Helping Judges and Juries Understand the Valuation of Chronic Pain Using the Subjective Well-Being Valuation Method

Abstract

Chronic pain is an issue that forensic economists are often called upon to value. However, some methods of valuing chronic pain are difficult for judges and juries to understand. One approach that is relatively easy for judges and juries to grasp is the subjective well-being valuation method, specifically when using identical twins. We provide an example of such an analysis in which we determine the value of chronic pain by exploiting variation in chronic pain between identical twins in a nationally representative and adequately powered sample using the subjective well-being valuation method. Subjective well-being is measured as global life satisfaction. To measure the impact of chronic pain in a manner independent of the part of the body afflicted with pain, we measured chronic pain multidimensionally using the Brief Pain Inventory Interference Scale. We determine the compensating wealth variation for various levels of chronic pain, controlling for both time-invariant intra-pair effects (twin fixed effects) and a relevant set of time-varying covariates. We find that the mean valuations for the highest level of chronic pain (the value of pain and suffering) ranges from $5 million to $7 million. The range is due to variation in the functional form of the estimating equations.