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Using TIPS to Discount to Present Value

Author

Listed:
  • Raymond Strangways
  • Bruce L. Rubin
  • Michael Zugelder

Abstract

The practice of forensic economics has a long history of trying to identify the correct interest rate to use when valuing economic losses in personal injury and wrongful death cases. We trace the legal history as it relates to the appropriate interest rates and adjustments for inflation. We then discuss the use of Treasury Inflation Protected Securities, TIPS, and an analysis of the combined effect of realized inflation and taxes on the effective return. We come to the unexpected conclusion that the use of TIPS does not lend itself to a simple adjustment to the rate for taxes nor eliminate the need to consider expected inflation.

Suggested Citation

  • Raymond Strangways & Bruce L. Rubin & Michael Zugelder, 2014. "Using TIPS to Discount to Present Value," Journal of Forensic Economics, National Association of Forensic Economics, vol. 25(1), pages 71-89, April.
    • Handle: RePEc:fek:papers:doi:10.5085/jfe.25.1.71
    DOI: 10.5085/jfe.25.1.71
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    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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