The Library

Death, happiness and the calculation of compensatory damages

Tools

Oswald, Andrew J. and Powdthavee, Nattavudh (2007) Death, happiness and the calculation of compensatory damages. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.827).

Preview

PDF
WRAP_Oswald_twerp_827.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (149Kb)

Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...

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.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HB Economic Theory

Divisions:

Faculty of Social Sciences > Economics

Library of Congress Subject Headings (LCSH):

Bereavement -- Psychological aspects, Happiness, Regression analysis -- Mathematical models, Reparation (Criminal justice), Marginal utility

Series Name:

Warwick economic research papers

Publisher:

University of Warwick, Department of Economics

Place of Publication:

Coventry

Official Date:

31 October 2007

Dates:

Date	Event
31 October 2007	Published

Number:

No.827

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Funder:

Economic and Social Research Council (Great Britain) (ESRC)

Version or Related Resource:

Oswald, A.J., and Powdthavee, N. (2008). Death, Happiness, and the Calculation of Compensatory Damages. The Journal of Legal Studies, 37(2), pp. S217-S251. http://wrap.warwick.ac.uk/id/eprint/28759

Related URLs:

Related item in WRAP

References:

Argyle, Michael. 2001. The Psychology of Happiness. London: Routledge.
Bagenstos, Samuel R., and Margo Schlanger. 2006. Hedonic damages, hedonic adaptation, and disability. Washington University School of Law Working Paper No. 06-09-01. University of Washington, St. Louis.
Ballas, Dimitris, and Danny Dorling. 2007. Measuring the impact of major life events upon happiness. University of Sheffield Working Paper. University of Sheffield, Sheffield. International Journal of Epidemiology (forthcoming).
Blanchflower, David G., and Andrew J. Oswald. 2004. Well-being over time in Britain and the USA. Journal of Public Economics 88:1359-1386.
Brickman, Phillip, Dan Coates and Ronnie Janoff-Bulman. 1978. Lottery winners and accident victims - is happiness relative? Journal of Personality and Social Psychology 36:917-927.
Broman, Clifford L., Melissa L. Riba, and Merideth R. Trahan. 1996. Traumatic events and marital well-being. Journal of Marriage and the Family 58:908-916.
Cardozo, Barbara L., Alfredo Vergara, Ferid Agani, and Carol A. Gotway. 2000. Mental health, social functioning, and attitudes of Kosovar Albanians following the war in Kosovo. Journal of the American Medical Association 284:569-577.
Clark, Andrew E., Ed Diener, Yannis Georgellis, and Richard E. Lucas. 2004. Lags and leads in life satisfaction: A test of the baseline hypothesis. DELTA Working Paper No. 2003-14. DELTA, Paris.
Clark, Andrew E., Paul Frijters, and Michael A. Shields. 2006. Income and happiness: Evidence, explanations and economic implications. PSE Working Papers No. 2006-24. PSE, Paris.
Clark, Andrew E., and Andrew J. Oswald. 1994. Unhappiness and unemployment. Economic Journal 104:648-659.
------------------------------. 2002. A simple statistical method for measuring how life events affect happiness. International Journal of Epidemiology 31:1139-1144.
Cooter, R. 2003. Hand rule damages for incompensable losses. San Diego Law Review 40:1097-1121.
Diener, Ed, Eunkook M. Suh, Richard E. Lucas, and Herbert L. Smith. 1999. Subjective well-being: Three decades of progress. Psychological Bulletin 125:276-302.
Di Tella Rafael, Robert J. MacCulloch, and Andrew J. Oswald. 2001. Preferences over inflation and unemployment: Evidence from surveys of happiness. American Economic Review 91: 335-341.
Di Tella Rafael, Robert J. MacCulloch, and Andrew J. Oswald. 2003. The macroeconomics of happiness. Review of Economics and Statistics 85: 809-827.
