Death, Happiness, and the Calculation of Compensatory Damages

Abstract

This paper studies the mental distress caused by bereavement. The largest emotional losses are from the death of a spouse; the second-worst in severity are the losses from the death of a child; the third-worst is the death of a parent. The paper explores how happiness regression equations might be used in tort cases to calculate compensatory damages for emotional harm and pain-and-suffering. We examine alternative well-being variables, discuss adaptation, consider the possibility that bereavement affects someone's marginal utility of income, and suggest a procedure for correcting for the endogeneity of income. Although the paper's contribution is methodological, and further research is needed, some illustrative compensation amounts are discussed. 2 Death, Happiness, and the Calculation of Compensatory Damages

Destruction and Distress: Using a Quasi‐Experiment to Show the Effects of the September 11 Attacks on Mental Well‐Being in the United Kingdom

“…The number of times a person places himself or herself in the top two categories was given a one and then all 12 questions were added together to produce what is known as a Caseness measure of mental distress, with the highest level of distress value scoring 12 and minimum distress level scoring 0. This composite rating is a good proxy for the transient component of moods (Watson and Clark, 1984) and has been used as a measure of SWB in recent studies by economists (Clark and Etilé, 2002; Clark, 2003; Gardner and Oswald, 2007; Blanchflower and Oswald, 2008; Jones and Wildman, 2008) and to value intangible goods (Oswald and Powdthavee, 2008).…”

Can having internal locus of control insure against negative shocks? Psychological evidence from panel data

“…Knowledge of the extent to which people are psychologically insured against various adverse life events can, for example, improve the way that compensatory damages (or the level of compensation for a bad life event due to negligence) are calculated in the courts of law (Oswald and Powdthavee, 2008). It can also help improve the accuracy of many existing cost–benefit models that take into account people’s subjective experiences (see, e.g., Kahneman and Sugden, 2005; Dolan and Kahneman, 2008).…”

Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

“…In a typical application, a measure of SWB is regressed on respondents' quantities of a bundle of non-market goods, and the ratio of the coefficients on two goods yields an estimate of the goods' rate of tradeoff that would leave SWB unchanged. SWB data have been used in this way, for example, to estimate the tradeoffs between inflation and unemployment (Di Tella, MacCulloch, and Oswald, 2001); between own and others' income (for a recent review, see Clark, Frijters, and Shields, 2008); and between money and a relative's life (by comparing the coefficient on losing a family member with the coefficient on income; Oswald and Powdthavee, 2008, and Deaton, Fortson, and Tortora, 2010). 1 …”