June 26, 2007

Cass Sunstein has a paper out suggesting that judges and juries consistently overestimate the value of some losses involving so-called hedonic damages, or those that cover foregone gains or opportunities, as opposed to affirmative distress like long-lasting pain. His observations: people who suffer a traumatic event like the loss of fingers or toes or who become paraplegics are able to recover their former degree of happiness relatively quickly, and do not focus on their loss on a day-to-day basis. On the other hand, Sunstein says, consistent low-level pain may be undervalued in that it has a much greater impact on day-to-day happiness. Naturally, however, he concludes that all this supports a greater government emphasis on social welfare and efforts to improve social well-being. The abstract of his paper is available here, and you can easily obtain a copy of the complete text of the paper by e-mail at the same source.