Hedonic Damages Research Articles

Editors' Note

This issue's symposium on future research directions in forensic economics originated with papers that were presented at the January 4, 2020, National Association of Forensic Economics (NAFE) session “NAFE: An Agenda for Future Research” at the Allied Social Science Associations annual meeting in San Diego, California. The impetus for the session was to honor Jack Ward, the first editor of the Journal of Forensic Economics (JFE) by having him provide insights on what research in forensic economics has contributed to the current knowledge of practitioners, as well as his thoughts on the future directions of forensic economics research. This symposium contains papers on the topic of future research directions in forensic economics that were prepared by the presenters at the San Diego meeting.Jack Ward's paper suggests that there have been advances over the last three decades in forensic economics that include the Markov analyses of worklife expectancy; Expectancy Data's Dollar Value of a Day and Full-time Earnings in the United States that have advanced the projection of replacement household services and lost earnings; research based on Bureau of Labor Statistics Family Expenditure Survey data that has added greater precision to measures of self-consumption of earnings; and papers that have helped clarify differences between measuring probable earnings and earning capacity. Ward's paper concludes with a list of topics for further research in the forensic economics literature that includes more work on the role of race and gender in determining earnings; modeling dynamic changes in industry specific employment and wage growth; and the incorporation of Bayesian methodologies in lost wage projections, including the assignment of meaningful probabilities to outcomes.The paper by Michael Brookshire and Frank Slesnick discusses what their 10 surveys of NAFE members have revealed about important research topics. They argue that their surveys suggest that NAFE members place high importance on research on worklife of the disabled, worklife of the self-employed, personal consumption, and household services. Brookshire and Slesnick also offer, based on their experience as practitioners and researchers, the following agenda: whole-time approach to damages estimation; forensic economics in the classroom; a paper summarizing what is known as a result of the papers published in the JFE state paper series; tailoring, i.e., accounting for qualitative factors and variables omitted from standard economic models; the market for forensic economists; the definition of earning capacity; and what is meant by reasonable economic probability.The paper by Steven Shapiro suggests that despite the large body of published research in forensic economics, there are still controversial topics that are lacking consensus. Shapiro suggests that the controversial areas that should be the focus of research include the choice of interest rates for discounting; interest rates, earnings growth and inflation; interest rates, growth in medical costs and inflation; how many years of earnings history is necessary to project base earnings and earnings history; alternative approaches to hedonic damages; and punitive damages. Shapiro expresses the hope that research on these topics will improve the reliability and validity of the work of forensic economists.

An Agenda for Future Research in Forensic Economics: New Approaches to Viewing Controversial Topics

AbstractDespite a large body of published research in forensic economics, there are still controversial topics that are lacking consensus. This paper presents an agenda for research on controversial topics in the hope that the results of such research will improve the reliability and validity of the work of forensic economists. Specifically, the paper presents suggestions for research on the choice of interest rates for discounting; interest rates, earnings growth and inflation; interest rates, growth in medical costs and inflation; how many years of earnings history is necessary to project base earnings and earnings history; alternative approaches to hedonic damages; and punitive damages.

Update to Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Nebraska

Abstract In a recent paper, Rosenbaum and Richardson (2019) described assessing economic damages in personal injury and wrongful death cases in Nebraska. That article omitted discussion of Nebraska's rules regarding hedonic damages. This note corrects that omission.

Using Value of Statistical Life Approach for Employee’s Compensation

The method adopted under the Employee Compensation Act, 1923 for paying compensation in case of death of an employee suffers from anomalies which go to the very root of the legislation. It uses “loss of dependents” approach and only pays economic damages, ignoring hedonic damages. Therefore, the amount arrived at is inadequate, failing to achieve the objective of welfare legislation and does not generate optimum level of deterrence. Adverse consequences of which are unaccounted externalities and increase in the number of fatal accidents due to suboptimal level of precaution. This paper makes a case study of the construction sector in India to understand these two problems. The alternative which can be adopted is Value of a Statistical Approach which originates from hedonic approach. It measures the value of life in terms of utility derived from life. This method will internalise the social cost and produce an optimum level of deterrence. The paper suggests a framework using VSL approach which can be applied by the courts while paying damages.

