| By: |
Andrew J. Oswald (University of Warwick and IZA Bonn);
Nattavudh Powdthavee (University of London) |
| Abstract: |
Economics ignores the possibility of hedonic adaptation (the idea that people
bounce back from utility shocks). This paper argues that economists are wrong
to do so. It provides longitudinal evidence that individuals who become
disabled go on to exhibit recovery in mental wellbeing. Adaptation to severe
disability, however, is shown to be incomplete. The paper suggests ways to
calculate the level of compensatory damages for the pain and suffering from
disablement. Courts all over the world currently use ad hoc methods. |
| Keywords: |
disability, adaptation, happiness, legal compensation, wellbeing, GHQ scores |
| JEL: |
D1 I3 I31 K0 |
| Date: |
2006–07 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp2208&r=law |