Q. What does hedonic loss encompass, Mr. Smith?
A. The word “hedonic,” first of all, does not mean hedonistic, which is a modern term. The word hedonic is an economic term and commonly used by economists. It refers to the non-financial attributes of something. So, for example, I in Chicago have a job which has a certain pay. That would be the monetary attribute of that job, the monetary characteristic of it. The job is also in a bank building, so it is safe. That’s a hedonic attribute. It is only several blocks from my house, so that is another attribute. People can raise or lower their wages or increase their medical benefits, but hedonic attributes generally come in a fixed set. If there is a restaurant near your place of employment that you like, that can be a hedonic attribute or an attribute that you value. It doesn’t have a strict price to it. It has a value to you, nonetheless. –from the testimony of Stanley V. Smith in the court record of Ferguson v. Vest
Smith, 42, is obviously a man who places a high value on the hedonic value of his own life. Stylishly trim and bespectacled, with curly, light brown hair brushed into obedience, he’s an economist trained at the University of Chicago, PhD candidate, treasure hunter, entrepreneur, and sometime marathoner. He’s fluent in several languages, including the Yiddish he learned from his mother. Divorced and the father of two, he shares an “equal parenting agreement” with his ex-wife. Smith once turned up at Francis Parker School in a clown suit “to talk on the value of making mistakes,” he says. “Mistakes are midpoints to success. Failures are a necessary ingredient to producing success.”
Smith points out that trials are often held just to determine damages. “The court system is too expensive and too time-consuming–but the NAEA can hold a hearing and render an opinion in 30 days, for a cost of several thousand dollars.”
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A shooting in Joliet is what inspired Smith to devise the formula. A cop named Willie Berry shot a 19-year-old kid named Ronald Sherrod to death for no good reason. On Saturday, September 8, 1979, Sherrod, a mechanic who worked in his family’s garage, was accompanying a customer–who turned out to be a robber on the lam–to try to help him start his car. The pair were stopped by Berry and his rookie partner. The unarmed Sherrod was, it is presumed, reaching for his driver’s license when Berry, who had a record of behaving abusively toward citizens, fired on him, shooting him in the head and killing him instantly.
“Sherrod was a civil-rights case,” says attorney Douglas Rallo. Rallo, who at the time worked for Horwitz & Horwitz, of Chicago, was cocounsel for the boy’s father, Lucien Sherrod. “It’s not a typical wrongful-death case: it represents misconduct by agents of the state. You want to compensate the family, you want to keep it from happening in the future,” says Rallo. “Hedonic damages can be a deterrent. It’s an idea whose time has come.”
A. The next column is the, what I call hedonic reduction. . . . Resulting from the pain, the disability, the disfigurement, based on the assessment of [the psychiatrist], which was at roughly the 83 Percent level [“emotional catastrophe”]. Based upon what we pay to save life in this society, a consensus, we value life in a range, I believe, of $2.7 million dollars. That figure is a conservative estimate. There have been results that have come out in the last year, results showing that we value life conservatively at three and a half, four million. Government economists are actually coming up with figures soon to be published in the five to six million dollar range. Using the $2.7 million figure, which is what we as a society are willing to spend, and I don’t mean that we’ll write the check for 2.7 million, but we’ll buy safety [at] that rate. That translates for the statistically average unknown person to about $63,000 per year life expectancy. An 83 percent reduction in the ability to experience the pleasure or value of life is a reduction of about $50,000 in 1986-’87 dollars. –from Ferguson v. Vest
What’s his definition of “worthwhile”? “Expert testimony can now be used in a lot of cases where formerly it couldn’t,” he says. “I had cases where the clients had been very severely damaged, although they didn’t look it. It’s an area in which his value could be useful. The result in the Ferguson case proved conclusively that I was right, at least this one time. It impressed my colleagues, I can tell you!”
