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balderdash111 · 10-11-2004, 07:14 AM

I don't actually agree that capping punitive damages or so-called "pain and suffering" damages is\e a good thing.

Granted, some juries (more and more of them today, it seems, based on what you see in the media) take the possibility of these damages as a license to give individual plaintiffs a windfall, but should this abuse swallow the overall benefit?

Punitive damages arose primarily because some companies did a cost-benefit analysis of making their products safer and decided that they would save money by paying out for injuries rather than fixing a defect.

A famous example is the Ford Pinto - Ford knew the Pinto's gas tank could explode in certain kinds of impacts, but they did an analysis. They calculated that the cost to fix the defect was $x dollars, and that, based on the number of accidents to be expected and the injuries that were likely to result, the cost of leaving the defect as is was $y. Turns out x > y, so they left the defect as is and people died.

Punitive damages introduce a variable to the equiation, so that the cost of ignoring defect can be larger than the cost of fixing it. Without this variable, Ford would -- indeed, from the perspective of investors, should -- make the same decision as it did for the Pinto.

So, I'm not really on the "curb punitive and pain-and-suffering damages" bandwagon.

(As a side note, there is an interesting discussion to be had about the fact that, notwithstanding the possibility of punitive damages, etc., companies all over the world make these kinds of cost benefit analysese every day, and people die because of their conclusions. The car companies could make cars virtual tanks and all but ensure passenger safety in most accidents, but it would raise the cost of the car too high for it to be affordable by consumers.

Obviously, nobody is seriously considering producing a line of tanks, but these kinds of decisions are made on a smaller scale every day. Cars could have all sorts of incremental improvements for safety, but the companies don't put them in. Why not? When people inevitably die who would have lived had such-and-such safety mechanism been in place, should the company be liable for not installing it? Why or why not? If not, should Ford have been liable for not fixing the Pinto?)

EDIT:

I should note, of course, that my analysis does not really apply to the question of punitives and pain and suffering damages in malpractice suits against doctors, since they are not deciding to make mistakes based on cost/benefit analyses.

10-11-2004, 07:14 AM	#8 (permalink)
balderdash111 Psycho	I don't actually agree that capping punitive damages or so-called "pain and suffering" damages is\e a good thing. Granted, some juries (more and more of them today, it seems, based on what you see in the media) take the possibility of these damages as a license to give individual plaintiffs a windfall, but should this abuse swallow the overall benefit? Punitive damages arose primarily because some companies did a cost-benefit analysis of making their products safer and decided that they would save money by paying out for injuries rather than fixing a defect. A famous example is the Ford Pinto - Ford knew the Pinto's gas tank could explode in certain kinds of impacts, but they did an analysis. They calculated that the cost to fix the defect was $x dollars, and that, based on the number of accidents to be expected and the injuries that were likely to result, the cost of leaving the defect as is was $y. Turns out x > y, so they left the defect as is and people died. Punitive damages introduce a variable to the equiation, so that the cost of ignoring defect can be larger than the cost of fixing it. Without this variable, Ford would -- indeed, from the perspective of investors, should -- make the same decision as it did for the Pinto. So, I'm not really on the "curb punitive and pain-and-suffering damages" bandwagon. (As a side note, there is an interesting discussion to be had about the fact that, notwithstanding the possibility of punitive damages, etc., companies all over the world make these kinds of cost benefit analysese every day, and people die because of their conclusions. The car companies could make cars virtual tanks and all but ensure passenger safety in most accidents, but it would raise the cost of the car too high for it to be affordable by consumers. Obviously, nobody is seriously considering producing a line of tanks, but these kinds of decisions are made on a smaller scale every day. Cars could have all sorts of incremental improvements for safety, but the companies don't put them in. Why not? When people inevitably die who would have lived had such-and-such safety mechanism been in place, should the company be liable for not installing it? Why or why not? If not, should Ford have been liable for not fixing the Pinto?) EDIT: I should note, of course, that my analysis does not really apply to the question of punitives and pain and suffering damages in malpractice suits against doctors, since they are not deciding to make mistakes based on cost/benefit analyses. Last edited by balderdash111; 10-11-2004 at 09:52 AM..