The present value of future wage losses represent an important part of the total economic loss that results from a wrongful death. The economist's task, in the role of expert witness, is to provide to the interested parties a lump sum amount of income equal to the losses experienced by the decedent's beneficiary. This amount is obtained. by increasing the decedent's wage at the time of death, by an appropriate annual wage growth rate, to generate estimates of what future wages would have been had the decedent been able to continue in his or her employment. Each of the annual future wages is then discounted to determine today's value of the future annual wage. The sum of these discounted future annual wages produces an amount of money, which when invested, will provide an income stream exactly equal to the decedent's lost income stream.
Cook, Robert W. Jr. and N. Fayne Edwards. 1981. "Wrongful Death and Disability Awards: Gross or After-Tax Income?" E.C.R.S.B. 81-1. Robins School of Business White Paper Series. University of Richmond, Richmond, Virginia.