Dismal Junk Science

We have often encountered plaintiff experts in personal injury work whose methodologies lead to results that are totally inconsistent with reality and easily refutable with actual data. For example, if Harold Goldstein were to be believed, every person in the U.S., regardless of age, occupation, experience, or education would receive pay raises that are higher than interest rates by one and a half percent each and every year (e.g., if interest rates are 7%, everyone should be getting annual raises of 8.5%). What has always amazed us in how these economists are able to get anyone to believe this. The answer appears to be that the American public is unaware of basic facts concerning the U.S. economy. A recent survey by the Washington Post, Harvard University and the Kaiser Foundation found that when people were asked about the current inflation rate, the average guess was 14%. (It has been 3% or less for the last five years). The survey also found that most people estimated the unemployment rate (currently about 5%) to be over 20%. They pegged corporate profits at 47%, about five times too high.

All of this underscores the ease with which juries may be mislead by economists who use methodologies that do not comport with standard practice in the profession, or by non-economists who claim that no one can make economic forecasts (but then proceed to do so by assuming that wage growth and interest rates are equal). It also reinforces the importance of educating the jury. Most of the survey respondents were pessimistic about the overall health of the U.S. economy and nearly half of those interviewed believed that government numbers were manipulated to hide the truth about just how badly average American workers were really doing. All this suggest that jury education regarding basic economic facts of life is important in defending against hyped damages.