Friday, January 25, 2008
Last week, Kip Viscusi posted on SSRN The Flawed Hedonic Damages Measure for Wrongful Death and Personal Injury Compensation. Here is the abstract:
The payment of hedonic damages based on the value of statistical life will lead to excessive insurance and excessive deterrence in personal injury cases. The value of statistical life can play a constructive role in assessing negligence and liability. The recent proposal that wrongful death victims be awarded hedonic damages in addition to both economic damages and noneconomic damages to compensate for the harm to survivors will produce rampant double counting and will transform wrongful death awards in a very inefficient and undesirable manner. Recent attempts to set compensation levels by chaining the value of statistical life with measures of happiness and disability reflect a fundamental misunderstanding of the value of statistical life literature.