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DraftofJune5,2014

PainandSufferingDamagesinPersonalInjuryCases:AnEmpiricalStudy

Yun‐chienChang,*TheodoreEisenberg,**TsungHsienLi,***MartinT.Wells****

Abstract

Many jurisdictions award pain and suffering damages yet it is difficult for judges orjuries to quantify pain. Several jurisdictions, such as California, cap pain and sufferingdamagesorothernoneconomicdamages,andlegalscholarshaveproposedwaystocontrolsuch damages. Reforms and proposals, however, have been based on limited empiricalevidence. It remainsanopenquestionwhethercomponentsofeconomicdamagesexplainpainandsufferingdamages.ThisstudyemploysauniquedatasetofTaiwandistrictcourtcases and uses detailed information on the components of pecuniary damages. Pain andsufferingdamageshighlycorrelatewiththeplaintiff ’smedicalexpenses,levelofinjury,andwiththeamountrequestedbytheplaintiff.Theassociationwiththeamountrequestedbytheplaintiffpersistswhenoneaccounts for the likelyquantifiable influencesonpainandsufferingdamages,evidenceofapossibleanchoringeffect.Thestrongcorrelationbetweeneconomicdamagesandnoneconomicdamagespersists inalargeU.S.datasetofjudgeandjurytrials, inwhichthenoneconomicfractionoftotaldamagesisnogreaterthanthepainand suffering fraction of total damages in Taiwan. Decision makers consistently producecoherentpatternsofnoneconomicdamages.

Keywords

Painandsufferingdamages,medicalexpenses,anchoringeffect,lostearningcapacity,salary,pecuniarydamages,non‐medicalexpenses,judges,juries,Taiwan

*AssociateResearchProfessor&DeputyDirectorof Center forEmpiricalLegalStudies, InstitutumIurisprudentiae, Academia Sinica, Taiwan. J.S.D., New York University School of Law. Email:kleiber@sinica.edu.tw.Correspondingauthor.WethankforcommentsRonenAvraham,OrenBar‐Gill,OmriBen‐Shahar,BernieBlack,JohnMacDonald,ValerieHans,JimHines,Jr.,WilliamHubbard,XifenLin,ChengxinPeng,WeiZhang,andparticipantsatthe2013ConferenceonEmpiricalLegalStudiesheldatUniversityofPennsylvaniaLawSchool; the2013meetingoftheItalianSociety forLawandEconomics held at the Universita della Svizerra Italiana; the 2014 American Law and EconomicsAssociationAnnualMeetingsheldattheUniversityofChicago;ShanghaiJiaoTungUniversityFacultyof Law at Shanghai, China; 2014 Asian Law and Economics Association AnnualMeeting at Taipei,Taiwan.Wealso thank the judgesat the JudicialYuan,Taiwan,whoprovidedvaluable feedbacks tothisproject.YuehHsunYangprovidedresearchassistance.**The lateHenryAllenMarkProfessorofLawandAdjunctProfessorof Statistical Science,CornellUniversity.***Ph.D.inCriminology,NationalChungChengUniversity,Taiwan.****CharlesA.AlexanderProfessorofStatisticalSciences,CornellUniversity.

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TableofContents

I. INTRODUCTION...........................................................................................................................................3

II. TAIWAN’SPAINANDSUFFERINGDAMAGESLAW..............................................................................5

III. HYPOTHESISANDMETHODOLOGY.......................................................................................................7

A. RESEARCHQUESTIONS.....................................................................................................................................................7B. THEDATA...........................................................................................................................................................................8C. REGRESSIONMODELS.....................................................................................................................................................121. OneEquationModels................................................................................................................................................122. StructuralEquationModel....................................................................................................................................14

IV. FINDINGSANDDISCUSSION..................................................................................................................14

A. MEDICALEXPENSESANDLEVELOFINJURYBESTEXPLAINPAINANDSUFFERINGDAMAGES..........................14B. EVIDENCEFROMREGRESSIONRESULTS......................................................................................................................19C. LOSTSALARYANDPAINANDSUFFERING...................................................................................................................24D. OTHERVARIABLESOFINTEREST..................................................................................................................................271. Victim’sFault...............................................................................................................................................................272. Victim’sAge..................................................................................................................................................................293. PainandSufferingDamagesasaPercentageofTotalDamages.........................................................304. CarAccidentversusMedicalMalpractice.......................................................................................................32

E. ACCOUNTINGFORPLAINTIFFS’REQUESTEDPAINANDSUFFERINGDAMAGES....................................................32

V. RELATIONTOU.S.TRIALOUTCOMES.................................................................................................36

VI. CONCLUSION..............................................................................................................................................41

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I. INTRODUCTION Painandsufferingandothernoneconomicdamagesawardedbycourtshavegeneratedmuchnormativeandpolicydebate intheU.S. (see,e.g.,Bovbjerg,Sloan,and Blumstein 1988; Croley and Hanson 1995; Geistfeld 1995; McCaffery,Kahneman, and Spitzer 1995; Viscusi 1996; Diamond, Saks, and Landsman 1998;Vidmar, Gross, and Rose 1998; Niemeyer 2004; Avraham 2005; Geistfeld 2005;Rabin2005;Sharkey2005;Avraham2006;Sugarman2006;Viscusi2007:120)andelsewhere (Flatscher‐Thoni et al. 2013a; 2013b). In Taiwan, doctors have longcontended that themedicalmalpractice law,which can lead tomillions of Taiwandollars (NTD) in pain and suffering damages, has caused young generations ofdoctors to choosehigh‐profit and low‐risk specialties, such asplastic surgery anddentistry, rather than surgery.1Concerns about the unpredictability of damageshave led to controversial caps on noneconomic damages, such as the CaliforniaMedicalInjuryCompensationReformAct(MICRA)of1975,2andtocapsonpunitivedamages inmanystates.Statutescappingdamageshavegeneratedmuch litigationunderU.S. state constitutions (Love2012). Taiwan’s highest judicial authority, theJudicial Yuan, has commissioned a leading tort scholar to develop a regressionmodeltohelpjudgesdeterminetheamountofpainandsufferingdamages.Whetherpain and suffering damages and other noneconomic awards are too capricious isalso an important question in European legal systems (Karapanou and Visscher2010a).

The stakes of connecting pain and suffering damages to underlyingmeasurablequantitiesarehigh.Noneconomicdamagesareasubstantialfractionofalldamages(Bovbjerg,Sloan,andBlumstein1988;Viscusi1988:207–08;Avraham2006).Lackofarationalbasisforthemwouldcallintoquestionabouthalformoreof tort damages. Pain and suffering damages also are an instance of unboundeddamages, which generate positively skewed award distributions (Kahneman,Schkade,andSunstein1998;Guthrie,Rachlinski,andWistrich2000),whichinturnlead toreformproposals (e.g.,Kahneman,Schkade,andSunstein1998).Theothermajor category of unbounded damages, also skewed, is punitive damages. If painand suffering damages cannot be connected to objective quantities, it might beinferredthatpunitivedamages,whicharelessrelatedtothevictim’sharm,areevenlessexplicable.

Onetestofpainandsufferingdamages iswhethertheyareassociatedwithobjectivedamagesmeasuresincases.Forexample,theamountofmedicalexpense,economic damages, and the severity of injury (Flatscher‐Thoni et al. 2013b) areexpected to be associated with the amount of pain and suffering damages.Significant associations would be evidence of rationality in pain and sufferingawards since greatermedical costs andmore severe injuries likely are associated

1Inafamousrecentcase,threedoctorsandthehospitalthathiredthemhadtopay2.5millionNTD(roughly0.83millionUSDollars)inpainandsufferingdamagesfornegligenttreatment.2Cal.Civ.Code§3333.2(West1997&Supp.2013).MICRAlimitsdamagesfornoneconomiclossesinactionsforprofessionalnegligenceagainsthealthcareprovidersto$250,000.

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withobjectivelymorepainandmoresuffering.Theabsenceofassociationswould,absentotherexplanatoryfactors,beevidenceofarbitrarinessinasystem.

Connections between pain and suffering damages and objective lossmeasureshavebeeninfrequentlystudied,probablybecausedetaileddatararelyareavailable.3Prior empirical investigations of pain and suffering damages utilizedatasets from insurance companies (Viscusi 1988), insurance regulators (Kritzer,Liu,andVidmar2014),U.S.statecourtdatasets(HansandReyna2011),courtcases(Leiter,Thoni,andWinner2012;Flatscher‐Thoni,Leiter,andWinner2013,2014),orcombinationsofsources(Kritzer,Liu,andVidmar2014).But,withtheexceptionof some sources used in Kritzer, Liu, and Vidmar (2014), they lack detailedinformation about pain‐and‐suffering and pecuniary damages. The majordeterminants of pain and suffering damages thus remain unclear. Are they, forexample,stronglyassociatedwiththetotalpecuniarylossormedicalexpenses?Oraretheyindeed,assomehavealleged,utterlyrandom,assuchclaimsaredescribedinAvraham(2006)? Using randomly sampled cases from Taiwan, we provide two innovativeanalysesofpainandsufferingdamages.First,weobtaineddetailedbreak‐downsofdamagescategoriesandassesstheirinfluencesonpainandsufferingdamages.Wefindthatthecareerprofessionaljudgesbasetheirdecisionsonproxiesofpainandsuffering—exactlywhatthelawmandates.Morespecifically,theproxiesaremedicalexpensesandthelevelofinjury.Thevictim’sannualsalary,amongotherfactors, isnotinfluential.Theabsenceofassociationwithsalaryisimportantbecauseitavoidsprovidinghigherpaidworkerswithgreaterpainandsufferingdamagesthanlowerpaidworkers.Thestrengthofthemedicalexpensesassociationisimportantfortworeasons. It is obviously rationally related to pain and suffering and suggests acoherencetothedamagessystem.Inaddition,medicalexpensesoutperformotherpecuniarycomponentsofdamagesinexplainingpainandsuffering.Thisisevidenceof judgesdistinguishingbetweenthecomponentsofpecuniarydamages less likelytobeassociatedwithpainandsuffering. Second, our data include the amount of pain and suffering damagesrequested by the plaintiff. This allows us to assesswhether, holding constant theexogenous influences on pain and suffering damages, the amount the plaintiffrequests isassociatedwith theamount the judgeawards. If therequestedamountindependentlyinfluencestheawardedamount,thatmaybeevidencethatanchoringis at work. Since the defendant almost never supplied the court with a pain andsuffering damages amount, the expected direction of the anchoring effect isreasonably clear. As the plaintiffs’ requests for pain and suffering damagesincreased, anchoring theorywould forecast that the judge awardedmore in suchdamages.

Plaintiff ’s request, holding constant other variables, has a substantial,statistically significant, and positive effect on the pain and suffering award. Thiscould be interpreted as real‐world evidence for the anchoring effect. This

3Sharkey(2005:448–49)notesthatalthoughtheNationalCenterforStateCourtprojecthastriedtocodethecomponentsofeconomicandnoneconomicdamages,thedataweresoincompletethattheCenterwouldrathernotpublishthem.

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contributestotheempirical literatureaswellas tothepolicydebate.Forexample,plaintiffs in a handful of states in the U.S. are not allowed to bring up a concretecompensation amount (the addamnum clause) (Franklin, Cardi, and Green 2008:299),partlyduetoconcernsovertheanchoringeffect.Yetinmanystates,plaintiffscan specify a dollar amount, on the assumption that juries or judges are free toregard it as irrelevant (Diamond et al. 2011: 150–52). Therefore, for policyreformers in either type of jurisdiction, it is critical to ascertain whether the addamnumclausecreatestheanchoringeffect.Ourfindingslendempiricalfoundationtothispolicydebate.

Our Taiwan data are rare in being a non‐U.S. source of pain and sufferingdamagesinformation.WeexploitthesenoveldatabycomparingtheTaiwanresultswith analogous data from U.S. trial outcomes. We find little evidence thatnoneconomicdamagesformahigherpercentageoftotaldamagesintheU.S.thaninTaiwan.Wedo, however, present evidence that noneconomic awards, by bothU.S.juries and judges, are higher per unit of economic damages than in Taiwan. Ourresearchalsoextendsthepriorpainandsuffering literature to thestudyofcareerjudgesinacivil‐lawcountry.

Part II of this article describes Taiwan’s law relating to pain and sufferingdamages.Part III addressesourhypotheses andmethodology. Part IV reports anddiscussesourresults.PartVaddressestheresults’relationtoU.S.data,andPartVIconcludes.

