Hedonic Damages, Explained

Hedonic damages are damages for the loss of enjoyment of life: compensation for what an injury takes away from a person's ability to do and enjoy the things that made up daily life. New Jersey's model civil jury charge defines that loss as "the inability to pursue one's normal pleasure and enjoyment" and directs jurors to determine how the injury has deprived the plaintiff of customary activities as a whole person (New Jersey Courts, 2017). The loss goes by other names, such as the lost pleasure of living: the Seventh Circuit, reviewing an economist's proposed testimony on the "pleasure of living" an injured child would be denied, noted that such damages are sometimes referred to as hedonic damages (Mercado v. Ahmed, 1992).

They are non-economic damages. New York's highest court describes nonpecuniary damages as those that compensate "the physical and emotional consequences of the injury, such as pain and suffering and the loss of the ability to engage in certain activities," and pecuniary damages as those that compensate its economic consequences, such as medical expenses and lost earnings (McDougald v. Garber, 1989). Lost enjoyment is therefore valued apart from economic losses such as future medical costs and lost earnings. The measure is personal: New Jersey's charge names the plaintiff's age, usual activities, occupation and family responsibilities among the facts jurors may consider (New Jersey Courts, 2017), so the same injury can take different things from a hypothetical runner who can no longer train and a parent who can no longer lift a child. The economic damages expert guide explains which experts value the economic losses.

In some forums they are, and in others they are an item of their own. New York's highest court held that loss of enjoyment of life is not to be awarded separately from pain and suffering: the inability to enjoy life is one type of suffering, factored into the general award for nonpecuniary damages, and the court was not persuaded that separate awards would serve any purpose (McDougald v. Garber, 1989). A California Court of Appeal described California law the same way, calling loss of enjoyment of life only one component of a general damage award for pain and suffering, not a separate award (Loth v. Truck-A-Way Corp., 1998). New Jersey's Appellate Division took the other view, describing loss of enjoyment of life as a separate and distinct item of damages that belongs with the disability and impairment an injury causes rather than with pain and suffering (Eyoma v. Falco, 1991), and New Jersey's model charge has the jury return one lump sum for pain, suffering, disability, impairment and loss of enjoyment of life (New Jersey Courts, 2017). Reviewing decisions from other courts in 1989, New York's highest court found that some had resisted separate awards, chiefly for fear of duplicative and excessive awards, others had allowed them, and still others had questioned the practice without finding reversible error (McDougald v. Garber, 1989). Attorneys confirm the governing rule for their case.

In two kinds of case. The first is a living plaintiff in a personal injury case whose injury has taken activities out of daily life, for a time or for good: recreation, family roles, travel, the ordinary pleasures of being well; New Jersey's charge, for example, covers a permanent or a temporary injury (New Jersey Courts, 2017). 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 death, where the forum's law decides whether the decedent's own lost enjoyment is recoverable at all and through which claim: the estate's survival claim, the claim brought for the death itself, or neither. In a New Jersey case, a jury awarded the estate survival damages for the lost enjoyment of life of a man who lay in a coma for over a year before he died, and a separate wrongful death claim was tried for his family; the Appellate Division held that the coma did not preclude such an award, though it ordered a new trial on all damages for other reasons (Eyoma v. Falco, 1991). New Mexico's highest court, by contrast, held that the value of the decedent's life itself is compensable in the wrongful death action, in which the jury determines fair and just compensation for the nonpecuniary rewards the decedent would have reaped from life (Romero v. Byers, 1994). 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.

It depends on the court and on what the testimony offers, because courts have treated a dollar figure and an explanation of the concept differently. The Seventh Circuit, in a case governed by Illinois law, upheld a trial court's exclusion of an economist's figure for the pleasure of living an injured child would lose: reviewing only for an abuse of discretion, it found no reversible error in the conclusion that the testimony would not aid the jury because the economist was no more expert in valuing life than the average person, though it added that it could not state conclusively that the approach was devoid of any merit (Mercado v. Ahmed, 1992). A California Court of Appeal held such testimony inadmissible as a matter of law and ordered a new trial on damages, because a separate figure risked a double recovery for a loss California treats as part of pain and suffering and because no expert may supply a formula for computing the value of life (Loth v. Truck-A-Way Corp., 1998).

The Tenth Circuit, in a diversity case governed by New Mexico law, affirmed a judgment in which the trial court had excluded the economist's figure but let him explain what hedonic damages are and how they differ from other damages, particularly pain and suffering. It called that division an appropriate decision on reliability, said it ventured no opinion on the admissibility of studies that quantify the loss, and noted that New Mexico law allows an economist to give an opinion of the economic value of a plaintiff's loss of enjoyment of life (Smith v. Ingersoll-Rand Co., 2000). Each court applied its own forum's rules on expert testimony, and the guide to federal and state admissibility standards sets those tests side by side. Attorneys confirm the governing rule for their case.

It is a measure of what people are willing to pay for small reductions in their risk of dying, added up across a large group: the total the group would pay for reductions that together mean one fewer expected death in a year. The U.S. Environmental Protection Agency uses such estimates to weigh the benefits of its rules; its mortality risk valuation page, read on October 23, 2026, recommends a central estimate of $7.4 million in 2006 dollars, updated to the year of the analysis, and states that the agency does not place a dollar value on individual lives and that the measure is not an estimate of what any single person or group would pay to prevent the certain death of a particular person (U.S. Environmental Protection Agency, n.d.). A hedonic figure starts from a value of this kind. In the case the Seventh Circuit reviewed, the economist drew a value of the enjoyment of an average person's life from studies of what people pay for safety devices such as smoke detectors and seat belts, of the extra pay workers receive for dangerous jobs and of the cost-benefit analyses behind government safety rules, then applied a percentage range of the child's loss that a medical expert supplied (Mercado v. Ahmed, 1992).

The courts' doubts concern whether the studies measure the value of life at all and whether a group's figure says anything about one person's loss. The economist argued that the method differs from asking jurors because it rests on observed behavior rather than opinion; the Seventh Circuit, accepting that premise for argument's sake, still had serious doubts that such studies measure how much Americans value life, since spending on safety also reflects advertising, government mandates and what people can afford (Mercado v. Ahmed, 1992). A California Court of Appeal said the studies may explain how much consumers will pay for safer products but shed no light on how to value a particular plaintiff's pain and suffering (Loth v. Truck-A-Way Corp., 1998). The Tenth Circuit separated the concept from the method used to compute it: that a life is worth more than its economic productivity it called rather noncontroversial, and the attempt to put a money value on the rest highly controversial (Smith v. Ingersoll-Rand Co., 2000). Attorneys confirm the governing rule for their case. The hedonic damages methodology page sets out the steps an economist follows where a forum allows the figure.

Where a figure is prepared, the hedonic section of the economic report shows each of 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 a statistically average 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 injured person's own life expectancy, 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, in a section the court can admit or exclude without touching the rest of the report. 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. Where the forum allows only an explanation of the concept, the section states no figure.