IS INJURY COMPENSATION EXCESSIVE?
Article first published online: 13 APR 2010
2004 The Economic Society of Australia
Economic Papers: A journal of applied economics and policy
Volume 23, Issue 2, pages 129–139, June 2004
How to Cite
Abelson, P. (2004), IS INJURY COMPENSATION EXCESSIVE?. Economic Papers: A journal of applied economics and policy, 23: 129–139. doi: 10.1111/j.1759-3441.2004.tb00359.x
- Issue published online: 13 APR 2010
- Article first published online: 13 APR 2010
- Health states;
In Australia, excessive awards in personal damage cases are widely perceived to have created a public liability crisis and cuts in valued services. This paper analyses whether awards for damages are excessive. The paper starts by setting out a normative basis for awards based on welfare economic principles and amounts that individuals are willing to pay to avoid injuries. It then provides estimates of appropriate compensation sums for 27 typical injuries ranging from broken arms to quadriplegia and severe brain damage. There follows an analysis of 192 court awards for injuries greater than $250 000 in New South Wales between 1991 and 2002, including awards for 101 traffic accidents, 64 workers compensation cases, and 27 personal injury cases. The paper concludes that these court awards are broadly consistent with economic estimates for damages and that the awards are generally not excessive.