アメリカ不法行為法における HEDONIC DAMAGES 理論

アメリカ不法行為法における HEDONIC DAMAGES 理論

Policy Challenges of the Heterogeneity of the Value of Statistical Life

Economic research has developed estimates of the heterogeneity of the value of statistical life (VSL) on dimensions such as individual age, income, immigrant status, and the nature of the risk exposure. This paper examines the empirical evidence on the heterogeneity of VSL and explores the potential implications for the valuation of regulatory policies. EPA unsuccessfully sought to adopt age variations in VSL based on survey evidence. However, labor market estimates of VSL indicate a pattern that tracks lifetime consumption trajectories, as the VSL rises with age and eventually tapers off but does not plummet with age. The VSL has an income elasticity of at least 0.5. The analysis of age variations in VSL is accompanied by a review of the value of statistical life year (VSLY) approach. The U.S. Department of Transportation recognizes the influence of a positive income elasticity of VSL, and EPA has proposed adopting a 50% cancer premium. Recent studies suggest that the risk of death from terrorist attacks are of particular concern and may merit a substantial premium in benefit assessments. Whether and how such heterogeneity in VSL should be incorporated in regulatory policy evaluations depends in part on the source of the heterogeneity. Some prominent sources of heterogeneity arise from segmented labor markets in which disadvantaged groups face different labor market opportunities. Blacks and Mexican immigrants face quite different labor market offer curves. As a result, influences that are problematic from the standpoint of setting different benefit levels for policy purposes are differences in VSL by race and immigrant status. The paper also examines the EPA’s recent devaluation of life and the Posner-Sunstein proposal to use VSL estimates to set hedonic damages in tort liability cases. The Posner-Sunstein proposal would lead to excessive levels of compensatory damages and would greatly increase damages amounts.

The Plaintiff and Defense Attorney's Guide to Understanding Economic Damages

The Plaintiff and Defense Attorney's Guide to Understanding Economic Damages

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Illinois

Forensic economics experts (FE) working with attorneys engaged in litigation, whether consulting, preparing a report, or testifying at deposition or trial, generally are expected to have some knowledge (1) of the state’s statutory and case law regarding allowable damages and methods; and (2) that certain topics (e.g., taxes, collateral sources) should not be mentioned or considered at certain times since a mistrial could result. This situation creates a tension: forensic economics experts are economics experts and are not attorneys, but nonetheless must have a reasonable understanding of the relevant state law. In this vein, the Journal of Forensic Economics (JFE) continues to publish a series of articles on the ways such damages are calculated in different state jurisdictions, one state at a time.2 The state of South Dakota is included in this issue and this paper adds Illinois to the list. Following the format of previous articles in this JFE series, Section II provides a listing of the controlling statutes, general case law, and court rules. Section III discusses the concept of earning capacity which appears throughout PI and WD case law in Illinois. Section IV discusses discounting to present value. Fringe benefits are discussed in Section V, while Section

Hedonic Damages – One More Time: A Symposium

On January 5, 2008, the National Association of Forensic Economics (NAFE) sponsored its third symposium on “hedonic damages,” this time entitled “Hedonic Damages – One More Time.” The first symposium on hedonic damages was presented at the December 1989 Allied Social Sciences meetings in Atlanta, Georgia with the title “Hedonic Damages and the Value of Life.” Papers from that session by W. Kip Viscusi, Ted R. Miller, Stan V. Smith, and William T. Dickens were published in Volume 3, No. 3 of this journal (1990). The second symposium on hedonic damages was presented at the January 2000 Allied Social Sciences meetings in Boston, Massachusetts with the title “Hedonic Damages Ten Years Later.” Papers from that session by W. Kip Viscusi, J. Paul Leigh and Jorge A. Garcia, Ted R. Miller, Stan V. Smith and Thomas R. Ireland, along with an introduction by Peter Marks and Thomas R. Ireland were published in Volume 13, No. 2 of this journal (2000). W. Kip Viscusi and Ted R. Miller returned as presenters for a third time at the January, 2008 symposium, along with Brian McDonald and John O. Ward. Thomas Ireland acted as the organizer of the 2008 symposium and Peter Marks served as its chair. The term “hedonic damages” first entered general public consciousness on December 12, 1988 with a front page story in the Wall Street Journal by Paul M Barrett on “The Price of Pleasure,” featuring Stan V. Smith and his successful presentation of hedonic damages testimony in the case of Sherrod v. Berry (1985, 1987, and 1988). Two federal judges in Illinois had commented favorably about Smith’s testimony in the original opinion and one of the appeals decisions before the case was reversed on other grounds in 1988. The NAFE symposium in December of 1989 was designed to explore this interesting new development in the field of forensic economics. As of the 2000 symposium hedonic damages testimony had enjoyed several successes in individual states, but had been rejected by the courts in a number of reported decisions, particularly at the federal level. The threat of Daubert and Frye standards for admission of expert testimony being applied negatively to hedonic damage testimony had become one of the central features in the debate over this concept. As of 2008 hedonic damages testimony had become much more specialized. Because hedonic damages testimony had been rejected in a number of legal decisions, fewer and fewer forensic economists were involved, but Stan Smith, Robert Johnson, Brian McDonald, as well as several other economic experts

Hedonic Damages: Were the Body Blows to the Golden Goose Well-Founded?

Hedonic Damages: Were the Body Blows to the Golden Goose Well-Founded?

