“An Invaluable Guide to the Jury” 7th Circuit Appellate Court on Hedonic Damages

For years courts used the human capital approach to value economic damages someone might have suffered subsequent to an injury. A model compensating for lost earnings definitely appealed to juries since it was relatively simple and unemotional. Yet the approach had flaws. A person's total value of life is only partially captured by their ability to earn a living. That is, the model failed to take into account the simple joy a person might get from walking, running, participating in hobbies or spending time with loved ones. Many would agree life is more than a paycheck and our worth is determined by more than our earnings.

In 1985, Stan V. Smith introduced a state-of-the-art economic model which attached a dollar amount to the joys of living. The concept he termed as "hedonic damages" has gained national attention since its introduction. Even though the idea of people having a value separate from their earning capacity was not new, some juries concluded that such a value was not trivial.

In 1987 the U.S. District Court of Northern Illinois allowed testimony on the theory of hedonic damages for the first time in Sherrod v. Berry. The 7th Circuit Court of Appeals called Stan's testimony "an invaluable guide to the jury".

The goal of expert testimony in any case is to educate the jury in order to reach sound and appropriate awards. Just as values are placed on lost earnings and household services, the concept of hedonic damages allows the jury the ability to extend damages to the value of life outside of earning money.

Like many other economic models, the theory of hedonic damages uses various mathematical computations, studies and statistics to derive the amount of loss. Hedonic damages have typically been applied in personal injury, wrongful death and civil rights cases. As with any concept, however, it is possible that its applicability could extend outside of this domain.

Dr. Smith's contribution to the fields of economics and law cannot be underestimated. He is nationally known for providing expert testimony on economic and financial matters nationwide.