A Research Note on Applying the Statistical Notion of “Confidence Intervals” in Tort Trials

Abstract

Since the landmark decision by the UK House of Lords (Wells v Wells [1999] AC 345), the Ogden Tables (tables of actuarial multipliers) effectively became the primary source of assessing future loss in personal injury litigation. In 2003, the Hong Kong Ogden Tables (based on Hong Kong mortality rates) were published. There are two major actuarial assumptions underlying the multipliers in the Ogden Tables: (1) the survival probability distribution, and (2) the risk-free rate of return (net of inflation). There is a likelihood that the actual survival distribution and rate of return may turn out to be different from those assumed in the computation. Furthermore, the Ogden Tables provide only a single estimate of the multipliers, leaving judges and lawyers with limited information about the underlying uncertainty. The absence of such information may bring a spurious accuracy to the actuarial assessment of damages. In this paper, we shall investigate into the precision of the multipliers in the Ogden Tables, and explore the research methodology in constructing the interval estimates (i.e. lower and upper bounds) of actuarial multipliers in the Ogden Tables. These interval estimates enable the courts to arrive at suitable multipliers in a range of possible situations.