II. TAIWAN’SPAINANDSUFFERINGDAMAGESLAW

Pursuant to Articles 193 and 195 of the Taiwan Civil Code, victims of a

tortious act can request the tortfeasor to pay pecuniary damages and pain andsufferingdamages.4Forexample,medicaldoctorscanbeliabletoapatientforbothtypesofdamagesiftheyfailtodiagnosehercancerorothermajordiseases.CourtsinTaiwan5breakdowndamagesinsuchcasesintotensub‐categories,asshowninTable1.WewillsometimesusethelabelsinTable1torefertodamagestypes.

4Taiwan Civil Code art 193I states: “If a person haswrongfully damaged to the body or health ofanother,andcaused the injuredpersonto loseordecreasehis laboringcapacity,or to increasetheneed in living, the tortfeasors shall bebound tomake compensation to the injuredperson for anyinjuryarisingtherefrom.”TaiwanCivilCodeart.195Istates:“Ifapersonhaswrongfullydamagedtothebody,health,reputation,liberty,credit,privacyorchastityofanother,ortoanother'spersonalityin a severe way, the injured personmay claim a reasonable compensation inmoney even if suchinjuryisnotapurelypecuniaryloss.”5Judges inTaiwanare career judgeswhoserveon thebenchafterpassinga judiciaryexaminationandreceivingtrainingfor2years.Asof2013December,thereisnojurysysteminTaiwan,thoughapilotprogramonintroducing“layobserversystem”isunderway(HuangandLin2013).

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Table1TypesofawardeddamagesLabel Expensetype ExpenseitemA1 Alreadyincurred medicaltreatmentandoperationA2 Alreadyincurred* nursingcare,medicaldevices,andnutritiousfoodE1 Estimatedfuture medicaltreatmentandoperationE2 Estimatedfuture* nursingcare,medicaldevices,andnutritiousfoodA3 Alreadyincurred victim’slostsalaryduringhospitalizationandrecoveryE3 Estimatedfuture victim’sfuturelostsalary(discountedtopresentvalueorpaidas

annuities),ifthetortiousactdecreasesthevictim’scapabilitytoworkandearn

A4 Alreadyincurred increasedtravellingexpenses(e.g.,taxifares toandfromhospitals)A5 Alreadyincurred propertydamages(e.g.,repairfeefordamagedcars)E4 Estimatedfuture otherexpenses(including,amongothers,increasedtravelling

expenses)PS painandsufferingdamages* A2andE2caneachbefurtherdividedintonursingcare,medicaldevicesandnutritiousfood,butduringthecodingprocess,wepoolthesethreeitemstogether. No formulaexists for courts todeterminetheamountofpainandsufferingdamages.Thecivilcodeprovidesnoguidanceandnoconventionalwisdomorrulesof thumb exist for quantifying pain and suffering. The plaintiff generally simplyclaims an amount, contending that it is just, with little supporting evidence. Thecourt decisions usually start with a template discussion (stating that the socio‐economic status, total asset, annual income, age, educational background, etc. ofboth sides, the plaintiff ’s level of pain and harm, the plaintiff ’s negligence, thedefendant’srepentance,andsoonhavetobetakenintoaccount),6thensummarizesthe facts of the case at hand, and at the end awards an amount. Judges likelyconsiderallfacetsofthecaseholistically,perhapstakeaquicklookatthedecisionsbytheircolleagues,andthenfollowtheirgut feelings.It isdoubtfultowhatextentthe factors listed in the template argumentsmatch the key elements in a judge’sheuristicdecision‐makingprocess.7

Plaintiffs do not have an incentive to claim unrealistically high amounts ofpain and sufferingdamages. First, the court fee isproportionate to theamountofclaimedtotaldamages(roughly,around1%ofthetotalclaimeddamages).8Second,thelosingpartyhastopaythecourtfee.Inatortlawsuit,usuallytheplaintiffhastopay part of the court fee if the court does not grant all her claims. The plaintiffgenerally has to pay [1–(court award/plaintiff ’s claim)] × court fee. So claiming a

6Notallcourtsusethesametemplate.Thefactorsthatacourtexplicitlyclaimstotakeintoaccountslightlydiffer.7Inunreportedtables,weexploredthefactorsthatTaiwanesecourtspurporttohaveconsideredindeterminingpainandsufferingdamages.Thetables,however,suggestnoclearpattern.8Pursuant to Article 77‐13 of Civil Procedure Code of Taiwan, the court fee is assessed in thefollowingway:“1,000NTDonthe firstNTD100,000ofthepriceorclaim'svalue,andanadditionalamountshallbetaxedforeachNTD10,000thereafterinaccordancewiththefollowingrates:NTD100on theportionbetweenNTD100,001andNTD1,000,000 inclusive;NTD90on theportion betweenNTD1,000,001 and NTD10,000,000 inclusive; NTD80 on the portion between NTD10,000,001 andNTD100,000,000inclusive;NTD70ontheportionbetweenNTD100,000,001andNTD1,000,000,000inclusive; and NTD60 on the portion over NTD1,000,000,000. A fraction of NTD10,000 shall beroundeduptoNTD10,000forpurposesoftaxingcourtcosts.”

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high amount of pain and suffering damages increases both the court fee and theprobabilityofbearingthecostofahigherpercentageofthecourtfee. Taiwancangenerallybeconsideredasacivil‐lawcountry.Almostall judgesare career judges who may or may not have (most didn’t) practiced law beforeserving on the bench. Most jurists in Taiwan major in law as an undergraduate,whereasaminorityofjuristsaretrainedinaJD‐likegraduateprogram.Juristswhopassthebarexamandfinishsixmonthsofpracticaltrainingarequalifiedtopracticelaw. Juristswhopursue a career as judges or prosecutors have to take the “courtofficer” examination. Thosewho pass the examinationwill receive training in thecourt officer institutes for two years. At the end of their training, based on theirgrades,preferences, andopenings, theywillbecome judgesorprosecutors. Judgesare tenured, and thus presumably less influenced by external political influences.For civilmatters, there are three levels of courts: district courts, appellate courts,and the supremecourt. The former two candeterminebothquestionsof fact andquestions of law, while the supreme court only deals with questions of law.Appealingtotheappellatecourtisasofright,whereaslarge‐stakecasesrepresentedby attorneys can be appealed to the supreme court, subject to its discretion(EisenbergandHuang2012;Chen,Huang,andLin2014).

III. HYPOTHESISANDMETHODOLOGY

A. ResearchQuestions

Our core research question is to identify themajor determinants of court‐adjudicatedpainandsufferingdamages.Ourdatasetcontainsdetailedinformationregarding the components of damages (we can break down, in every case, totaldamagesintotencomponents;seeTable1).Avraham(2006:112)conjecturesthatpainandsufferingdamagesmightbepositivelycorrelatedwithmedicalcosts (seealso Epstein 1999: 442), but points out that the data available only enableresearchers to test pain and suffering damages versus all kinds of pecuniarydamages mixed together (Avraham 2006: 114). Kritzer, Liu, and Vidmar (2014)provideareviewoftherelevantliteratureandararestudyoftherelationbetweennoneconomicdamagesandeconomicdamages.Theyreportamixtureofconsistentandinconsistentpatternsacrossmultipledatasets.Theyconclude(Kritzer,Liu,andVidmar (2014: 38) that “there tends to be considerably more variability in therelationshipbetweennon‐economicandeconomicdamagesthanbetweenpunitiveand compensatory damages.” Our detailed data allow us to assess which sub‐categoryofpecuniarydamagesismoststronglycorrelatedwithpainandsufferingdamages.

The issue is normatively important. For example, if adjudicators useplaintiffs’futurelostsalariesasareferencepoint,white‐collarworkerswouldtendtoreceivemorepainandsufferingdamages,whileit isunclearwhetherhigh‐wageearnerssufferfrommorepainthanthelow‐wageearnersforagivenbodilyinjury,andwhethertherichwouldneedmorecompensationtoeasetheirpain(Avraham2006:114).Pecuniarydamages topropertywouldbeanotherexampleofdubiousanchors.Inlawsuitsinvolvingcaraccidents,suchareferenceeffectwouldgiveLexus

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owners more pain and suffering damages than Toyota owners. Using medicalexpenses as the benchmark would make more sense because medical expensesshould be a reasonable proxy for the seriousness of the injury,which in turn is areasonableproxyfortheamountofpainthevictimendures.9

Our firsthypothesis is that thepainand sufferingawardwill beassociatedwith objective losses and injury severity in the case, as studies ofU.S. juries havefound. Hans and Reyna (2011: 141), using U.S. state court data, found that theamount of noneconomic damages is positively correlated with that of pecuniarydamages. Other empirical studies have also found that that jury‐determined painandsufferingdamagesareneitherrandomnorcapricious;rather,painandsufferingdamages are often some multiples of the plaintiff ’s pecuniary losses, or at leastsignificantly correlatedwith the pecuniary losses (Bovbjerg, Sloan, andBlumstein1988;Viscusi1988:210–211;Geistfeld1995:787)10andinjuryseverity(Flatscher‐Thonietal.2013b).Thelevelofinjuryhasbeenempiricallydemonstratedtoaffecttheamountofpainandsufferingdamages(Vidmar,Gross,andRose1998).Asourdatabasecontainsan indexof the levelof injuryaswellas theamountofmedicalexpense,weareabletoexaminetheeffectsofboththesefactors.

Secondly, judges, in determining a number absent legislative guidance, arelikely to be subject to the anchoring effect.11That is, another number, even anarbitrary or irrelevant one, might influence the amount of pain and sufferingdamages. In a tort lawsuit that leads to awards of pain and suffering damages,severalsalientnumbersmayexist.Pecuniarydamagesorcomponentsofthemmayinfluenceawards.Suchinfluencesmaybepositivelyandnormativelyrelevanttotheamountofpainandsuffering.Moreharm,highermedicalbills,andotherfactorsmayreflect greater pain and suffering andone cannot readily separate out suchdirectinfluences frompossible anchoring effects unrelated to pain and suffering. Judgesappeartobeinfluencedbymeaningfulandotheranchors(Rachlinski,Guthrie,andWistrich 2006). In this article, as elaborated below, we focus on examining theanchoring effect createdby the plaintiff’s requested amount of pain and sufferingdamages.

B. TheData

Usingcarefullychosenkeywords,welimitedthecasesyieldedbyoursearchtoones theplaintiffwon.We limit our search to thedistrict court cases renderedbetweenJanuary1,2008,andDecember31,2012.TheresearchperiodwaschosenbecauseotherresearchteamsinTaiwanhavecollecteddataonsimilarissuesbefore2008andarecollectingdataonsimilarissuesresolvedinappellatecourts.Ourdatathusfillinapotentialdatagap.Moreover,wefocusondecisionsbythecourtoffirst 9Courts in Taiwan will review the receipts of the expenses and only award the plaintiff withreasonable expenses. Due to the national health care system that covers most basic medicaltreatmentsandmedication,onlymedicalexpensesthatarenotcoveredbythehealthcareplans(suchasco‐payandcertainspecialmedicines)canberecoveredbythevictim.10Forcritiqueofthispractice,seee.g.Geistfeld(1995:787).11For introduction to the anchoring effect, see, e.g., Ariely (2008: 25–48); Kahneman (2011: 119–128);TeichmanandZamir(2014).

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instance. As emphasized by Guthrie, Rachlinski, and Wistrich (2007: 4) andEisenberg and Heise (2013), most cases are handled by them, many of thesedecisionsarefinalinthattheyarenotappealed,andsuchcasesavoidtheselectionissuesthatariseinstudyingappellatecases,suchastheparties’decisionstoappealandsettlementofcasespendingappeal. Small‐claimandsimple‐proceedingcasesare excludedbecause the judgments in these casesusuallydonot contain enoughinformationaboutthecases.

We searched for and coded pain and suffering damages cases related topersonalinjury.Welimitoursearchtotwotypesoftortcases:medicalmalpracticeand car accident. After filtering out irrelevant cases, there are surprisingly fewmedical malpractice cases that end with an award of positive pain and sufferingdamages.Wecodedall46ofthem.Bycontrast,morethan3,000caraccidentcasesshowed up in our search. We coded a random sample of one‐tenth of the caraccident cases. To assure geographic representation of the whole country, westratified the sample by judicial district to obtain 10%of car accident cases fromeachjurisdiction.Thisresultedin302caraccidentcasesinourdataset.

