Should there be pain-and-suffering damages in tort law? Most legal economists who wrote on the subject that there should not be pain-and-suffering damages in tort law. A minority of scholars thought the decision of whether tort law should provide pain-and-suffering damages is an empirical, or an experimental, question that cannot be armchair-theorized. Yet, all scholars who have done empirical or experimental work to explore the desirability of pain-and-suffering damages reached the conclusion that it is undesirable. In this paper I argue that the majority view cannot serve as a policy-making aid. I side with the minority of scholars who argue it is an empirical or experimental question. I then show why the empirical and experimental evidence provided by scholars who recognized the need for empirical or experimental studies cannot serve as a policy making aid for denying pain-and-suffering coverage in tort law. I then provide preliminary evidence that it may in fact be desirable to have pain-and-suffering damages in tort law. Specifically, I present three experimental studies I researched in order to study the demand for pain-and-suffering coverage. Most importantly, I was interested to know whether participants perceive any difference between monetary and non-monetary coverage. In my studies, participants faced four insurance decisions involving the purchase of four different types of products: padding for roller skates ($40), a portable saw ($100), computer monitor ($250), and tires for a car ($800). For each product, participants had to state the price they were willing to pay, above the price of the product, for monetary and for pain-and-suffering insurance. Before answering the questions, participants were told that they had no other rights whatsoever to a remedy for any loss as result of an accident besides the insurance coverage that they were about to buy. I then compared the demand for monetary coverage with the demand for pain-and-suffering coverage. My results in all studies show that the vast majority of the participants treated the two types of insurance the same, either buying them both or buying neither. Moreover, on average, in all studies the majority of participants (in the state of full information) treated both types of insurance exactly the same, namely, they paid exactly the same amount of money for both types of insurance. Of those who did not treat it the same, the vast majority preferred monetary to pain-and-suffering insurance.


Law and Economics | Torts

Date of this Version