Do We Overcompensate Tort Victims?: Reading Stumbling on Happiness
Over Memorial Day weekend, I read Daniel Gilbert’s new book Stumbling on Happiness. Gilbert is a Harvard psychology professor and the book isn’t a how-to—that would be a big seller—but is instead on the “science” of happiness. In econ grad school, I learned that we maximize utility subject to constraints. It is a long, long way from that to knowing how people do that or—another step—how people actually experience happiness. Gilbert’s book is an effort at situating a great deal of serious research on happiness and is well worth reading.
To tort victims and I guess we call it hedonic adaptation. Here is what Gilbert says: “Able-bodied people are willing to pay far more to avoid becoming disabled than disabled people are willing to pay to become able-bodied again because able-bodied people underestimate how happy disabled people are (p. 153).” That is backed up by references to three studies, one of which references “hedonic adaptation” in its title.
We can see quickly where we might go with this. If able-bodied jurors can’t really understand that accident victims will adapt, they will over-compensate victims. In the extreme case of full habituation, the disabled would report identical happiness levels to the abled, and no “compensation” would be required.
It appears that these ideas have received relatively little attention in the legal academy. A quick Lexis search on “(hedonic w/2 adaptation) and (tort w/2 victim)”—I’ll show you my Boolean searches if you’ll show me yours—produced one article: Jeremy Blumenthal, Law and the Emotions: The Problems of Affective Forecasting, 80 Ind. L.J. 155 (2005). Blumenthal makes exactly the overcompensation point that we should expect given the happiness literature: “... jurors may apply default judgments that inaccurately predict the intensity and duration of that suffering, with the potential to overcompensate tort victims.”
A comparable Google Scholar search took me to 2005 work by two economists, Andrew Oswald and Nattavudh Powdthavee, on “Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges.” That work suggests that adaptation is substantial but often incomplete. Happiness levels for the never-disabled and the always-disabled are flat lines, but those of accident victims are V-shaped: a drop in happiness followed by recovery, but often at a somewhat lower final happiness level (see figures 1-5 at pages 27 to 29 if you are following along).
But on the overcompensation question, for those given to jury studies, we should run a test. Present a hypothetical damages scenario to mock juries. We should have say 12-member juries using a supra-majority rule for awarding damages of perhaps 9-3 or better. Impanel three different types of juries: all non-disabled; all-disabled; and a seeded jury, with only one disabled member. We should be interested in understanding two issues: (1) do disabled and non-disabled juries award different damage levels?; and (2) can the presence of a disabled jury member alter what non-disabled jurors would do? That presence might be about availability—better able to imagine the life of the disabled with a disabled person present—or about actual communication (“I know it sounds weird, but it actually hasn’t been so bad, and there have been some advantages”).
This also raises something of a philosophical question about what it means to have a jury of our peers. Gilbert’s book suggests that we should think of a victim of a severe accident as having three states or, put differently, as being three different people: the pre-accident person; the wake-of-the-accident person; and the habituated person. The pre-accident person does a poor job of imagining what it would mean to become disabled. Just after the accident, prior to adjusting to the accident, the victim experiences a real loss in happiness. Better after more time passes, the victim adjusts and happiness levels rise (giving rise to the V). Which peer should sit on the jury? The former self or the future self? Or some combination of the two?