We examined whether substantial differences in awards existed acrosscourts.Therewasnosignificantdifferenceintheratioofpainandsufferingdamagestonon‐painandsufferingdamagesacrossthecourts(Kruskal‐Wallisp=0.33;ANOVA(logofratio)p=0.19).12Theabsenceofdifferencepersistedwhenwesubdividedthesampleintocaraccidentcasesandmedicalmalpracticecases.Theabsenceofinter‐court difference persistedwhen using the ratio of pain and suffering damages tototaldamages. As Figure 1 shows, the pain and suffering damages awarded by courts inTaiwan exhibit a somewhat bell‐shaped distribution (after a log transformation)around$10,000US.13Theskeweddistributionsupportingthelogtransformationistypicalofunboundedawardoutcomes.Thepainandsufferingdamages inmedicalmalpracticecases,ifawardedatall,isnolessthan$3,333US(100,000NTD).Inallbutthreecases,courtsinTaiwanawardedpainandsufferingdamagesinmultiplesof 100,000 NTD. The most common amounts were 100,000; 150,000; 200,000;300,000; 400,000; and 500,000 NTD. By contrast, court‐adjudicated medicalexpenses endwith twoormore zeros inonly17 cases.Thispreference for roundnumber innoneconomicdamages is consistentwithHansandReyna (2011:133–137)gist‐basedmodelofjuries.

12Inaregressionmodelthataccountsforthesampledesign,thep‐valueis0.49.13Throughoutthispaper,theconversionrateisUSDollars:TaiwanDollars=30:1.

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Figure1.Distributionofcourt‐adjudicatedpainandsufferingdamagesinTaiwanpersonalinjurycases

Note.AmountsareinU.S.dollarsandthefigureincludes341Taiwancourtcasesdecidedfrom2008through2012. Table 2 provides selected summary statistics of the dataset. Panel Asummarizes continuous variables and Panel B summarizes categorical variables.Caraccidentcasescomprise98%ofthesampleandmedicalmalpracticecases2%.

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1015

2 3 4 5 2 3 4 5

Car accident Medical malpractice

Per

cent

Pain and suffering damages (log10 USD)

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Table2.SummaryStatisticsPanelA:Continuousvariables N Mean Median St.Dev. Min. Max.Court‐adjudicatedPSdamages*† een 12,857 6,667 16,193 167 166,667Plaintiff’srequestedPSdamages* 343 53,826 16,667 366,115 6676,333,334%ofplaintiff’sPSrequestawarded† 343 49 40 30 0 100Court‐adjudicatedmedicalexpenses*†(A1+A2+E1+E2) 315 19,986 2,994 57,696 10 685,511

Court‐adjudicatedpastlostsalary*†(A3) 131 5,892 3500 7,388 115 53,900Court‐adjudicatedfuturelostsalary*†(E3) 93 67,299 33,333 97,663 800 609,021Court‐adjudicatednonmedicalexpenses*†(A4+A5+E4) 224 4,437 1,765 6,795 4 53,900

Yearsofpermanentlostearningcapacity 64 26.0 26.5 13.0 3.6 65Annualincomeusedtocomputefuturelostsalary*†

63 10,082 7,933 5,111 6,000 33,070

%oflostearningcapability† 64 0.53 0.50 0.33 0.02 1Numberofplaintiffs 349 1.26 1 0.69 1 7Numberofdefendants 349 1.12 1 0.46 1 7%ofplaintiff’snegligence 349 17 0 22 0 75%ofcourtfeepaidbyplaintiff 349 56 60 29 0 99.9Plaintiff’sannualincome* 183 14,234 10,560 22,609 0 228,957Defendant’sannualincome* 194 13,653 8,000 25,527 0 328,116Plaintiff’scurrenttotalassets* 114 56,230 0 251,235 05,000,000Defendant’scurrenttotalassets* 125 46,292 0 170524 01,658,380PanelB:Categoricalvariables N %Plaintiffisaminor 348 10Corporatedefendant 348 15Plaintiffwithattorneys 348 39Defendantwithattorneys 348 27Casestransferredfromcriminalcourt 349 60Torttypes 349

Bodyinjury 100Failtodiagnoselatentillness .3

Casetypes 349Caraccident 98Medicalmalpractice 2

Injurytypes 349Injured 76Seriouslyinjured 21Vegetative 3

Typeofplaintiffs(caraccidentscasesonly) 300Pedestrian 15Bicyclist 3Motorcyclist/motorcyclepassenger 70Sedandriver/sedanpassenger 7Truckdriver/truckpassenger 3Other 2

Typeofdefendants(caraccidentscases 301Pedestrian 0.3Motorcyclist 22Sedandriver 56Truckdriver 14Taxidriver 2Other 6

TypeofdefendantsII(caraccidentcases 302Human 84

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Governmentagency 0.7Human+corporation 15Human+governmentagency 0.3

Year 348 2008 16 2009 20 2010 23 2011 18 2012 23Note.PS=painandsuffering.The“A1”andsimilarabbreviationsareexplainedinTable1.Amountscolumnreportsamountsadjustedtoreflecttheuseofa10%sampleforcaraccidentcases.*InUSDollars.†Onlyamountsgreaterthanzeroareincluded.

C. RegressionModels

1. OneEquationModels

In addition to presenting correlation coefficients and other descriptivestatistics,wealsoreportregressionmodels thataccount forstratifying thesamplebycourtdistrict,the10%samplingofcaraccidentcases,andthenonindependenceofobservationsincaseswithmorethanoneplaintiff.Thedependentvariableisthenatural log of the judge’s pain and suffering damages award. The independentvariables considered for inclusion control for types of pecuniary damages,characteristics of both parties, and the nature of the tort action.14Year and courtfixedeffectsarealsoincluded.Themodelstakethefollowingform:

PS=α+βPEC+θPL+ηDF+γTYPE+ρYR+ΩCT+ε

wherePS is the logofpainandsufferingdamages;PECarevariablesrepresentingpecuniarydamages innatural log form;PL andDF areseveralvariablescapturingthecharacteristicsoftheplaintiffandthedefendant,respectively;TYPEisagroupofvariablescontrollingforthenatureofthedisputes,particularlythetortiousacts;YRand CT are dummy variables indicating the years and jurisdictions of the case,respectively.Thecoefficientstobeestimatedareα,β,θ,η,ρ,γ,andΩ;εisanerrorterm.

More specifically, PEC includes one variable, court‐adjudicated medicalexpenses, that isused inallregressionmodels,andonevariable, future lostsalary(E3), that isused inonemodel.15Medicalexpenses includethecostsofmedicines,

14OrenBar‐Gillsuggeststousthatwhetherthevictimwaspresentinthecourtroomandwhetherthevictim’sinjuryisvisibletothejudgemayaffecttheamountofpainandsufferingdamages.Fromthewrittendecisions,wecanhardlytellwhetherthevictimwaspresent.Weinterviewedafewattorneysandjudges,andwereinformedthatmostattorney‐representedvictimsdonotshowupinthecourtroom.Whileafewself‐representedvictimswouldtrytoshowtheirscarstothejudges,mostplaintiffsrelyonphotosandmedicalreportstodemonstratetheirinjuries,becausethetortlawsuitsusuallytakeplacemonthsaftertheaccident,andmostwoundswouldhavehealed.Wegobacktothewrittendecisionsandtrytocodeadummyvariableonwhethertheinjurywouldbevisible,anditturnsoutthat(atleastpartof)theinjuriesinalmostallcasesarevisible.Therefore,wedonotchangeourmodels.15We omit nonmedical expenses from our models, because including them greatly reduces ourdegrees of freedom, and the reported correlation coefficients and unreported regression models

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doctor’svisits,hospitalexpenses,medicaldevices,nursingcare,andnutritiousfood(A1+A2+E1+E2). Inonemodel,we include threevariables thatare componentsoffuture lost salary. They are “number of years of lost earning capacity” (using asquare root transformation to promote normality), “plaintiff ’s annual income” (innatural log),and“percentageof lostearningcapability.”16In fourmodels,damagesfornonmedicalexpensesareincludedasavariable.

PLandDF include the natural log of the number of plaintiffs and natural‐person defendants; a dummy variable for whether the defendants include acorporation; a dummy variable for whether the plaintiff is a minor; a dummyvariableforwhethertheparentoftheminordefendantwillincurvicariousliability(incaraccidentcasesonly);adummyvariableforwhetheronlymedicaldoctorsarethe defendants in medical malpractice cases or whether medical institutions arelisted as defendants;17and dummy variables for whether the plaintiff and thedefendantarerepresentedbyattorneys.18Incaraccidentcasemodels,weconsiderfor inclusiondummyvariables that capturewhether theplaintiffor thedefendantwasapedestrian,rodeabikeoramotorcycle,ordroveasedan,taxi,truck,orothervehicle.We also distinguishwhether the partieswere a driver, a passenger, or apedestrian. In unreported regression models, we also include the plaintiff’s anddefendant’s annual incomes. Alternatively, we include the plaintiff’s current totalassetvalueandthedefendant’scurrenttotalassetvalue.19

TYPEincludesdummyvariablescapturingwhetherthevictimsweremerelyinjured (the reference category), seriously injured, or vegetative. We classify avictimasvegetativeifsuchastate is indicated inthejudgment. Injuryandseriousinjury are distinguished based on the standard in the Criminal Code of Taiwan. Aserious injury is one of the following conditions: 1. Destruction of or seriouslydamagetothesightofoneorbotheyes;2.Destructionoforseriousdamagetothehearingofoneorbothears;3.Destructionoforseriousdamagetothefunctionofspeech,taste,orsmell;4.Destructionoforseriousdamagetothefunctionofoneormorelimbs;5.Destructionoforseriousdamagetothepowerofreproduction;and6.Otherserious injury tobodyor tohealth that iseither impossibleordifficult tocure.

TYPE also includes a continuous variable representing the proportion of theplaintiff’scomparativenegligence(inourdataset,from0to0.75);adummyvariableindicatingwhetherthecasewastransferredfromcriminalcourt;adummyvariablethat distinguishes car accident cases from medical malpractice cases; another indicate that these expenses arenot statistically significantly related to the court‐adjudicatedpainandsufferingdamages.16In somecases, victims loseworkingandearningcapacityonly fora fewyears. In the regressionmodels,weusethethreecomponentvariablesofthefuturelostsalaryonlyifthevictimlosespartofthecapabilitypermanently(thereare64suchobservations)17Inthereportedregressions,wedropthisinsignificantvariabletosavedegreesoffreedom.18We have also tried the natural log of the numbers of attorneys representing the plaintiffs anddefendants.Theresultisessentiallythesame.19AsshownbythefrequenciesinTable2,therearemanymissingvaluesforannualincomeandtotalassetsofplaintiffsanddefendants.Includingthesevariablesintheregressionmodelswouldgreatlyreducethenumberofobservationsanddegreesof freedom.Thusweexcludetheminthereportedmodels.Inunreportedmodels,neithertheincomenortheassetvariablesisstatisticallysignificant.

14

dummy variable that further distinguishes, inmedicalmalpractice cases,whetherdoctors performed sub‐standard treatments/operations or failed to diagnose alatent cancer/illness. “Percentage of court fee paid by the plaintiff,” describedabove,20is also included in the regression models. Because it is based on theplaintiff’sdegreeofsuccess,itmightbequestionableasanexplanatoryvariablebutprovedinsignificantandoflittleeffect.

YRisaseriesofdummyvariables(oneforeachyear)thatcontrolsthetimingof the judgment. CT are a series of court dummy variables that control for thevarianceamong jurisdictions.Wecombine12of the20courts toproducea setoffourdummiesforcourtsthathavefewobservations.Thecombinationsarebasedongeographicproximityandsimilarityineconomicdevelopment.

Although we consider all of the above variables for inclusion in models, wereportresultsforsubsetsofvariablesselectedbasedontheoreticalimportanceandLeastAngleRegression,amodel‐buildingalgorithmthatvaluesparsimonyaswellasaccuracy(Efronetal.2004).

2. StructuralEquationModel

Our data include the amount plaintiffs requested in pain and sufferingdamages. Such information has not been available in prior pain and sufferingstudies.Intheinterestofsimplicity,wedonotincludeitintheabovesingle‐equationregressionmodelsduetoendogeneity.Therequestedamountisnotindependentofotherexplanatoryvariablessuchasmedicalexpensesanddegreeofinjury.Buttherequested amount is of obvious interest and potential importance. It might beexpected to influence the awarded amount in two ways. First, higher requestedamounts put higher numbers before the judge. Anchoring theory suggests thathigher requested numbers will be associated with higher awarded numbersindependently of the merits of an increased award. Second, higher requestedamountsmaybeassociatedwithfactorsthatshouldincreaseawardsbutthatarenotrepresented by observable variables in a single equation regression model. Theplaintiff ’s attorney, in formulating the requested amount, may have access toinformation about the degree or nature of pain and suffering that we cannotobserve. To account for the more complex relationship among the variables inmodelsthatincludetheplaintiffs’request,weemployastructuralequationmodel.

IV. FINDINGSANDDISCUSSION

A. MedicalExpensesandLevelofInjuryBestExplainPainandSufferingDamages

Theamountofpainandsufferingdamagesawarded isnotrandom.Table3shows the correlation coefficients among pain and suffering damages, pecuniarydamages, medical expenses, past and future lost salary, and percentage of lost

20Seenote8supraandaccompanyingtext.

