- Research Handbooks in Law and Economics series
Edited by Jennifer H. Arlen
Tort liability for accidents includes economic losses like a car, house, or job that are usually replaceable at a price, and non-economic losses like death or serious bodily injury that are irreplaceable at any price. Compensation for a replaceable loss equals its market price, which makes sense to most people. Compensation for an irreplaceable loss puzzles many people because it has no price. Most people have no idea what perfect “compensation” means for death of a loved one or serious bodily injury. Compensation for economic harms makes perfect sense to them, and compensation for non-economic harms makes little sense to them. Hence our phrase “in compensable harms.” Law should not ask judges or jurors to find damages for death or serious bodily injury without telling them how to do it. Unfortunately, the legal standards to determine these losses are as confused as the sentiments of ordinary people. Without clear guidance from law about damages for in compensable harms, judges make unprincipled decisions and give unintelligible instructions to juries (Jaffe, 1953; Ingber, 1985; Geistfeld, 1995). To make damages for incompensable harms justifiable and consistent, law should develop standards that people can understand.
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