ESTIMATING DAMAGES FROM REPUTATIONAL HARM: HOW TO FACTOR IN PAST AND FUTURE INFLATION AND EXCHANGE RATES
When estimating any kind of damages, including damages from reputational harm, the estimator must look at both the past and the future, and at both personal and business earnings and value (measured as ‘net worth’ for a person and ‘value’ for a business). When estimating the economic toll from any kind of harm, special issues may arise. This article explores two of those issues: inflation rate and exchange rate (for cross-border transactions).
Estimating future inflation rates – sources
When individuals are defamed, their earnings typically decline. So, obviously they can claim lost earnings looking back in time. In addition, they can allege potential harm to future earnings, but this calculation is more complex.
First, they must estimate the period of time that has been or will be affected by the defamation. This may be only a few years or it may be a lifetime, depending on the nature of the accusations and their possible perpetuity online, offset by any investment in reputation repair.
Second, they must estimate the total amount of what they could have earned or could be earning during that period of harm in the future, ‘but for’ defamation, adjusting for historical or projected inflation during the period.
Third, they must estimate the same time period the lower total amount that they will likely earn during this period of past or future harm, using the same measure for inflation. Then, they must calculate the difference between the higher earnings and the lower earnings.
Finally, when looking to future damages, they must estimate the present value of that amount using a nominal discount rate.
Apr-Jun 2026 Issue
Blue Ocean Global Technology
Capital Expert Services