15

earningcapability.Itdemonstratesthatpainandsufferingdamagesarestronglyandstatisticallysignificantlycorrelatedwithpecuniarydamages(oritstwocomponents,medicalexpensesandfuturelostsalary).21Judgedfromthecorrelationcoefficients,“damagesformedicalexpenses”isthecategoryofdamagesmoststronglyassociatedwith the amount of pain and suffering damages. The difference in the correlationcoefficients for the relation between pain and suffering damages and (1) totalpecuniarydamages,and(2)medicalexpensedamagesissmallsoitisreasonabletouseeitherdamagesamounttoexplainpainandsufferingdamages.Nevertheless,itisnotablethatmedicalexpensesareslightlymorestronglyassociatedwithpainandsuffering than are total pecuniary damages. This stronger, though statisticallyinsignificant, association persists in regression models of pain and sufferingdamagesthataccountforthesampledesignandthatincludeonlymedicalexpensesoronlytotalpecuniarydamages,aswellasinregressionmodels that includebothvariablesanddummyvariablesforthelevelofinjury.22

With respect to theotherkey individual componentofpecuniarydamages,lost salary (or its component, percentage of lost earning capability) and medicalexpensesaremorehighlycorrelatedwithpainandsufferingdamages.Theamountof lost salary (incurred before the judgment) is the component most weaklycorrelatedwith pain and suffering damages. The stronger association ofmedicalexpense damageswith pain and suffering damages persists in the 127 cases thatcontain awards for both past lost salary and medical expenses. In a regressionmodelofpainandsufferingdamagesthatincludespastlostsalary,medicalexpensesand seriousness of injury, medical expenses are highly statistically significant(p<0.001), past lost salary is not statistically significant (p=0.350), and thedifference between the two damages components is significant at p=0.126. Thestrongerassociationofmedicalexpensedamageswithpainandsufferingdamagespersistsinthe87casesthatcontainawardsforbothfuturelostsalaryandmedicalexpenses.Inaregressionmodelofpainandsufferingdamagesthatincludesfuturelostsalary,medicalexpensesandseriousnessofinjury,medicalexpensesarehighlystatistically significant (p<0.001), future lost salary is significant (p=0.017)with acoefficient about half as large as that for medical expenses, and the differencebetweenthetwodamagescomponentsissignificantatp=0.385.23

21Note, however, that in 28 of the 47 medical‐malpractice cases, victims request only pain andsufferingdamages.22The number of observations with nonzero amounts for total pain and suffering damages andmedical expenses is similar so directly comparing them is informative. The stronger associationbetweenpainandsufferingdamagesandmedicalexpensedamagespersistsifonelimitsthesampletothe311observationswithdataforbothtotalpecuniarydamagesandmedicalexpensedamages.23Thevarianceinflationfactorforthesemodelsuggestsnoproblemofmulticollinearity.

16

Table 3.Correlationsamongpecuniarydamages,medicalexpenses,lostsalary,andpainandsufferingdamages

Painandsuffering

damages(PS)

Totalpecuniarydamages

(A1+A2+A3+A4+A5+E1+E2+E3+E4)

Medicalexpenses

(A1+A2+E1+E2)

Pastlostsalary(A3)

Futurelostsalary

Total 0.6764 pecuniary <0.001 damages 319 Medical 0.7028 0.8585 expenses <0.001 <0.001 311 311 Past 0.2352 0.7200 0.3774 lostsalary 0.0071 <0.001 <0.001 130 130 128 Future 0.4996 0.8884 0.5077 0.1912lostsalary <0.001 <0.001 <0.001 0.4781 63 64 59 16%of 0.6296 0.8015 0.7236 ‐0.0846 0.7186lostworking <0.001 <0.001 <0.001 0.7553 <0.001capacity 63 64 59 16 64

Note.AbbreviationsareasinTable1.Thefirstrowineachcellshowsthecorrelationcoefficient;thesecond row statistical significance; and the third row N. Damages and expenses are logs. Onlydamages andexpenses that arepositive (non‐zero) are includedhere.Only cases inwhichvictimspermanentlylostworkingcapacityareincludedforfuturelostsalary. Given the strong correlation between medical expenses and pain andsufferingdamages,Table4 furtherexamines thecorrelationsofpainandsufferingdamageswiththefourcomponentsofmedicalexpenses.Itshowsthatfuturecaringexpenseshavethestrongestcorrelationwithpainandsufferingdamages,butsuchexpenses are only awarded in 51 observations. The medical treatments andoperations that the victim has paid for (awarded in most observations) alsodemonstrateintermediatecorrelationwithpainandsufferingdamages.

17

Table 4. Correlationsamongpecuniarydamagesandthemedicalexpensecomponents

Painandsuffering

damages(PS)

Futuremedicaltreatments&

operations(E1)

Futurecaring

expenses(E2)

Incurredmedicaltreatments&

operations(A1)

Future 0.4067Medical 0.0257 treatments&operations 30 30Future 0.7141 0.4260 caring <0.001 0.1466 expenses 51 13 51Incurred 0.5363 0.4834 0.2395 medical <0.001 0.0167 0.1218treatments&operations 293 24 43 296Incurred 0.3451 ‐0.0241 0.3440 0.2388Caring <0.001 0.9349 0.0853 0.0023expenses(A2) 169 14 26 161Note.AbbreviationsareasinTable1.Thefirstrowineachcellshowsthecorrelationcoefficient;thesecondrowthestatisticalsignificance;andthethirdrowN.Damagesandexpensesareinnaturallogform.Onlydamagesandexpensesthatarepositive(non‐zero)areincludedhere.

Figure2 furtherexplores thestrongestcorrelations fromTable3. It showstherelationofpainandsufferingdamagestototalpecuniarydamagesinitsfirstrowofgraphsandtherelationofpainandsufferingdamagestototalmedicalexpensesinits second row of graphs. The graphs further refine the analysis by showing therelationstopainandsufferingdamagesseparatelyforthreeclassesofinjuryandforbothmedicalmalpractice casesandcaraccidentcases.Thestrong linear relationspersist across injury level and case type, except that the number of cases withvegetative injury is toosmall tosupport firm inferences. Therelationsaresimilarforallthreeinjurylevels,assuggestedbythesimilarcorrelationcoefficientsinTable3.

18

Figure2.Scatterplotsofcourt‐adjudicatedpecuniarydamages(firstrow)andmedicaldamages(secondrow)versuspainandsufferingdamages

Note. The first row of graphs shows the relation between pain and suffering damages and totalpecuniary damages. The second row of graphs shows the relation between pain and sufferingdamagesandmedicaldamages.Thecolumnsshowthedatabycharacterizationofinjury.AmountsareinU.S.dollarsandthefigureincludes319(firstrow)and311(secondrow)Taiwancourtcasesdecidedfrom2008through2012.

Sincemedicalexpensesaremorestronglyassociatedwithpainandsuffering

awards than are total pecuniary damages, it is natural to explore the relationbetweenpain and suffering awards and thenonmedical components of pecuniarydamages. Some componentof pecuniary awardsmustbe less strongly associatedwithpainand sufferingdamages. Figure3 shows the relationsbetweenpainandsuffering damages and (1) future lost salary, and (2) total nonmedical pecuniarydamages. The first row of graphs shows the relation between pain and sufferingdamages and future lost salary. Compared to Figure 2, it indicates that theassociationbetweenpainandsufferingdamagesandlostsalaryisnoticeablyweakerthantheassociationbetweenpainandsufferingdamagesandmedicalexpenses.

Although the correlation coefficients between pain and suffering damagesand(1)medicalexpenses,and(2)futurelostsalaryarereasonablysimilarinTable3,thatsimilarityisattributabletopoolingheterogeneousinjurytypes.Separationbyinjury type, as shown in Figure 3, establishes a greater difference in the twoindividual measures’ relations to pain and suffering damages. Indeed, Figure 3indicatesthat,inthe“injury”and“vegetative”categories,nolinearrelationbetweenlostsalaryandpainandsufferingdamagesexists. Thisisconfirmedbycorrelation

23

45

Pai

n &

su

ffer

ing

da

ma

ges

(log

10 U

SD

)

1 2 3 4 5Total pecuniary damages (log10 USD)

Injury

33

.54

4.5

5

2 3 4 5 6Total pecuniary damages (log10 USD)

Serious injury

3.5

44

.55

5.5

4 4.5 5 5.5 6Total pecuniary damages (log10 USD)

Vegetative

23

45

Pai

n &

su

ffer

ing

da

ma

ges

(log

10 U

SD

)

1 2 3 4 5Total medical damages (log10 USD)

Injury

33

.54

4.5

5

2 3 4 5 6Total medical damages (log10 USD)

Serious injury

3.5

44

.55

5.5

4.8 5 5.2 5.4 5.6 5.8Total medical damages (log10 USD)

Vegetative

Car accident case Medical-malpractice case

19

coefficients subdivided by injury level. Table 3’s correlation coefficient of 0.500,significantatp<0.001,doesnotpersistby injury level. Thecorrelationcoefficientfor injury cases is 0.104, significant at p=0.724, for serious injury cases, 0.377,significantatp=0.014,andforvegetativecases,–0.253,significantat0.585. Figure3’ssecondrowofgraphsconfirmsasimilarpatternwhenthefocusshiftsfromlostsalarytototalnonmedicalnonpecuniarydamages.

Figure 3. Scatterplotsofcourt‐adjudicatedfuturelostsalary(firstrow)andtotalnonmedicalpecuniarydamages(secondrow)versuspainandsufferingdamages

Note.Thefirstrowofgraphsshowstherelationbetweenpainandsufferingdamagesandfuturelostsalary. Thesecondrowofgraphsshowstherelationbetweenpainandsufferingdamagesandtotalnonmedicalpecuniarydamages.Thecolumnsshowthedatabycharacterizationofinjury.Amountsare inU.S.dollars and the figure includes64 (first row)and263(second row)Taiwancourt casesdecidedfrom2008through2012.Onlycasesinwhichvictimspermanentlylostworkingcapacityareincludedinthefirstrow.

B. EvidencefromRegressionResults

Part IV.A presents evidence that medical damages are strongly associatedwithpainandsufferingdamagesandthatthenonmedicalcomponentofpecuniarydamages ismuch less strongly associatedwith pain and suffering damages. Thisresult is importantbecausemedical costs aremorenaturally associatedwithpainand suffering than nonmedical costs. Thatmedical costs better explain pain andsufferingdamages thandototalpecuniarydamages isevidence that judgesdonotsimply focusonhighernumbers inassessingpainandsuffering. Theyseemmore

3.5

44

.55

Pai

n &

su

ffer

ing

da

ma

ges

(log

10 U

SD

)

3.5 4 4.5 5Future lost salary (log10 USD)

Injury3

.54

4.5

5

3 3.5 4 4.5 5 5.5Future lost salary (log10 USD)

Serious injury

4.4

4.6

4.8

55

.2

4 4.5 5 5.5 6Future lost salary (log10 USD)

Vegetative

23

45

Pai

n &

su

ffer

ing

da

ma

ges

(log

10 U

SD

)

1 2 3 4 5Nonmed. pecun. damages (log10 USD)

Injury

33

.54

4.5

5

0 2 4 6Nonmed. pecun. damages (log10 USD)

Serious injury3

.54

4.5

55

.5

4.8 5 5.2 5.4 5.6 5.8Nonmed. pecun. damages (log10 USD)

Vegetative

Car accident case Medical-malpractice case

20

influencedbythecomponentofdamages,medicalcosts,mostassociatedwithpainandsuffering.

In further exploring this result, the importanceof both individual damagescategories and injury level support using regression analysis to account formorethanoneinfluenceonpainandsufferingdamages. WhileFigures2and3separatethe influencesby injury level,ourdetaileddata, as summarized inTable2, supplymanyotherpossibleinfluencesonpainandsufferingdamages.Wethereforereportresults based on the regressionmodels described in Part III.C above. As Table 2indicates,wehaveaplethora(over60)ofpossibleexplanatoryvariablestoconsiderusinginregressionmodels. Thevariablesofprimaryinterestarethoseassociatedwithmeasurabledamages,suchasmedicalexpenses,andthedummyvariablesthatqualitatively code for the nature of the injury. We have more additional possibleexplanatory variables than may be reasonable to use given the desirability ofparsimoniousmodels. Aside from the variables of prime theoretical interest, weemployed Least Angle Regression (LARS) (Efron et al. 2004), a model selectionmethod that improves on traditional stepwise methods, to assist with variableselection.