Dolan, Paul, and Daniel Kahneman. 2007. Interpretations of utility and their implications for the valuation of health. Economic Journal (forthcoming.)
Easterlin, Richard A. 2003. Explaining happiness. Proceedings of the National Academy of Sciences 100:11176-11183.
Easterlin, Richard A., Sandra L. Reynolds, Olga Shemyakina, and Yasuhiko Saito. 2006. Do people adapt fully to adverse changes in health? University of California Working Paper. University of Southern California, Los Angeles.
Elliott, Catherine and Frances Quinn. 2005. Tort Law. London: Pearson Education.
Ferrer-i-Carbonell, Ada, and Bernard M.S. van Praag. 2002. The subjective costs of health losses due to chronic diseases: an alternative model for monetary appraisal. Health Economics 11:709-722.
Frederick, S. and G. Loewenstein. 1999. Hedonic adaptation. Pp. 302-329 in Hedonic Psychology: Scientific Approaches to Enjoyment, Suffering, and Well-being, edited by Ed Diener, Norbert Schwarz, and Daniel Kahneman. New York: Russell Sage Foundation.
Frey, Bruno S., and Alois Stutzer. 2002. Happiness and Economics. Princeton: Princeton University Press.
Fujita, Frank and Ed Diener. 2005. Life satisfaction set point: stability and change. Journal of Personality and Social Psychology 88:158-164.
Gardner, Jonathan, and Andrew J. Oswald. 2006. Do divorcing couples become happier by breaking up? Journal of the Royal Statistical Society 169:319-336.
------------------------------. 2007. Money and mental well-being: A longitudinal study of medium-sized lottery wins. Journal of Health Economics 26:49-60.
Gilbert, Daniel T., Elizabeth C. Pinel, Timothy D. Wilson, Stephen J. Blumberg, and Thalia Wheatley. 1998. Immune neglect: a source of durability bias in affective forecasting. Journal of Personality and Social Psychology 75:617-638.
Groot, Wim, Henriette M. van den Brink, and Erik Plug. 2004. Money for health: the equivalent variation of cardiovascular diseases. Health Economics 13:859-872.
Hsee, Christopher K., and Reid Hastie. 2006. Decision and experience: why don't we choose what makes us happy? Trends in Cognitive Sciences 10:31-37.
Huang, Peter H., and Scott A. Moss. 2006. Implications of happiness research for employment law. Paper presented at the First Annual Colloquium on Current Scholarship in Labor & Employment Law, Marquette, WI.
Ireland, Thomas R. 2001. Hedonic damages as compensation: a reply to Bruce. Journal of Forensic Economics 14:271-272.
Kahan, Dan M., and Martha C. Nussbaum. 1996. Two conceptions of emotion in criminal law. Columbia Law Review 96:269-374.
Kahneman, Daniel, Alan B. Krueger, David Schkade, Norbert Schwarz, and Arthur A. Stone. 2006. Would you be happier if you were richer? A focusing illusion. Science 312:1908-1910.
Lehman, Darrin R., Christopher G. Davis, Anita DeLongis, Camille B. Wortman, Susan Bluck, Denise R. Mandel, and John H. Ellard. 1993. Positive and negative life changes following bereavement, and their relations to adjustment. Journal of Social and Clinical Psychology 12:90-112
Li, Jiong, Thomas M. Laursen, Dorthe H. Precht, Jorn Olsen, and Preben B. Mortensen. 2005. Hospitalization for mental illness among parents after the death of a child. New England Journal of Medicine 352:1190-1196.
Lucas, Richard E., Andrew Clark, Ed Diener, and Yannis Georgellis. 2003. Reexamining adaptation and the setpoint model of happiness: reactions to changes in marital status. Journal of Personality and Social Psychology 84:527-539.
Martikainen, Pekka, Jerome Adda, Jane E. Ferrie, George D. Smith, and Michael G. Marmot. 2003. Effects of income and wealth on GHQ depression and poor self-rated health in white collar women and men in the Whitehall II study. Journal of Epidemiology and Community Health 57:718-723.
