November 11

 Discount rate- includes pure time preference, price variance (inflation), risk of not getting
money
 In many states, the discount rate is statutory
o Other states have rules that say you shouldn’t discount future payments- $7,000 is
still given as $7,000 ten years from now
 Duncan v. Kansas City Southern Railway
o Louisiana, 2000
o 3 sisters in church van hit by train
o 1 sister died and two were injured, one becoming a quadriplegic
o Medical expenses of 17 million and pain and suffering for 8 million
o Reduced to 10.5 million and 6 million (based on calculations based on evidence
for the medical expenses and the precedents)
o Rule- the role of appellate court is examining for abuse of discretion
o Rule- future medical expenses must be established with some degree of certainty
 How much should pain and suffering be impacted by emotion?
o Concerns- judgments about how much we care impacted by biases, judgment
based on how much one side sells it and goes for the Tony Award, media
attention impacts, impact of jury selection, disadvantages mental pain and
suffering over visible pain and suffering, pain and suffering to defendant (after
they have to pay)
o Should we have something like a schedule for pain and suffering and limits?
o How much should we consider precedent?- Problem- we don’t have good data
(settlements are private) and all cases are different
 Rules regarding precedent make things hard to change when societal
norms change
o Anchoring effect of a cap? Will juries go higher when given an anchor?
 Remittitur and additur
o Remittitur- allowing plaintiff to accept less in exchange for no appeal
o Additur- allowing defendant to pay more in exchange for no appeal
o These are offered by courts
o Most states allow courts to engage in remittitur but not additur
 Dumb argument people use- something important about juries okaying
awards less than what they actually award but not more
 Caps on damages
o Pushed by Chamber of Commerce and AMA
o Result of caps appears to not effective levels of awards but reduce variance
 For insurers, this is great, because things are more predictable and easy to
price in for premiums
o Caps on medical malpractice- data is a bit better because there is a federally-
created database of settlements or judgements above $50,000
o For Texas, which has its own data- med mal reforms do not appear to have
impacted frequency or size of claims or judgments
o Haircuts result- insurance will pay up to x dollars for you, so everyone settles at
the insurance limits because you won’t be able to get more anyway
November 11

 Artifact of Texas’s unlimited homestead exemption- if you declare

bankruptcy, your house, no matter how big and valuable, will be protected
o Problem- it’s a single state study
 Does tort reform impact insurance premiums? Generally, there is very little correlation,
but also bad data
 Wrongful death
o In common law a long time ago, there was no wrongful death action- when a
party dies, all of their claims disappear
o Law and econ problem here- if you are going to injure someone, kill them so they
can’t sue
 Life is worth more than $0, so not considering this is a failure
o But tort is about compensation and you can’t compensate a dead person
o States created wrongful death awards through statutory awards
o Absent statute, how do we calculate the value of life- Statistical Value of Life
literature
 Statutes do not rely on this literature, but regulatory regimes rely on it
when determining cost-benefit analyses
 Different regulatory spheres use different estimates of the value of a life
 Refinements of this literature- quality life-year value, statistical year in a
life value
 Using these calculations is a political problem
o Most statutes either award loss to survivors or loss to estate
 Loss to survivors- more common, defendant pays damages to a dependent
beneficiary
 Loss to estate- defendant pays damages, regardless of existence of
dependency
 Loss of consortium- emotional investment or services, including sex when loss of spouse
o Calibration problem- how do you come up with the number?
o Parents and children were not initially covered under loss of consortium- this has
changed over time