Table5reports five regressionmodels.Models (1)and(2)are thebaselineregression models with all observations and variables beyond those of primeinterest as informedby LARS.Models (3)–(6) include only car accident cases andLARS was separately used on the car accident cases to help select additionalvariables. Models (3) and (4) include variables regarding the defendant but omitvariables regarding future lost salary, to preserve the number of observations.Permanent future lost salary awards in cases with nonmissing covariates werepresent in only 54 cases. Models (2) and (4) include the sum of pecuniarynonmedicalexpensesasanadditionalexplanatoryvariable.Model(5)includesthreevariablesthatarethemajorcomponentsoffuturelostsalary.Model(6)differsfromModel (5) in that the formerusesonevariable thatcaptures theamountof futurelost salaries to replace the three component variables. Model (7) includes onlymedicalmalpracticecasesandonlyvariablesofprimeinterestwereusedduetothesmallsamplesize.

Table 5’s models indicate that medical expenses are highly statisticallysignificantly associated with pain and suffering damages (p<0.001 in all but onemodels).Theexpensesarestronglyassociatedwithpainandsufferingdamages inallmodels.ForModel(1),afteradjustingforthelogtransformations,a1%increasein medical expenses is associated with a 0.28% increase in pain and sufferingdamages. In Model (2), which includes nonmedical pecuniary expenses as anexplanatory variable, the increase associated with a 1% increase in medicalexpensesis0.25%.ThesmallestinfluenceisinModel(6),inwhicha1%increaseinmedicalexpensesisassociatedwitha0.18%increaseinpainandsufferingdamages.

Unlike medical expenses, nonmedical pecuniary damages are inconsistentandsmall in theirassociationwithpainandsufferingdamages. Anassociationatthe 95% level of significance only emerges inModel (4). There a 1% increase innonmedical expenses is associated with a 0.05% increase in pain and sufferingdamagescomparedtothe0.25%increaseassociatedwithmedicalexpenses.BasedonFigure3’s second rowof graphs, this variable ismost stronglyassociatedwith

21

pain and suffering damages in cases of serious injury. If those are excluded, thenonmedicalexpensescoefficient is close tozeroand insignificant (p=0.369) in theremaining 187 cases, and the medical expenses coefficient remains substantial(0.263) and highly significant (p<0.001). In the four models that include bothmedicalexpensesandnonmedicalpecuniaryexpenses, thecoefficients for thetwovariables are statistically significantly different. Thus, medical expenses stronglyinfluence pain and suffering damages; nonmedical expenses weakly andinconsistently influence pain and suffering damages. The regressionmodels thusconfirmjudges’emphasizingmedicalexpensesoverotherdamagesmeasures.

22

Table5.RegressionModelsofCourt‐AwardedPainandSufferingDamages (1) (2) (3) (4) (5) (6) (7) Allcases Caraccidents Med.malp.

Dependentvariable=painandsufferingdamages(log)Seriouslyinjured 0.541*** 0.573*** 0.586*** 0.604*** 0.637** 0.567** 0.343

(0.129) (0.137) (0.131) (0.135) (0.211) (0.196) (0.366)

Vegetative 0.573+ 0.665* 0.612+ 0.676* 0.346 0.376 0.117

(0.318) (0.319) (0.320) (0.303) (0.399) (0.343) (0.638)

Medicalexpense(log) 0.280*** 0.252*** 0.272*** 0.251*** 0.164** 0.172*** 0.206*

(0.027) (0.027) (0.029) (0.028) (0.048) (0.033) (0.098)

Nonmed.pecun.exp.(log)

0.043+ 0.053* -0.210+ -0.266+

(0.025) (0.026) (0.121) (0.153)

%ofP'snegligence 0.452* 0.481* 0.376+ 0.447* 0.845** 0.780**

(0.194) (0.186) (0.199) (0.189) (0.313) (0.283)

Corporatedefendant 0.096 0.251*

(0.125) (0.111)

Vicariousliability 0.288+ 0.379* (0.160) (0.183)

Defendanthadlawyer 0.278* 0.067 0.309** 0.118 (0.110) (0.096) (0.104) (0.094)

Transferfromcrim.ct. -0.053 -0.067 (0.090) (0.092)

Medicalmalpracticecase 0.197 0.217 (0.199) (0.229)

%feepaidbyplaintiff 0.194 0.255 0.295 0.356 (0.183) (0.179) (0.344) (0.294)

Ndefendants(log) 0.279+ 0.331* -0.605* -0.639** (0.148) (0.149) (0.248) (0.229)

%earningcapacitylost 0.636 (0.576)

Annualincome 0.381+ (0.205)

Yrs.lostearnings(sq.rt.) 0.070 (0.053)

Futurelostsalary 0.277+

(0.143)

Failuretodiagnose 0.823

(0.511)

Nofdoctordefendants 0.194

(0.140)

Constant 8.609*** 8.616*** 8.417*** 8.189*** 8.040*** 11.244*** 10.104***

(0.395) (0.381) (0.461) (0.462) (2.073) (1.211) (1.066)

Observations 311 255 283 240 53 54 26

R‐squared 0.589 0.623 0.605 0.629 0.718 0.720 0.611

Note.P=plaintiff.Models(1)‐(4)accountforthecourtstrata,thedifferentialsamplingofcaraccidentandmedicalmalpracticecases,andthenonindependenceofmultipleplaintiffcases.Models(5)‐(7)donotaccountforstrataduetosingle‐observationstrata. Models(1)‐(4)includedummyvariablesforcourtandyear. Models (5)‐(7)clusterstandarderrorsbasedoncase. ***p<0.001**p<0.01, *p<0.05,+p<0.1.

The level of injury (injury, serious injury, and vegetative condition) isgenerally statistically significant, 24 except in Model (7), which has only 26 24IntheU.S.andAustria,empiricalscholarsalsofoundthatseverityofinjuryispositivelycorrelated

23

observations, all medical malpractice cases. Specifically, in the Models (1)‐(6),seriousinjury,ascomparedtominorinjury,isstatisticallysignificantatleastatthe99%level.Vegetativestatus,ascomparedtominorinjury,isstatisticallysignificantat the 95% or 99% level in Models (1)‐(4). The sign and magnitude of thecoefficientsintheModels(1)‐(4)indicatethatvegetativevictimsreceivemorepainand suffering damages than seriously injured victims,who receivemore pain andsuffering damages than those with minor injuries. 25 Plaintiff ’s comparativenegligencecouldnotreasonablybeincludedinModel(7)becauseithadanonzerovalueinonlyonecase.

ThesefindingssuggestthatjudgesinTaiwanappeartosetpainandsufferingdamages according to the severity of the injury. From scholarly literature andhundredsof court caseswe read,wearesure that there isnosettled criterion formeasuring the severity of injury; indeed, no criterion at all has been endorsedbyany court decisions.26Judges probably try to find proxies for pain and suffering.Without large‐scale, in‐depth interviews, we cannot verify how they think.Nevertheless,theregressionresultsshowthatbothmedicalexpensesandlevelsofinjuryhighlycorrelatewiththeirproxies,ifnotthemajordeterminantsthemselves.Medical expensesand levelsof injuryof coursearehighlyassociated,as shown inFigure 4—this could also explain why vegetative status is not always statisticallysignificant at the 5% level.27Note thatmedical expenses are unlikely to influencejudicialdecisionsbybeingananchor,assuchexpensesareacombinationofseveraltypes of incurred and expected medically‐related expenses. Their sums are notcomputedinthewrittenjudgments.Thatis,medicalexpensesarenotonenumber(butlotsofdifferentnumbers)forjudges.Bycontrast,totalpecuniarydamagesareoftenonenumberinjudges’thinkingprocessandwrittenjudgments,butaswehavedemonstratedabove,medicalexpensesaremoreassociatedwithpainandsufferingdamagesthantotalpecuniarydamages.Insum,wedemonstratethattheamountofpain and suffering damages is laid on a reasonable foundation; judges acrossjurisdictionshaveconsistentlyusedmedicalexpensesandlevelsofpaintoquantifythe pain and suffering damages. That being said, aswediscuss below, judges stillsuffer from the anchoring effect and may have adjusted the amount of pain andsufferingdamagesaccordingtofactorsthatarenormativelyhardertojustify.

withpainandsufferingdamages(Vidmar,Gross,andRose1998:296).25VegetativestatusisstatisticallyinsignificantwithsmallercoefficientsintheModels(5)and(6)probablybecausethereareonly7observationsofvegetativestatusinthesetwomodels,andinModel(5),“%ofearningcapacitylost”isalways100%whenvegetativestatusequalsone.26Thereareafewwaystomeasurepercentageoflostearningcapacity,asdiscussedbelow,butmostcasesinourdatasetdonotinvolveassessmentoflostearningcapacity.27Inmodel(1),forexample,ifthevariable“medicalexpenses”isremovedfromtheregression,thevariable“vegetative”willbecomestatisticallysignificantatthe99.9%level.

24

Figure 4 Court-adjudicated medical expenses by injury level

Note.AmountsareinU.S.dollarsandthefigureTaiwancourtcasesdecidedfrom2008through2012.Jittereffectsareapplied.

C. LostSalaryandPainandSuffering

Casesinwhichvictimsrequestcompensationforreducedearningcapabilityare an important subset of observations. For permanent reduction in earningcapability,courtsusuallyawardthevictimalump‐sumconsistingoflostsalaryfromthe judgment to themandatory retirement age28discounted to present value. Thecompensation is mainly based on three factors: years until retirement, currentannual salary, and percentage of lost earning capability. To determine thepercentage, courts often rely on the “schedule of impairment” declared by thegovernmentagencyforlaborinsurancepurposes.29Theannualsalaryisamatterofproof.30

One might expect that reduced earnings would seriously compete with orsupplement medical expenses and the three injury categories as measures ofvictims’painandsuffering.Themoreonelosesearningcapacity,themorepainandsuffering(duetothe injury itselfandthesenseof fulfillmentatworking)onemayincur.Ontheotherhand,abodilyimpairmentthatcausessubstantialsufferingmaynot always reduce earning capability. Losing an eyemay be a case in point. So in 28Themandatoryretirementagewas60yearsoldbefore2008Apriland65yearsoldsincethen.29In34%ofthecases,courtsexplicitlyrefertosuchaschedule.30In56%ofthecases,courtsusethevictim’sactualpre‐injurysalary. In40%ofthecases(usuallywithminorvictim),courtsusetheminimumwagetocalculatelostsalary.

12

34

56

log1

0 of

pas

t an

d fu

ture

med

ical

exp

ense

s (U

SD

)

minor serious vegetativeLevel of Injury

25

somecasesreducedearningsmaybeaninadequateproxyforpainandsuffering.Itis therefore of interest to address the relation between earnings and pain andsuffering in more detail. Model (5) in Table 5 includes three measures ofpermanently reduced earning capability: future lost salary, percentage of lostearning capacity, and years of lost earning capacity. We assess each measure’srelationtopainandsufferingdamagesandfindthattheydolittletoaddtomedicalexpensesasanexplanationofpainandsuffering.

Table 3 shows that future lost salary is positively correlatedwithpain andsuffering damages. Figure 3 suggests this effect is due to pooling heterogeneousinjury cases. Table 5’s regression models do not show future lost salary (or itscomponents) to have a statistically significant impact on pain and sufferingdamages.Model(5)ofTable5 includesthethreefactorsas independentvariables,butnoneof them is statistically significant.Model (6) insteaduses the amount oftotalfuturelostsalary(discountedtopresentvalue)asanindependentvariable,andit is not statistically significant. We have tried several other (unreported) modelspecifications, but the results are consistent: as long as the twodummy variablesrepresenting injury levels and the medical expenses variable are included in theregressionmodels,noneofyearsuntilretirement,currentannualsalary,percentageoflostearningcapability,ortotalfuturelostsalaryisstatisticallysignificant.

Theinsignificanceoffuturelostsalary,aftercontrollingforotherinfluenceonpain and sufferingdamages canbe explainedby two factors. First, Figure3’s firstrow of graphs shows the injury‐dependence of lost salary’s associationwith painandsufferingdamages. Second, inthe40serious injurycasesinwhichbothexist,futurelostsalaryiscorrelatedwithmedicalexpenses(r=0.394;p=0.012),whicharestronglycorrelatedwithpainandsufferingdamages(r=0.710;p<0.001).Intuitively,judgeshavenoobviousreasontogivevictimswhoreceivemorecompensationforlost salaryhigherpainandsufferingdamages,once the judgeshaveaccounted forsuch victims’ higher medical expenses. In models that include both medicalexpenses and lost salary,medical expensesdominateand lost salary’s influence issmallandinsignificant.

Asimilarsetofcorrelationsexplainstherelationbetweenpainandsufferingdamagesandthepercentageof lostearningcapacity. Table3andFigure 5 indicatethatthepercentageof lostearningcapabilityispositivelycorrelatedwithpainandsuffering damages. But lost earning capacity is itself correlated with medicalexpenses (r=0.724; p<0.001), which strongly correlates with pain and sufferingdamages (r=0.740; p<0.001).Another reasonmight be that thepercentageof lostearningcapability isascertained inonlyabout23%ofourobservations, sowedonothavesufficientstatisticalpowertosortoutitseffect.

