HW3 - University of Illinois at Urbana-Champaign Professor...

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University of Illinois at Urbana-Champaign Professor Ron Laschever, ECON 440, Spring 2010 1 Problem set #3 DUE at the beginning of class 3/2 (later than date stated on syllabus) The special master responsible for administering the Victims’ Compensation Fund for victims of the September 11 terrorist attack set up a compensation plan in which the relatives of the deceased would receive two types of payments, one representing their non-economic loss and one representing their economic loss. The non-economic loss includes a payment of $250,000 to the victim’s estate plus an additional $100,000 payment to each child or spouse of the victim. The payment for economic loss will be calculated as the expected future earnings that the victim would have earned had he or she not been killed on September 11 th . 1. Present a formula to calculate the economic loss using the guidelines that the special master prescribed. You may assume that the person is a 28-year-old single male. In your answer, be sure to
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