Time Valuation as an Alternative to Lost Enjoyment of Life in Determining Wrongful Death Damages

In a wrongful death case1 the task of the jury, if liability is found, is to award those pecuniary and non-pecuniary damages to the decedent’s survivor(s) that would make them whole. Steven Shavell (2004) defines pecuniary and non-pecuniary losses as follows: Pecuniary losses are those that either are monetary or are losses of goods that can be purchased in markets, in which case the measure of the losses comprises the replacement costs. Non-pecuniary losses correspond to the losses in utility suffered when irreplaceable things have been destroyed, such as family portraits or other unique objects. Making the survivors of a decedent whole, of course, is impossible and, in practice, testimony by a forensic economist on wrongful death damages is usually limited to calculations of lost earnings support and household work services the decedent could have provided survivors. There are other compensable pecuniary damages suffered by survivors of a decedent such as the advice, counsel, instruction, supervision, and care a decedent may have provided survivors for which a replacement cost might be calculated. Finally there are the usual non-pecuniary losses of pure companionship, consortia, love, affection, the loss of the enjoyment of the decedent’s life and bereavement suffered by survivors which are usually categorized as intangibles and left to a jury to decide or are prescribed by statute. The fundamental difference between pecuniary and non-pecuniary damages is that pecuniary damages are associated with a productive use of time (such as work, offering advice and counsel, or giving care, support, or assistance) while non-pecuniary damages derive from the pure utility of relationships alone. Schwartz and Thornton (1989) suggest that economists should approach damages from a utility base which would incorporate both the tangible (pecuniary) and intangible (non-pecuniary) losses suffered by survivors of a decedent. Such a holistic approach to damages is beyond the capacity of traditional means of calculating wrongful death damages by economists. A number of states, over the past two decades, have attempted to

The Flawed Hedonic Damages Measure of Compensation for Wrongful Death and Personal Injury

expanded use of the VSLs in the courtroom. 2 The fundamental issue continues to be whether the legal system should adopt regulatory policy practices for risk prevention and use the VSL as the measure of the welfare loss of a fatality for purposes of risk compensation. The refinement of VSL estimates in the litera- ture to reflect values across the population makes it increasingly important to understand when and how these values should be used. The question of what is the right value of life cannot be answered in the abstract. The correct value will depend on the purpose to which it is being put. This distinction is not simply with respect to which party is using the VSL—in particular, whether the value is being used by the government or by the judi- cial system. For both the government and the courts, there are different con- texts in which there might be consideration of value-of-life estimates, with the chief areas being compensation and valuation of the reduction of the risk of personal injuries for benefit assessment. As I will indicate, the VSL serves a constructive, but highly circumscribed function both in formulating govern- ment policy and in personal injury cases. The traditional measures of economic damages also serve a valuable economic role and should remain the approach used in setting compensatory damages. The discussion in Section II outlines the basics of the VSL methodology. Section III reviews the principles underlying conventional personal injury damages approaches, and Section IV presents a model of optimal deterrence. In Section V I examine the recent proposal by Posner and Sunstein (2005) to

Hedonic Damages, Hedonic Adaptation, and Disability

This article contributes to the broad debate over adaptive preferences in law, economics, and political philosophy by addressing an important ongoing controversy in tort law. Hedonic damages compensate for the lost enjoyment of life that results from a tortious injury. Lawyers seeking hedonic damages in personal injury cases emphasize their clients' new status as compromised and damaged persons, and courts frequently uphold jury verdicts awarding hedonic damages to individuals who experienced disabling injuries based on a view that disability necessarily limits one's enjoyment of life. This view is consonant with a general societal understanding of disability as a tragedy and of people with disabilities as natural objects of pity. But a rich psychological literature demonstrates that disability does not inherently limit enjoyment of life to the degree that these courts suggest. Rather, people who experience disabling injuries tend to adapt to their disabilities. To be sure, the views of people with disabilities about their own quality of life are classic adaptive preferences. Accordingly, one might suggest that the legal system should disregard those views. But we argue that the legal system goes wrong by so devaluing the experience of people with disabilities. When courts award damages based on the (nondisabled person's) view that disability is tragic, they distract attention from the societal choices and stigmas that attach disadvantage to disability; they also make it harder for people with disabilities to make hedonic adjustments to their conditions. For deterrence and compensation reasons, people who experience disabling injuries should be able to recover for their physical pain; for medical expenses and the cost of assistive technology and personal assistance; for the opportunities society denies people with their conditions; and for the effects of social stigma. But they should not recover for any purported effect of disability on the enjoyment of life.

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: the State of Kansas

Abstract No abstract available.

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Florida

Abstract No abstract available.

Is Leisure Time Worth More Than Working Time?

Abstract No abstract available.

Hedonic Damages as Deterrent: A Reply to Viscusi

Abstract No abstract available.

Recent Legal Decisions Regarding Hedonic Damages: An Update

Abstract No abstract available.

Hedonic Damages Ten Years Later: A Symposium

Abstract No abstract available.

Valuing Nonfatal Quality of Life Losses with Quality-Adjusted Life Years: The Health Economist's Meow

Abstract No abstract available.