26

Figure 5.Lostcapacitytoworkversuscourt‐adjudicatedpainandsufferingdamages

Note.AmountsareinU.S.dollarsandthefigureincludes64Taiwancourtcasesdecidedfrom2008through2012.Onlycasesinwhichvictimspermanentlylostworkingcapacityareincluded. Thenumberofyearsofpermanentlylostearningcapabilityisathirdaspectofreducedearningcapacity.Thosewithmoreyearsoflostearningcapacityareyoungerandhavetoendurepainformoreyearsduringtheirexpectedlifetime.Itwouldnotbesurprisingifthecoefficientofthevariable“yearsoflostearningcapacity”werepositiveandstatisticallysignificant.Wefindthatthecoefficientispositivebutstatisticallyinsignificant.Figure6showsthatnosubstantialpositivecorrelationexistsbetweenpainandsufferingandyearsoflostearningcapacityforanyofthethreeinjurylevels.Perhapsjudgesimplicitlyadoptthepsychologicaltheoriesofadaptation(Ariely2011:157–90),whichfindthatvictimsaftersomeyearsadjusttothebodyimpairmentandtheirpainandsufferingdecreases.31

31Anotherwaytotesttheadaptationhypothesisistoincludevictim’sageintheregression.70%ofourobservations,however,donotincludeinformationonage.Inanunreportedsimpleregressionmodel,inwhichtheindependentvariablesincludeonlythetwodummiesonthelevelofinjury,medicalcosts,andage,allbuttheagevariablearestatisticallysignificant.Thisisconsistentwiththeresultreportedinthetext.

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Figure6.Casetype,levelofinjury,yearsoflostearningcapacityandpainandsufferingdamages

Note.AmountsareinU.S.dollarsandthefigureincludes63Taiwancourtcasesdecidedfrom2008through2012.Onlycasesinwhichvictimspermanentlylostworkingcapacityareincluded. Finally, as forannual income,usedasanexplanatoryvariable inModel (6),utilitytheoristshavepositedhowtheutilityofagivendollarchangeswhentherichbecome poor and when a healthy person gets injured. Yet before more solidempiricalevidenceofutilitychangesappears,itshouldbeempiricallyunsurprising(andnormativelyacceptable)forjudgestoregardtheamountofsalaryasirrelevanttopainandsuffering.

D. OtherVariablesofInterest

Other than the level of plaintiff ’s fault, none of the variables other thanmedicalexpensesandinjurylevelareconsistentlystatisticallysignificantatthe95%level.32

1. Victim’sFault

32Unreportedregressionmodelsshowthattheannualincomeorwealthofbothpartiesdonothavestatistically significant effects on the amount of pain and suffering damages.Wehave tried to useboth“positiveincome/wealthonly”and“positiveplusnoincome/wealth”inourmodels.Theresultsarethesame.AsTable2shows,however,manycasesdonotprovideinformationabouttheeconomicconditionsofbothparties.

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Oneinterestingissueiswhetherthevictim’sownfaultinfluencestheamountof pain and suffering damages. In Taiwan, judges take into account the plaintiff ’scomparativenegligenceattheendofthedamagescomputationprocess.Thatis,thevarioustypesofdamagesarefirstdeterminedandsummed,andthenthedeductionpercentage (the comparativenegligenceattributed to thevictim) isappliedacrosstheboard.33Theplaintiff ’scomparativenegligencethusreducesbothherpecuniaryandpainandsufferingdamages.

Figure 7 shows the relation between pain and suffering damages and thepercent of negligence attributed to the plaintiff. It does not show a strongassociationbetweenthetwobutthepositiveslopeofthelineispuzzling.Itdoesnotmakesenseforjudgestoincreasetheamountofpainandsufferingdamageswhenthe victim herself is more at fault. The regression models, however, confirm thefigure; thecomparativenegligencevariableisstatisticallysignificantat leastatthe95%levelin5ofthe6modelsandisconsistentlypositive.

Thebunchingofobservationsatzerofaultforplaintiffsledustoexploremodelsthatalsoincludedadummyvariableequaltozerowhenplaintiff ’sfaultwasnonzeroandonewhenitwaszero.Resultsdidnotmateriallydiffer.Butthefiguresuggeststhat the positive slope is largely attributable to the relatively few caseswith highplaintifffault.InaregressionmodelsimilartothatofModel(1)inTable5,butwithobservationslimitedtothe249casesinwhichfaultwaslessthanorequalto0.4,thecoefficientonthefaultvariablewaspositivebutnotsignificant(p=0.162).Perhapsthecaseswithhighestplaintifffaultresultedinmorepainandsuffering.Negligenceby the defendant and substantial negligence by the victim might lead to worseresultsthanincasesinwhichthevictimismodestlynegligentornotnegligent.

Anotherpossibleexplanationaroseinaroundtablediscussionwithseveralof Taiwan’smost experienced judges. A few judges suggested that judgesmay becompassionate about the tort victim, and, despite the victim’s own fault, beunwillingtosubstantiallyreducethe(post‐deduction)compensation.Hence,judgesmay award higher pain and suffering damages than they otherwise would inanticipationof the fault‐basedreduction.34Nevertheless, therelationshipbetweenthe level of victim’s negligence and the amount of pain and suffering damagescertainlywarrantsmoreempiricalresearch.

33Forinstance,assumethattotalpecuniarydamagesare75dollarsandpainandsufferingdamagesare25dollars—totalcompensationis100dollars.Theplaintiffis40%negligent.Thedefendanthastopay[100*(1‐0.4)]=60.34Sharkey(2005:391)hypothesizesananalogouseffectwhen lawscapdamages,pointingout that“wherenoneconomicdamagesarelimitedbycaps,plaintiffs'attorneyswillmorevigorouslypursue,andjurieswillaward,largereconomicdamages,whichareoftenunbounded.”

29

Figure7.Percentageofplaintiff ’snegligenceandcompensationlevel

Note.AmountsareinU.S.dollarsandthefigureincludes343Taiwancourtcasesdecidedfrom2008through 2012. Jittering is used to facilitate viewing similar data points. The lowess line is anonparametriclinethatbestfitsthedata.Itshowsamodestupwardslopingtrend.

2. Victim’sAgeWediscussedabovewhetherthelengthofenduringpainwouldinfluencethe

amount of the pain and suffering damages. There we examined the years of lostearningcapacity.Herewelookattheageofvictim(notavailableinmanycases).AsFigure 8 shows, courts appear to have a different approach towards age in caraccidentcasesandmedicalmalpracticecases.Inthelatter,theamountofpainandsufferingdamagesdecreaseswith thevictim’sage. Bycontrast, in the former,agedoesnotappeartobeanimportantfactor. Inaregressionmodel, inwhichweaddageasan independentvariable toModel (3)ofTable5,we find, consistentlywithFigure8,agetobestatisticallyinsignificantincaraccidentcases(positivesign;smallcoefficient).Inmedicalmalpracticecases,inamoreparsimoniousversionofModel(7) in Table 5 (including only age, medical expenses, the nature of the medicalmalpractice, and the number of defendant doctors as explanatory variables andexcluding other insignificant variables), age has a negative sign, and a larger andstatistically significant coefficient (p=0.013).Medical expenses remain statisticallysignificantinthatmodel.35 Thedifferent treatmentmightbeexplainedby thedifferent levelofpain inthe two types of cases. Themost critical and systematic differences between thevictims in the two types of cases is that victims in medical malpractice cases 35Duetomissingvaluesofageorothercovariates,thismodelhasonly17observations.

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generally had suffered serious illness before the tortious act worsened victims’health conditions, whereas car accident victims can be presumed to be relativelyhealthy.Medicalmalpracticevictimswereonaverage45yearsoldwhilecaraccidentvictims were on average 39 years old.36Older age plus unhealthy preconditionsprobablyhasalreadycausedsomepaintothevictimsinmedicalmalpracticecasesnot attributable to the tort. Judgesmay reason that the extra pain caused by thetortious act is lower than that in other contexts (younger age plus healthierpreconditions in car accident cases), thus awarding less compensation for thevictim’spainandsuffering.Figure8.Victimage,casetype,andcourt‐adjudicatedpainandsufferingdamages

Note. Amounts are in U.S. dollars and the figure includes 81 car accident cases and 22 medicalmalpracticecasesdecidedinTaiwancourtcasesfrom2008through2012.

3. PainandSufferingDamagesasaPercentageofTotalDamages The prior literature on the pain and suffering damages, as well as theliterature on the relation between ordinary damages and punitive damages, havefocusedon thepercentageof “subjective” damages (that is, thepain and sufferingdamagesor thepunitivedamages) in totaldamages.Figure9contains twosetsof

36AKolmogorov‐Smirnovtestofthedifferenceinagedistributionsforthetwotortcategoriesyieldsp=0.02.Neitherat‐testnoraMann‐Whitneytestyieldedastatisticallysignificantresult.Themajordifferenceintheagedistributionsisattributabletochildren.Ninepercentofvictimsincaraccidentcaseswerelessthan19yearsold;nomedicalmalpracticevictimsinourdatawerelessthan19yearsold.

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boxplots,inwhichthehorizontallinerepresentsthemedianvalueofthepercentageof damages consisting of pain and suffering damages and the boxes show theinterquartilerange.Theleft‐handboxplotsshowsthepainandsufferingawardasapercentage of the combined pain and suffering award plusmedical expenses.Theright‐hand box plot shows pain and suffering award as a percentage of the totalaward.Figure9.Painandsufferingdamagesaspercentagesofdamages

Note. PS=pain and suffering. The figure shows the distributions of pain and suffering awards aspercentagesofdamagesbytorttype.Intheseboxplots,thehorizontallineineachboxisthemedianvalueor50thpercentile. Theheightoftheboxisameasureofspreadofthedistribution,calledtheinterquartilerangeor IQR. It showsthe25th to75thpercentilesof thedistribution. Extendingoutfromtheboxarethe“whiskers.”Thebottomwhiskerrepresentsthe25thpercentileminus1.5timestheIQR. Thetopwhiskerrepresentsthe75thpercentileplus1.5timestheIQR. Datapointsaboveandbelowthewhiskersareconsideredoutliers. Thefigureincludes297caraccidentcasesand45medicalmalpracticecasesdecidedinTaiwancourtcasesfrom2008through2012. Forcaraccidentcases,themedianpercentageofpainandsufferingdamagesinrelationtomedicalexpensesisabout70%andthe25thpercentileisnear50%.So,in about 75% of the cases, the pain and suffering damages exceed the medicalexpenses. For medical malpractice cases, the median percentage of pain andsuffering damages in relation to medical expenses is over 90% and the 25thpercentile is over 70%. In almost all themedicalmalpractice cases, the pain andsufferingdamagesexceed themedical expenses.The right‐handboxplot indicatesthat,forcaraccidents,inabout50%ofthecases,painandsufferingdamagesexceedpecuniary damages (including nonmedical expenses and lost salary). In medicalmalpracticecases,painandsufferingdamagesexceedpecuniarydamagesinalmost

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all(92%)cases.InPartVwediscusstheresultsincomparisontoU.S.results.

4. CarAccidentversusMedicalMalpractice

Caraccidentscasesandmedicalmalpracticecasesexhibitdifferentpatterns.Figure1andunreportedstatisticsshowthatthemean,median,and25and75percentilesofpainandsufferingdamagesinthemedicalmalpracticecasesarehigherthanthoseinthecaraccidentcases.Thestatistics,however,areinsufficienttoconcludethatthecasetypeitselfdrivesthedifferenceintheamountofpainandsufferingdamages.Thecasetypedummyvariableinourregressionmodels(Models1and2inTable5)isstatisticallyinsignificant,suggestingthatotherfactors(suchaslevelofinjury37)leadtomoredamagesforvictimsinthemedicalmalpracticecases.

Inaddition,Table7andFigure9showthatthepainandsufferingdamagestake

upahigherratiooftotaldamagesinmedicalmalpracticecases.Thereareatleasttworeasons.First,assaid,victimsinthemedicalmalpracticecasesreceivemuchmorepainandsufferingdamagesthanthoseinthecaraccidentcases,whereasthoseintheformeronaveragereceiveslightlymoreinpecuniarydamagesthanthelatter.Second,inourdataset,40%oftheplaintiffsinthemedicalmalpracticecasesclaimnothingbutpainandsufferingdamages,sotheirratiosare100%,drivingupthemeanandmedianshowninTable7andFigure9.

