LPE System

LPE System (Life, Participation, Employment System) -


 * This technique can be used to estimate worklife expectancy of a worker by separately assessing the annual probabilities of survival of the worker (“L” for life), the annual probabilities that the worker would have been a participant in the labor market (“P” for participation), and the annual probabilities that the worker would have been employed (“E” for employment). These three probabilities can be multiplied together in any one year to determine the conditional probability that the worker would have been employed in that year. Adding these values over the life expectancy of the worker produces the LPE estimate of worklife expectancy.  As this method is often used, annual conditional worklife probabilities are directly multiplied by earnings estimated over the individual’s entire possible life expectancy to age 100  (or to some advanced year such as age 75 or age 85).  These annual loss figures over the life expectancy are then discounted to present value without any recourse to the worklife expectancy figure implicit in this method of calculation.  Such an expected value technique is preferred by some economists and is referred to as an “actuarial approach.”


 * From: http://www.umsl.edu/divisions/artscience/economics/ForensicEconomics/definitions.html