October 06, 2014 Articles

The Role of the Economic Expert in Damages Analyses

Economists can provide analyses through the application of economic techniques.

By Robert Kneuper and James Langenfeld

Economists can be particularly useful as experts in complex damages matters. Economic experts are good at modeling the world "but for" the alleged illegal act, developing a theory of causation that links the acts to damage calculations, and separating the impact of the alleged acts from other market forces. As such, economic experts contribute at various steps in the process of developing economic expert testimony, including the formation of the theory of causation and assistance in discovery.

Selection of the Economic Expert
The first decision about the role of an economist in damages analyses is whether to use an economist or a financial/accounting expert. The answer to this question depends on a number of factors, including the nature and extent of the anticipated analysis of damages. An economist can offer certain key strengths as part of a damages analysis, including the ability to develop economic models of market outcomes that would likely have happened "but for" the alleged bad acts. Because economists are often trained at developing economic models of firm behavior under various conditions, economic theory can be particularly well suited toward predicting market outcomes in a "but for" world. Economists also typically have extensive training in quantitative methods, such as regression analysis, and can offer the ability to conduct rigorous statistical analyses and other data techniques in order to isolate the impact of the alleged "bad acts" from other factors.

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