Valuation of Quality of Life Losses Associated with Nonfatal Injury: Insights from Jury Verdict Data

Aiken Deborah Vaughn and Zamula William W.
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Aiken Deborah Vaughn: U.S. Consumer Product Safety Commission
Zamula William W.: U.S. Consumer Product Safety Commission

Review of Law & Economics, 2009, vol. 5, issue 1, 293-310

Abstract: Evaluations of the societal burden associated with injury typically employ a cost of illness (COI) framework, focusing on direct costs, such as medical costs, and indirect costs, such as reduced productivity. However, nonfatal injuries that have long-lasting or permanent consequences can significantly reduce the quality of life for those affected. While COI evaluations are useful in demonstrating the economic burden attributable to injury, they typically do not cover quality of life losses. This study estimates the value of quality of life losses associated with consumer product injuries. We use ex post data based on jury awards in product liability lawsuits involving nonfatal product-related injuries. By combining data on monetary compensation awarded in these cases with estimates of the reduction in quality adjusted life years (QALYs) due to the injury suffered, we are able to estimate the component awarded for quality of life losses. Our findings suggest that these awards are rational and systematic, and that the most significant determinant appears to be injury severity, measured as the QALY loss. The values for life and quality of life losses implied by jury awards appear reasonable (if not somewhat low) when compared to the values obtained in the value of a statistical life literature.

Date: 2009
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DOI: 10.2202/1555-5879.1230

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