automobile accident.” Defendants also appeared to argue that because Smith assumes that Larson is no longer able to work in a full-time capacity, his testimony is “nothing more than speculation as to when and why Larson will retire.” In further refinement of their argument, Defendants argued that Smith’s testimony lacks any evidence that Larson is “unable to continue working in his prior occupation.” ### **Analysis** During his deposition, Smith acknowledged that he assumed the information Larson provided to him was accurate and incorporated that information into his report. Smith said it was up to “the trier of fact to give . . . whatever weight to [Larson’s statements] they believe is appropriate.” He also indicated the limited nature of his testimony as focused on calculating decreased earning capacity and not on the cause of that decrease in earning capacity (be it personal choice or the accident). That said, there were several instances in his deposition where Smith walked the line and appeared to opine on the cause of changes to Larson’s earning capacity. To the extent that Smith acknowledges the statements made by Larson that he relied on for his calculations, the Court deemed it permissible. But the Court agreed with Defendants that Smith lacked the foundation to testify as to the truth of those assertions or that the accident in fact caused Larson’s reduced earning capacity. Those opinions are prohibited. The Court concluded that Defendants’ arguments primarily concern the weight of Smith’s testimony, which are arguments best pitched not to the judge, but to the jury. Larson has established a sufficient basis for the admissibility of Smith’s testimony limited in scope to a calculation of Larson’s alleged economic loss. Smith may not testify as to causation because, as Defendants argue, he lacks sufficient foundation to do so. ## **Held** The Court denied the Defendant’s motion to exclude the testimony of Larson’s economic expert Stan Smith. ## **Key Takeaway:** In Defendants’ eyes, there is a missing connection between the data Smith relied upon (Larson’s allegations concerning his inability to continue working in the same capacity as before the accident) and Smith’s opinion (which calculates lost wages and earning capacity). Larson has established a sufficient basis for the admissibility of Smith’s testimony limited in scope to a calculation of Larson’s alleged economic loss. However, Smith may not testify as to causation because, he lacks sufficient foundation to do so. ## **Case Details:** --- ## **You Might Also Like** ![Human Resources Expert Allowed to Opine on Termination](https://ewp-blog.expertwitnessprofiler.org/wp-content/uploads/2026/04/blog-pic-640X480-2026-04-22T200052.311.jpg) [**Human Resources Expert Allowed to Opine on Termination**](https://expertwitnessprofiler.com/economics-expert-witness-allowed-to-calculate-the-plaintiffs-decreased-earning-capacity/human-resources-expert-allowed-to-opine-on-termination)![Neuropsychology Expert Not Allowed to Opine on Cognitive Decline](https://ewp-blog.expertwitnessprofiler.org/wp-content/uploads/2026/04/blog-pic-640X480-2026-04-22T144728.528.jpg) [**Neuropsychology Expert Not Allowed to Opine on Cognitive Decline **](https://expertwitnessprofiler.com/economics-expert-witness-allowed-to-calculate-the-plaintiffs-decreased-earning-capacity/neuropsychology-expert-not-allowed-to-opine-on-cognitive-decline)![Human Factors Expert Not Allowed to Opine on the Tile](https://ewp-blog.expertwitnessprofiler.org/wp-content/uploads/2026/04/blog-pic-640X480-2026-04-21T191749.960.jpg) [**Human Factors Expert Not Allowed to Opine on the Tile**](https://expertwitnessprofiler.com/economics-expert-witness-allowed-to-calculate-the-plaintiffs-decreased-earning-capacity/human-factors-expert-not-allowed-to-opine-on-the-tile)![Insurance Expert Not Allowed to Opine on Legal Duties](https://ewp-blog.expertwitnessprofiler.org/wp-content/uploads/2026/04/blog-pic-640X480-2026-04-21T155751.487.jpg) [**Insurance Expert Not Allowed to Opine on Legal Duties**](https://expertwitnessprofiler.com/economics-expert-witness-allowed-to-calculate-the-plaintiffs-decreased-earning-capacity/insurance-expert-not-allowed-to-opine-on-legal-duties)![Law And Legal Expert Not Allowed to Opine on Contract Formation](https://ewp-blog.expertwitnessprofiler.org/wp-content/uploads/2026/04/blog-pic-640X480-2026-04-20T213123.718.jpg) [**Law And Legal Expert Not Allowed to Opine on Contract Formation**](https://expertwitnessprofiler.com/economics-expert-witness-allowed-to-calculate-the-plaintiffs-decreased-earning-capacity/law-and-legal-expert-not-allowed-to-opine-on-contract-formation)