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Viscusi vs. Eisenberg on punitives

"Two widely respected Ivy League academics, Harvard Law School's W. Kip Viscusi and Cornell Law School's Theodore Eisenberg, have spent years crunching the numbers" on punitive damage awards, The American Lawyer reported recently. "Their scholarship represents the gold standard of empirical work on punitive damages. The two scholars, however, come to wildly clashing conclusions." Why? Well, one main reason is that Viscusi chooses to emphasize, while Eisenberg chooses not to emphasize, the role of "outlier" cases with unusually big dollar numbers. Arizona State lawprof Michael Saks, whom we've met before in these pages, contributes the following quote to the piece: "As [Saks] says, Viscusi's concern is with the 'tip of the tail of the elephant [of punitive damages] whereas Eisenberg's concern is with the 'whole elephant.'"

Congratulations, Prof. Saks: you may have come up with the worst and most tendentious analogy in the history of the liability debate. The tail of an elephant is an outlier, sure enough -- it's noteworthy for being a relatively slender portion of an animal the remainder of which is known for its hugeness. So it's exactly the reverse of an analogy that would aptly account for the spectrum of punitive damage awards, which consist of a larger number of $10,000 awards (which, as Eisenberg might point out, are unlikely to be inflicting much trauma by themselves on the U.S. economy) and a much smaller number of awards in amounts like $1 million, $10 million or $100 million (which, as Viscusi might point out, play a crucial role in scaring defendants into altering behavior and in providing leverage for settlements that redistribute wealth). It takes a sort of genius to look at the few cases that loom far larger than the rest and come up with a mental picture of them as the tail of an elephant.

Since we're trading in analogies, here's a different one. Profs. Viscusi and Eisenberg can be compared to seismologists debating whether the phenomenon of West Coast earthquakes has been overblown. Eisenberg triumphantly demonstrates that the great majority of seismic events recorded in Pacific fault zones are very minor -- so minor they won't even rattle your teacups. Viscusi chooses instead to focus on the impact of a few infrequent events like Northridge and Loma Prieta that make up an almost infinitesimal percentage of all seismic occurrences. Who makes the more useful guide? Well, it depends. If you're wondering whether watching the needle on a Cal Tech seismograph is likely to prove an exciting or entertaining way of passing your time on a random Saturday, Eisenberg's way of looking at the data is actually more helpful. If, on the other hand, you're seeking to ascertain the effects of earthquakes on construction and insurance practices in California, or on people's willingness to live in the state, more likely Viscusi's your man.




Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.