Research Handbook on the Economics of Torts
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Research Handbook on the Economics of Torts

Edited by Jennifer H. Arlen

This pioneering Handbook contains specially-commissioned chapters on tort law from leading experts in the field. This volume evaluates issues of vital importance to those seeking to understand and reform the tort law and the litigation process, taking a multi-disciplinary approach, including theoretical economic analysis, empirical analysis, socio-economic analysis, and behavioral analysis. Topics discussed include products liability, medical malpractice, causation, proximate cause, joint and several liability, class actions, mass torts, vicarious liability, settlement, damage rules, juries, tort reform, and potential alternatives to the tort system. Scholars, students, legal practitioners, regulators, and judges with an interest in tort law, litigation, damages, and reform will find this seminal Handbook an invaluable addition to their libraries.
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Chapter 17: Damages for incompensable harms

Robert Cooter and David DePianto


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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