Death, Happiness, and the Calculation of Compensatory Damages

44 Pages Posted: 28 Nov 2007

See all articles by Andrew J. Oswald

Andrew J. Oswald

University of Warwick - Department of Economics; IZA Institute of Labor Economics

Nattavudh Powdthavee

University of Warwick

Date Written: November 2007

Abstract

This paper studies the mental distress caused by bereavement. The largest emotional losses are from the death of a spouse; the second-worst in severity are the losses from the death of a child; the third-worst is the death of a parent. The paper explores how happiness regression equations might be used in tort cases to calculate compensatory damages for emotional harm and pain-and-suffering. We examine alternative well-being variables, discuss adaptation, consider the possibility that bereavement affects someone's marginal utility of income, and suggest a procedure for correcting for the endogeneity of income. Although the paper's contribution is methodological, and further research is needed, some illustrative compensation amounts are discussed.

Keywords: bereavement, damages, happiness, compensation, well-being, GHQ scores

JEL Classification: D1, I3, I31, K0

Suggested Citation

Oswald, Andrew J. and Powdthavee, Nattavudh, Death, Happiness, and the Calculation of Compensatory Damages (November 2007). IZA Discussion Paper No. 3159, Available at SSRN: https://ssrn.com/abstract=1033387

Andrew J. Oswald (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
523510 (Phone)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Nattavudh Powdthavee

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom
+44 (0)2476 528240 (Phone)

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