E. AccountingforPlaintiffs’RequestedPainandSufferingDamages Wenowexplorewhether,inadditiontotheotherinfluencesonthepainandsufferingaward,theplaintiff’spainandsufferingdamagesrequestisassociatedwiththejudge’spainandsufferingaward.Wecannotmeaningfullymodelthedefendant’srecommendation concerning pain and suffering damages38due to its variety and

37Achi‐squareanalysisontheeffectofcasetypeonthelevelofinjuryproducesapvalueof0.000.Victimsinmedicalmalpracticecasesaremuchmorefrequentlyvegetativeandseriouslyinjured.38Diamondetal.(2011:174)findthatjuriesarelessinclinedtorejectthedefendant’sclaimthantheplaintiff’sclaim.

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lackofexplicitamounts.39Atleastthreereasonssuggestthattherequestshouldberelevant. First, judgeswill not awardmore than plaintiff’s request. The requestthereforecapsthepainandsufferingawardandshouldbenonrandomlyassociatedwithit. Second,plaintiffshaveanincentivetomakereasonablepainandsufferingrequestsbecausethefilingfeeincreasesastherequestedamountincreases.Third,themedicalorotherpecuniarydamagesthatinformapainandsufferingrequestareknowntotheplaintiff,asareotherintangibleaspectsofthecase.

Becausetherequestedamountisnotindependentofotherdamagesfactors,weuseastructuralequationapproachinwhichthestructuralequationincludestheplaintiff’srequestedpainandsufferingamountandanadditionalequationmodelstheplaintiff’srequestedamountasafunctionofobjectivelyobservablefactors.Ourmodel is recursive and therefore is identified. Table 6 reports the results. Themodel accounts for the sample design, as described above and we again rely onLARStoproduceparsimoniousmodels thatnevertheless includethekeyvariablesofinterest.

39The following table summarizes defendants’ responses to plaintiffs’ pain and suffering damagesrequests:

Defendant’sresponse Freq. PercentPlaintiff’sclaimtoohigh 170 48.7DonotcounterPSclaims 94 26.9Counterwithspecificclaims 23 6.6Givenocounterclaimsatall 23 6.6ZeroPSdamages 21 6.0ToopoortopayPSdamages 6 1.7Defertocourt 6 1.7PSdamageswithincertaincap 6 1.7

Total 349 100.0Note.PS=painandsuffering.

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Table6.Structuralequationmodelrelatingtotherequestedpainandsufferingaward

Pain&sufferingaward

Pain&sufferingrequest

Totaleffectsofvariablesonawards

(A) (B) (C)

Plaintiff'spainandsufferingrequest 0.415** 0.415** (0.147) (0.147)

Seriouslyinjured 0.269+ 0.631*** 0.531*** (0.154) (0.130) (0.126)

Vegetative 0.305 0.816* 0.644* (0.266) (0.332) (0.288)

Medicalexpenses 0.214*** 0.214*** (0.034) (0.034)

%ofP’snegligence 0.535** 0.176 0.608** (0.161) (0.260) (0.199)

Vicariousliability 0.241 0.250 0.345* (0.171) (0.204) (0.148)

Defendanthaslawyer 0.071 0.071 (0.094) (0.094)

Plaintiff'snon‐pain&sufferingrequest

0.219*** 0.091**

(0.042) (0.032) Plaintiffhaslawyer 0.344** 0.143

(0.111) (0.079) Constant 4.218* 10.182***

(1.661) (0.510) Observations 310

Note. The model is a structural equation model with the pain and suffering award and requestmodeled simultaneously. Themodel accounts for the court strata, the differential sampling of caraccident and medical malpractice cases, and the nonindependence of multiple plaintiff cases.Standard errors in parentheses. ρ (the correlation between the error terms in the twoequations)=0.03andisstatisticallyinsignificant.***p<0.001,**p<0.01,*p<0.05,+p<0.1.

Themodel is analogous toTable5’s firstmodel to facilitate comparing theeffectofincludingtherequestedpainandsufferingamountwithamodelthatdoesnotincludetherequestedamount.ThepainandsufferingawardequationinTable6uses key explanatory variables fromModel (1) in Table 5 but drops insignificantvariables.Theawardequationshowsastrong, significantassociationbetween therequestedpainandsufferingawardandtheactualpainandsufferingaward.Thisisevidencethattheplaintiff’srequest,independentofobjectivemeasuresofpainandsuffering, is associated with the judge’s pain and suffering award. The requestequationmodels theplaintiff’s requestedpainandsufferingdamages.Rather thanusing court‐adjudicated medical expenses, it uses the plaintiff’s non‐pain and

35

suffering requested damages.40The judge’s award is not used as an explanatoryvariablebecausetheawardisunknownwhentheplaintiffmakesadamagesrequest.Weaddavariable forwhether theplaintiffhasa lawyersince thatmayaffect therequested amount.41 Recall that the LARS model selection criteria eliminatedplaintiffhavingalawyerfromtheestimationofthepainandsufferingawardinthemodelsinTable5.Thepresenceofalawyerforthedefendantisnotincludedinthemodel because the plaintiff does not know whether the defendant has a lawyerwhenthedamagesrequestismade.Therequestequationshowsthattherequestissignificantlyassociatedwithotherexplanatoryvariablesintheawardequation.Thisis of course plausible since the same principal factors that influence the judge’sawardlikelyinfluencetheplaintiff’srequest. Themodelalso suggests themechanism throughwhich lawyersmayaffectthe judge’s pain and suffering award amount. Table 2 shows that only 39% ofplaintiffshadattorneys.Theplaintiffhavingalawyerisnotsignificantinmodelsofthepainandsufferingaward. But it ishighlysignificant in theequationmodelingthe requested pain and suffering amount. This suggests that the lawyer effect isindirectandnotreadilydetectedinsingle‐equationmodels,suchasModel(2),thatdonotmodelthepresenceofalawyer.Thelawyerincreasestherequest,whichinturn increases theactual award.42A single equationmodel that includes thepainandsufferingrequestyieldsresultsconsistentwiththoseinTable6. Havingalawyerisassociatedwithahigherrequesteddamagesamount.Buthavinga lawyer is itself not exogenous sinceoneexpects lawyers tobe sought inand attracted to cases with higher damages. As a check on the influence of themechanism bywhich lawyers are selected,we used Stata’s generalized structuralequation modeling feature to add equations modeling whether plaintiffs anddefendants had lawyers. We assumed that the stakes of the case would bemostinfluentialonalawyer’spresenceforplaintiffs.Fortheplaintifflawyerequation,weusedasexplanatoryvariableswhethertheplaintiffwasseriously injured,whetherthe plaintiff was in a vegetative state, the total damages other than pain andsufferingandthedegreeofplaintiff’s fault.Forthedefendant lawyerequation,weaddedtothesevariableswhetherthedefendantwasacorporationandwhethertheplaintiffhadalawyer.TheresultsreportedinTable6didnotmateriallydifferwhentheseequationswereadded.43

40Naturallogofplaintiff’snon‐painandsufferingrequesteddamagesfollowsabell‐shapedistribution,whileplaintiff’srequestedmedicalexpensesandplaintiff’srequestednon‐medicalexpenses(thetwocomponentsofnon‐painandsufferingrequesteddamages)generallyexhibitabell‐shapedistributionbutbothhaveaspikeinthelefttailbecauseinalotofobservationssuchrequestedamountiszero.41Theplaintiffanddefendantlawyerdummyvariablesaresignificantlycorrelated,withbothpartieseitherhavingornothavinglawyersin73%ofcases.42Ourfindingofapositiveassociationbetweenpainandsufferingrecoveriesandthepresenceofanattorney is consistent with O'Connell and Simon (1972: 23–24)’s finding such an association inautomobile accident cases. Their early study lacked the specific controls available to us. Note thatcolumn(C) inTable6shows that the totaleffectofplaintiff’shiringa lawyeron judicialawards ispositivebutstatisticallyinsignificant(p=0.07).43Plaintiff being represented by a lawyerwas significantly associatedwith serious injury and thepresenceofavegetativestate.Defendantbeingrepresentedbyalawyerwassignificantlyassociated

36

Plaintiff’spainandsufferingrequestbeingassociatedwithhigherpainandsuffering awards could be interpreted as evidence of an anchoring effect.44Afterobjectivemeasuresofthequalitativenatureofharmandthequantitativemonetarylossareaccountedfor,thesizeoftherequestedamountremainsassociatedwiththejudge’s pain and suffering award. Absent an experimental setting, it is difficult toisolateapureanchoringeffectfromotherfactorsthatmayincreasethejudge’spainand suffering award. In the anchoring interpretation, judges are thought of asfollowingthe“anchorandadjust”procedure(TverskyandKahneman1974:1128).Thatis,judgesuseplaintiff ’srequestasthestartingpointandadjustitbytakingintoaccountmedicalexpenses(asaproxyfortheseverityof injury)andpercentageofplaintiff ’snegligence(togiveplaintiffs“adequate”post‐deductioncompensation).

V. RELATIONTOU.S.TRIALOUTCOMES

We have information about the relation between pain and sufferingdamagesandpecuniaryloss,asshownacrosstherangeofpecuniarylossinFigure2andassummarizedinFigure9.GiventheattentiondevotedtothebehaviorofU.S.juries with respect to pain and suffering damages payments, it is of interest tocompare the behavior of Taiwan judges with outcomes of U.S. trials. Doing sorequiresusingadatasetthatcontainsreasonablydetailedinformationonU.S.trialoutcomes. Data that specifically focuses on pain and suffering awards are rare(Avraham2006),soweuseadatasetthatreportsoneconomicandnoneconomicdamages(ofwhichpainandsufferingdamagesarethemajorcomponent).

TheU.S.dataforthispartofourstudycomefromtheCivilJusticeSurveyofStateCourts,aNationalCenterforStateCourts‐BureauofJusticeStatistics(BJS)projectthathasyieldedfourmajordatasets.TheCivilJusticeSurveygathersdatadirectly from state court clerks’ offices on tort, contract, and property casesdisposedofbytrial in fiscalyear1991–1992 and in calendar years 1996, 2001,and2005.Eachof thesetimeperiodscorrespondstoaseparateBJSdataset.Thefirst three data sets covered state courts of general jurisdiction in a randomsampleof46ofthe75mostpopulouscountiesintheUnitedStates.The2001CivilJusticeSurveydataincluded46counties;the1991–1992and1996dataincluded45.45

The2005Civil JusticeSurveydata included156countiesandarethedataused here. The 2005 survey included 46 of the 75 most populous counties

withwhethertheplaintiffhadalawyer,whetherthedefendantwasacorporation,thetotalnon‐painandsufferingamountrequestbyplaintiffs.44ThisfindingisconsistentwiththeexperimentalresultonthesameissuereportedinChapmanandBornstein(1996).ButcompareDiamondetal.(2011:174)whofindthat juries intheArizonaJuryProject aremore inclined to reject plaintiff’s request than defendant’s counter claim, particularlyregardingthepainandsufferingdamages.Theyconjecturethatthegeneralsuspicionaboutplaintiffsmaybeatworkhere.45For a summary of the data andmethodology, see Bureau of Justice Statistics (1995); Bureau ofJustice Statistics (1996); Bureau of Justice Statistics (2004).The initialCivil Justice Surveydataset(1991–1992)includesonlyjurytrials.Thetwosubsequentdatasets,1996and2001,includejuryandbenchtrials.Thethreedatasetsincludeallcompletedtrialsinallthreeyearsinmostofthecounties.

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selected to maintain backwards compatibility with the earlier Civil JusticeSurveys.The2005surveyexpandedcoveragebyadding110countiestorepresentthe3,066smallercountiesnotincludedinthecountry’s75largestcounties.46 The2005 data included all completed trials in the studied counties. The 2005 dataincluded 8,872 trials of an estimated total of 27,128 in state courts in theUnited States in 2005, or 32.7 percent. Based on the sample design, the trialsfrom the 46 counties are estimated to represent 10,813 general bench and civiltrialsdisposedof inthenation’s75most populous counties. Trials from the110smallercountiesareestimated to represent16,315general civil andbench trialsfrom outside the nation’s 75 most populous counties (BJS 2008; authors’calculations).

Weextractedfromthe2005datainformationabouteconomicdamagesandnoneconomic damages for automobile accident cases and medical malpracticecases,thetwocasecategoriesintheTaiwandata.GiventheconcernaboutthehighfractionsofdamagesintheU.S.thatconsistofpainandsufferingawards(Bovbjerg,Sloan,andBlumstein1988;Viscusi1988:207–08;Avraham2006),itisinterestingtocomparethepercentagesofdamagesthatconsistofpainandsufferingawardsintheTaiwantrialsdatawith the fractionsofdamagesthatconsistofnoneconomicdamagesintheU.S.trialsdata.Table7,panelA,reportstheresultsforautomobilecasesandpanelB reports the results formedicalmalpractice cases. For theBJSdata,wereportresultsseparatelyforjudgetrialsandforjurytrials.

