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Pricing Damages for Pain and Suffering in Court: The Impact of the Valuation Method

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  • Magdalena Flatscher‐Thöni
  • Andrea M. Leiter
  • Hannes Winner

Abstract

We analyze the pricing of pain and suffering and, in particular, whether the corresponding compensation for pain and suffering is affected by a court's approach to valuing such damages. For this purpose, we use data on pain and suffering verdicts in Austria, where courts are generally free to choose between a per‐diem and a lump‐sum scheme to assess damages for pain and suffering. The per‐diem approach was introduced in 1990 but was not adopted in all Austrian provincial courts. This enables us to estimate the causal impact of the change in calculation schemes. Applying a difference‐in‐difference framework to estimate this treatment effect, we observe that courts increased their compensation by about 38 percent to 59 percent after the implementation of the per‐diem scheme.

Suggested Citation

  • Magdalena Flatscher‐Thöni & Andrea M. Leiter & Hannes Winner, 2013. "Pricing Damages for Pain and Suffering in Court: The Impact of the Valuation Method," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 10(1), pages 104-119, March.
    • Handle: RePEc:wly:empleg:v:10:y:2013:i:1:p:104-119
    DOI: 10.1111/jels.12004
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    References listed on IDEAS

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    3. Calfee, John E & Rubin, Paul H, 1992. "Some Implications of Damage Payments for Nonpecuniary Losses," The Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 371-411, June.
    4. Lott, John R, Jr & Manning, Richard L, 2000. "Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards? Earnings Premiums and Cancer Risks," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 99-130, January.
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    Cited by:

    1. Sofia Amaral-Garcia, 2015. "Non-economic Damages in Medical Malpractice Appeals: Does the Jurisdiction Make a Difference?," Discussion Papers of DIW Berlin 1506, DIW Berlin, German Institute for Economic Research.
    2. Yun‐chien Chang & Theodore Eisenberg & Han‐Wei Ho & Martin T. Wells, 2015. "Pain and Suffering Damages in Wrongful Death Cases: An Empirical Study," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(1), pages 128-160, March.
    3. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2019. "Investigating medical malpractice victim compensation: micro-level evidence from a professional liability insurer’s files," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(8), pages 1249-1260, November.

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