Punitive Damages: How Judges and Juries Perform

Abstract

A substantial recent literature has documented the inability of jurors to make sound decisions with respect to punitive damages, particularly for health, safety, and environmental torts. Included in this literature are experimental studies documenting the better performance of judges than jurors for the same case scenarios. Recent research by Eisenberg et al. (2002) has suggested, however, that there is no significant difference between the performance of judges and jurors with respect to punitive damages. Our paper provides a critical assessment of this finding as well as a detailed statistical analysis of the state court data upon which the Eisenberg et al. claim is based. Our analysis starts with a review of very large punitive damages awards. We found that 98 percent of the large punitive damages awards were made by juries and only two percent by judges. The jury awards in these large cases were highly unpredictable and were weakly correlated with compensatory damages. We then analyze data from the Civil Justice Survey of State Courts, 1996, which is the data set used by Eisenberg et al. Our analysis of the state court data set contradicts Eisenberg et al.'s analysis. We find that juries are significantly more likely to award punitive damages than are judges; juries award higher levels of punitive damages; and juries are largely responsible for extremely large punitive damages awards. Juries also tend to award higher compensatory damages, which in turn will often boost the punitive damages award. This paper also discusses the reasons why our results contradict the findings by Eisenberg et al.

JEL Classification: K00, K13, K41