Forensic Economic Valuation of Future Medical Costs: A Stationarity-Based Approach to Present Value Calculations
Gary R. Albrecht & Bill Marcum
What the paper says
Abstract This note proposes a simplified approach to calculating the present value of future medical costs that eliminates the need for explicit inflation forecasting. Drawing on the stationarity-based framework of Rosenbaum and Mann (2024), we argue that when the growth in relative medical prices is stationary, the present value of life care plan costs can be reliably estimated using real interest rates and historical relative price trends. Applying Fisher’s equation, we demonstrate that projected inflation cancels out when it appears symmetrically in both cost escalation and discounting, making separate inflation forecasts unnecessary. This approach reduces complexity in forensic economic valuations and maintains logical coherence with economic theory. We illustrate the method using data on prescription drug costs and highlight its practical benefits, including transparency and ease of use, while acknowledging that other valuation frameworks may be appropriate in specific contexts.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.