Menzel, Paul, Paul Dolan, Jeff Richardson, and Jan A. Olsen. 2002. The role of adaptation to disability and disease in health state valuation: a preliminary normative analysis. Social Science and Medicine 55:2149-2158.
Middleton, Warwick F., Beverley F. Raphael, Paul Burnett, and Nada Martinek. 1997.
Psychological distress and bereavement. Journal of Nervous and Mental Disease 185:447-453.
Oswald, Andrew J. 1997. Happiness and economic performance. Economic Journal 107:1815-1831.
Oswald, Andrew J., and Nattavudh Powdthavee. 2004. Does happiness adapt? A longitudinal study of disability with implications for economists and judges. Working paper. University of Warwick, Warwick.
------------------------------. 2007. Obesity, unhappiness, and the challenge of affluence: Theory and evidence. Economic Journal 117: 441-454.
Pevalin, David J., and John Ermisch. 2004. Cohabiting unions, repartnering and mental health. Psychological Medicine 34:1553-1559.
Posner, Eric A. 2001. Law and the emotions. Georgetown Law Journal 89:1977-2012.
Posner, Eric A., and Cass R. Sunstein. 2005. Dollars and death. University of Chicago Law Review 72:537-598.
Powdthavee, Nattavudh. 2005a. Unhappiness and crime: Evidence from South Africa. Economica 72:531-547.
--------------------. 2005b. Putting a price tag on friends, relatives and neighbours: Using surveys of life satisfaction to value social relationships. Working paper. Institute of Education, London. Journal of Socio-economics (forthcoming).
--------------------. 2007. Are there geographical variations in the psychological costs of unemployment in South Africa? Social Indicators Research 80:629-652.
Rayo, Luis, and Gary S. Becker. 2007. Evolutionary efficiency and happiness. Journal of Political Economy 115:302-337.
Riis, Jason, George Loewenstein, Jonathan Baron, Christopher Jepson, Angela Fagerlin, and Peter A. Ubel. 2005. Ignorance of hedonic adaptation to hemodialysis: A study using ecological momentary assessment. Journal of Experimental Psychology: General 134:3-9.
Robinson, Kate L., John McBeth, and Gary J. MacFarlane. 2004. Psychological
distress and premature mortality in the general population: A prospective study. Annals of Epidemiology 14:467-472.
Shields, Michael A., and Stephen Wheatley Price. 2005. Exploring the economic and social determinants of psychological well-being and perceived social support in England. Journal of the Royal Statistical Society: Series A 168:513-537.
Smith, Dylan M., Kenneth M. Langa, Mohammed U. Kabeto, and Peter A. Ubel. 2005. Health, wealth and happiness. Psychological Science 16:663-666.
Stevenson, Betsey, and Justin Wolfers. 2006. Bargaining in the shadow of the law: Divorce laws and family distress. Quarterly Journal of Economics 121:267-288.
Sunstein, Cass R., David Schkade, and Daniel Kahneman. 2000. Do people want optimal deterrence? Journal of Legal Studies 29:237-253.
Sunstein, Cass R. 2004. Valuing life: A plea for disaggregation. Duke Law Journal 54:385-445.
Taylor, Marcia F., John Brice, Nick Buck, and Elaine Prentice-Lane. 2002. British Household Panel Survey User Manual. Colchester: University of Essex.
Tetlock, Philip E. 2003. Thinking the unthinkable: sacred values and taboo cognitions. Trends in Cognitive Sciences 7:320-324.
Ubel, Peter A., George Loewenstein, and Christopher Jepson. 2005. Disability and sunshine: Can hedonic predictions be improved by drawing attention to focusing illusions or emotional adaptation? Journal of Experimental Psychology: Applied 11:111-123.
Van Praag, Bernard M.S. and Barbara E. Baarsma. 2005. Using happiness surveys to value intangibles: The case of airport noise. Economic Journal 115: 224-246.
Van Praag, Bernard M.S., and Ada Ferrer-i-Carbonell. 2004. Happiness Quantified: A Satisfaction Calculus Approach. Oxford: Oxford University Press.
Winkelmann, Liliana, and Rainer Winkelmann. 1998. Why are the unemployed so unhappy? Evidence from panel data. Economica 65:1-15.