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Go Figure; Are punitive damages too high? Two leading scholars crunch the numbers- and come up with very different answers.
The numbers grab your attention: almost $3 million in punitive damages for a spilled cup of McDonald's coffee; $5 billion for the Exxon Valdez oil spill; $145 billion for a Florida tobacco class action… Are outsize jury awards signs that the system needs fixing, or are they aberrations that don't matter much in the long run? It might seem that a close look at the empirical evidence-the hard data on thousands of actual cases-would yield some answers. Two widely respected Ivy League academics, Harvard Law School's W. Kip Viscusi and Cornell Law School's Theodore Eisenberg, have spent years crunching the numbers. Their scholarship represents the gold standard of empirical work on punitive damages. The two scholars, however, come to wildly clashing conclusions. Viscusi, an economist who has been writing about punitive damages since 1991, says the system is broken-thanks largely to the capriciousness of juries … Eisenberg, a lawyer by training, self-taught economist, and an editor of the Journal of Empirical Legal Studies, disagrees. Having studied punitive damages since 1997, he says there is no evidence that the tort system is broken or that juries are irrational in their determination of damages. … By contrast, Viscusi finds randomness and irrationality by focusing on the outliers-very large punitive damages awards that he claims Eisenberg ignores. As Michael Saks, a professor of law and psychology at the College of Law at Arizona State University, says, Viscusi's concern is with the "tip of the tail of the elephant [of punitive damages]" whereas Eisenberg's concern is with the "whole elephant."
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