Table7.PercentageofDamagesConsistingofNoneconomicDamages

Mean Median Std.dev. NA.Carcases Taiwancar(thisstudy) 50 48 28 297U.S.jurycar(BJS) 49 51 25 532U.S.judgecar(BJS) 51 52 24 21B.Medicalmalpracticecases Taiwanmedical(thisstudy) 73 92 34 45U.S.jurymedical(BJS) 67 73 28 81U.S.judgemedical(BJS) 72 81 29 5

Note.Taiwandataare fromcourtcases from2008through2012. U.S.dataare fromBJS(2008),whichconsistsofstatecourttrialsendingin2005.

TothosewhoattributetoU.S.juriesunusuallyhighpercentagesofdamages

awards that consist of noneconomic damages, the results should be startling.ProfessionaljudgesinTaiwan’scivillawsystemdonotawardmeaningfullylowernoneconomicdamagesasfractionsofrecoveriesthandoU.S.juries.47EvenwithintheU.S.,thetableprovidesnoevidenceofmeaningfuldifferencesbetweenjudges

46For a summary of the data and methodology, see Bureau of Justice Statistics (2008); Inter‐universityConsortiumforPoliticalandSocialResearch(2009)..47TheabsenceofdifferenceisnotattributabletoU.S.states’statutorydamagescapsasonlysixcasesinthetablewereaffectedbystatelawscappingdamages.

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andjuries.ToofewU.S.judgemedicalmalpracticecasesexisttosupportinferencesaboutthatcategoryofcasesbuttheothertablerowscontainreasonablenumberofcases.

Other differences between the two legal systems caution against hastyconclusionsbasedonthetwocountries’data. Forexample,totheextentthattheU.S.datameasureofnoneconomicdamagesincludescomponentsotherthanpainand suffering, the percentage ofU.S. awards that consist of pain and suffering issystematically lower than the percentages Table 7. This suggests that pain andsufferingawardsbyTaiwanjudgeslikelyareahigherpercentageoftotaldamagesthanarepainandsufferingawardsbyU.S. juriesandjudges.48Ontheotherhand,Taiwan’s national care health system coversmost basicmedical treatments andmedication.49 So the medical expense portion of pecuniary damages in Taiwanlikely is lower than that portion of pecuniary damages in the U.S. for similarinjuries. The relatively lower medical expenses would tend to make pain andsuffering damages a higher percentage of total damages than in theU.S. Despitethese and other systemic differences, our results are evidence suggesting theabsence of dramatic differences in the percentages of noneconomic damagesawardedinthetwocountries.

Similarity extends to another important feature of damages, the relationbetween noneconomic damages and economic damages. Figure 10 containsscatterplotsof that relation for theTaiwanandU.S.data. The first row’sgraphscover automobile accident cases and the second row’s graphs cover medicalmalpractice cases,with U.S. cases again separated by judge and jury trial. Eachsubfigure also shows the best fitting regression line from a simple regression ofnoneconomicdamagesasafunctionofeconomicdamages.Tofacilitatecomparison,the figure shows the Taiwan damages in U.S. dollars and uses common x and yscalesforallgraphs.

48Pain and suffering awards were found to not constitute a high proportion of awards in Illinoismedicalmalpracticecases(Vidmar,Robinson,andMacKillop2006).49Seenote9supra.

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Figure 10.RelationBetweenNoneconomicandEconomicDamages,Taiwan&U.S.

Note.Y‐axis isnon‐economicdamages for theU.S.dataandpainandsufferingdamages fortheTaiwandata.Taiwandataarefromcourtcasesfrom2008through2012.U.S.dataarefromBJS(2008),whichconsistsofstatecourttrialsendingin2005.

The figure confirms strong associations between economic and

noneconomicdamagesinthedatasets.Allscatterplots,exceptthatoffivemedicalmalpractice judge‐tried cases, suggest a significant positive relation betweeneconomic and noneconomic damages. As noted in our discussion of the Taiwancaseresults, increasingnoneconomicdamages likelyreflectgreaternoneconomiclosses being associated with greater pecuniary harm, or anchoring on thepecuniaryloss,oracombinationofthetwo.Simpleregressionmodels,reportedinTable8,confirmthefigure’simpression.Eachmodelcontainsasingleexplanatoryvariable,economicdamages,andeithernoneconomicdamages(U.S.data)orpainandsufferingdamages(Taiwandata)asthedependentvariable.

The coefficients for medical malpractice cases across the data sets arereasonably consistent, as shown in panel B.50 But, as suggested by Figure 10’ssecondrow,substantiallylessofthevarianceisexplainedinthejury‐triedmedicalmalpracticecases.Thisisinpartafunctionofpoolingdataacrossheterogeneous 50Kritzeretal.(2014:tbls.3,8)analyzeadditionalpainandsufferingdatasets.Theadditionaldatacome fromCook County (Chicago), California, and other jury verdict reporters,whichmay have asystematic bias towards reporting large awards. Those data for U.S. and Cook County car awardsshow similar coefficients to the U.S. case coefficients in Table 8. Those data for Cook County andCaliforniamedicalawardsshowsimilarcoefficientstothemedicalcoefficientsinpanelBexceptthatadatasetforamixtureofnon‐Californiastatesresultsinacoefficientof0.434(p=0.031).

02

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U.S.states.PanelBbreaksdowntheU.S.medicalcasedataintoNewYorkCountycases, Cook County cases, and other counties’ cases.51 TheU.S. state coefficientssubstantially and significantly differ with large differences in the variance innoneconomicdamagesexplained.

Table8.RegressionModelsofNoneconomicDamages

Coefficient Std.err. p‐value N R‐squared

A.Carcases Taiwanjudgecar(thisstudy) 0.359 0.023 <0.001 292 0.462U.S.jurycar(BJS) 0.917 0.038 <0.001 533 0.521U.S.judgecar(BJS) 0.946 0.107 <0.001 21 0.805B.Medicalmalpracticecases Taiwanjudgemedical(thisstudy)

0.293 0.060 <0.001 27 0.490

U.S.jurymedical(BJS) 0.258 0.083 0.003 81 0.109NYCty. 1.026 0.182 <0.001 14 0.726CookCty. 0.370 0.111 0.004 20 0.381Othercounties 0.087 0.104 0.408 47 0.015

U.S.judgemedical(BJS) 0.110 0.234 0.670 5 0.069Note. Themodels all use economic damages (log10 USD) as the explanatory variable. Taiwanmodelsusepainandsufferingdamages(log10USD)asthedependentvariable. U.S.modelsusenoneconomicdamages(log10USD)asthedependentvariable.

Figure 10 and Table 8 also show differences between the countries. U.S.awardsareconsistentlyhigher.Partofthisdifferencemaybeduetodifferencesingeneral economic conditions. Taiwan’s 2012 per capita purchasing power wasabout74%thatoftheU.S.52AlmostnoTaiwanawardsexceed$1million(US)andseveralarelessthan$100(US).TheU.S.datahaveawardsabove$1millionandnoawards of less than $100.53Panel A shows that the coefficient for economicdamagesismuchsmallerinTaiwancases,suggestingalesserincreaseinpainandsufferingdamagesperunitincreaseineconomicdamagesthaninU.S.cases.Figure 10’s first rowshows thisdifference in slopes. Thisdifferencepersists inmedianregression models, which reduce the influence of the large U.S. awards. Theincreased slope is not limited to U.S. juries as the slopes for the U.S. decisionmakers are similar and do not significantly vary (Hans and Reyna 2011). Thehigher slope may be attributable to U.S. noneconomic damages in the BJS dataincludingcomponentsotherthanpainandsuffering.AsKritzeretal.(2014)note,many state legislatures have defined additional categories of noneconomic

51New York County and Cook County were the only two counties with more than six jury‐triedmedicalmalpracticecaseswonbyplaintiffs.52 International Monetary Fund, World Economic Outlook Database‐October 2013, accessed12/24/2013.53Nevertheless,median car awards inTaiwan are comparable to those in theU.S.: $17,000USD in2012dollarscomparedto$15,000USDintheU.S.in2005dollarsintheBJSstudy.

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damages,includingdisfigurement,lossofsociety,andlossofconsortium.

VI. CONCLUSIONConcernshavebeenexpressedinTaiwanaboutthevariabilityofdamagesfor

pain and suffering.We show that, in car accident andmedical malpractice cases,these damages are strongly correlated with measurable quantities and are notnumbers randomly generated by judges. The amount expended for medicalexpensesandthelevelofinjuryaretwokeyvariablesthatexplainmuchofthepainandsufferingaward.Wealsoprovideevidencethattherequestedamountinfluencestheawardedamountbeyondtheimportantobjectiveinfluencesonawards.Judicialanchoring on the plaintiff’s requested amount may increase pain and sufferingawardsbeyondtheamountforecastbyobservablevariables.

Evidence of the basic rationality of pain and suffering damages hasimplications beyond Taiwan. In the U.S., concerns about damages for pain andsuffering damages have led tomany statutes capping damages. Caps on damageslikelyreduceaccesstocounselgiventhereducedexpectedrecoveries(Garberetal.2009). In the classes of cases studied in the two countries, we show thatnoneconomic damages in the U.S. constitute no higher a percentage of the totaldamagesawardthandopainandsufferingdamagesinTaiwan.GiventheevidenceofrationalityoftheTaiwanesesystem,thisshouldreduceconcernsexpressedbasedonthesubstantialportionofdamagesconsistingofpainandsufferingdamagesintheU.S. (e.g., Viscusi 1988: 207). Both countries’ systems show strong associationsbetweennoneconomicdamagesandeconomicdamages.Reformproposalsinbothcountries should be considered in light of evidence of the consistent evidence ofrationallyfunctioningsystems.

ConcernsaboutpainandsufferingdamagesinTaiwanandtheU.S.shouldalsobeconsideredinlightofdatafromothercountries.KarapanouandVisscher(2010a)comparepainandsufferingawardsfromEuropeancountrycaseswithamountsthatmight be awarded if a metric from health care economics, Quality Adjusted LifeYears(QALYs),wereused.54QALYSarebasedonsurveysofpeopleinvarioushealthconditions.QALYsintwostatesofhealthcanbecomparedtoquantifythedifferencebetween two states. Karapanou and Visscher (2010a) employed a conservativeapproachtomonetizedifferences inhealthconditionsbasedonQALYs,whichtheyusetomonetizepainandsuffering.Theycompare theirconservativeestimates foramputations,spinal injuries,anddeafness toawards incourtcases fromGermany,Greece,Italy,andtheNetherlands.TheyconcludethatpainandsufferingdamagesinEuropearesystematicallytoolow.Theremaybeatradeoffbetweenvariabilityandtryingtoassuresomeminimallevelofappropriatedamages.55 54AQALYisameasureofthevalueoflivingoneyearinaparticularhealthcondition.Eachcondition,suchasamputationofa foot, isassignedaQALY‐weight,varying from0.00(death) to1.00(perfecthealth.TheQALY‐weightassociatedwithaconditionisthesumoftheQALY‐weighthealthconditionforthedurationtheconditionwasexperienced(Hammitt2002).FortheoreticalargumentforusingQuality Adjusted Life Years, a metric from health economics, to better assess pain and sufferingdamages,seeKarapanouandVisscher(2010b).55ThevariabilityinQALYsisabsorbedinthepoolingofdatafromrespondents.Thetechniquethus

42

Lastly,ourTaiwandataareaproductofjudges’behavior;U.S.datacomefrombothjudgesandjuries.GiventhetendencyofthemediaandpolicymakerstofocusonU.S. juries, some similarities areworthnoting. Taiwan judges,U.S. judges, andU.S. juries all produce strong statistically significant associations betweennoneconomicdamagesandeconomicdamages. The threesetsofdecisionmakersalso produce reasonably similar percentages of total awards that consist ofnoneconomic damages. Policy recommendations based solely on data relating tojuries that recommend reducing their responsibility (e.g., Kahneman et al. 1998)omittherelevantcomparisongroup,judges.56

doesnoteliminatevariabilityinindividualresponsestohealthconditions;itpoolstheresponsestoarriveatasinglevalue.ItisnotclearthatpainisfullyrepresentedintheQALYapproachinthesamemannerthatthelegalsystemseekstosupplydamagesforit.56The rationality of pain and suffering damages also reduces concerns about punitive damagesawards.Punitivedamagesawardsareconsistentlystronglyassociatedwithnonpunitivedamagesbutone concern is that the nonpunitive damages themselves may be arbitrary. We show here thatevidence fromTaiwanandtheU.S. indicates thatan importantcomponentofnonpunitivedamagesawards follows a rational pattern, thereby reducing the likelihood that punitive awards related tothemarecapricious.

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