Hedonic Damages, Explained

Hedonic damages address the non-pecuniary value of life experiences lost due to injury or death. They are distinct from medical expenses, lost earnings, and pain and suffering.

Quantification draws on VSL literature from EPA, DOT, and peer-reviewed studies (U.S. Environmental Protection Agency, n.d.; Viscusi & Aldy, 2003). Adjustments for the specific case context are documented. Methodology remains controversial in some courts.

Admissibility varies: some courts permit quantified hedonic damages testimony, others admit only qualitative testimony on loss of enjoyment of life, and some exclude the concept entirely (Mercado v. Ahmed, 1992). Confirm jurisdictional rules before relying on this category.

Hedonic damages come into a case in two situations. The first is a survivor with a permanent injury that has removed activities from daily life: recreation, family roles, travel, the ordinary pleasures of being well. The claim says that this loss is real and separate from the wages lost and the care that must be bought, and it asks the finder of fact to value it. The second is a wrongful death claim in a forum that recognizes the decedent's lost enjoyment of life as an element of damages, where the claim belongs to the estate rather than to the survivors. Whether the element is available at all, whether it is folded into pain and suffering or stands alone, and whether it survives the decedent are questions of the forum's law that counsel resolves before an economist is asked to value it. Attorneys confirm the governing rule for their case. The request to the economist follows that decision and comes with a specific question: a figure, an illustration, or an explanation of the concept for a jury that will set its own number.

When a figure is prepared, the hedonic section of the economic report shows its inputs on a single page. It states the range of the value of a statistical life drawn from the published literature and the reason for the point within it that the report uses. It shows the conversion of that lifetime value into a value per year over the person's remaining life expectancy. It identifies the source of the loss proportion, which is a clinical rating from a named evaluator and not the economist's own judgment, and it applies that proportion to the annual value. It then projects the annual loss over the life expectancy from the national life tables, discounts each year to present value at the rate stated elsewhere in the report, and totals the result apart from every other category of loss. A reader can substitute a different proportion or a different point in the range and rework the figure, which is the test the report is written to pass. The method page sets out each step and the source behind it.

Courts take one of three positions. Some admit quantified hedonic testimony and let the jury weigh it. Many admit testimony that explains the concept of lost enjoyment of life and distinguishes it from other losses, but exclude the dollar figure on the ground that the willingness-to-pay literature measures something other than one person's loss (Mercado v. Ahmed, 1992). Some exclude the element or treat it as part of pain and suffering, which the jury values without expert help. Federal courts have varied and many exclude the figure; state courts vary as well, and the posture of a given forum can turn on whether the case is an injury or a death claim. Attorneys confirm the governing rule for their case. The practical consequence is that an economist is usually asked to prepare the qualitative explanation in every case and the figure only where the forum's posture supports it, in a separate section that can be withdrawn without touching the rest of the report.