television commercials that portray the physical challenges of serving and are also designed to appeal to a young person's sense of adventure.
Adam Smith did comment that certain laborers (example: coal miners, id. 112) demand higher pay as a result of employment risks and incorporated that into a general theory of wages. But the leap from that observation to a theory for valuing life was not taken for almost 200 years: It is recognized that the genesis of the willingness-to-pay method of valuing human life is T.C. Schelling's The Life You Save May Be Your Own (reprinted in the Brookings Institution's study Problems in Public Expenditure Analysis (Samuel Chase, Jr. ed., 1966)). In that piece Schelling set out the model's basic framework, and nothing has really changed in that respect since. Schelling's purpose was to suggest a method for conducting cost-benefit analyses in the context of proposed safety regulations. It was another 20 years before the further leap into the courtroom was first taken, and this time the economist was Stan Smith ( Sherrod, 827 F.2d at 205-06 ).
As a method for measuring statistical life in a regulatory context, then, the theory's genealogy traces back only to Schelling, while as a method of calculating damages in court Stan Smith is (or hopes to be) the father of what is really an infant industry. By seeking to portray as a genealogical credential the exceedingly tenuous connection between his willingness-to-pay methodology and Adam Smith's Wealth of Nations, Stan Smith coats his novel use of a quite recent economic theory with a vintage veneer that it does not deserve. Because the sample testimony involving Adam Smith's classic work thus provides little support for Stan Smith's theory and much unfair prejudice when used to influence a lay jury, it too is inadmissible under Rule 403.
4. Empirical Data
After Schelling had suggested a new way to measure the value life, a number of economists set out to determine what results would flow from the application of that theory to the real world. Over a 20-year period they found that the willingness-to-pay model values life somewhere between $ 500 thousand and $ 9 million (see Graphs A and B).
Even if this Court were to find that the methodology underlying those studies constituted "science" as that term is properly understood, it would still have to exclude them under the helpfulness standard of Rule 702. It would really be no use to a jury to hear that others had placed the statistical value of life at greater than $ 500 thousand and less than $ 9 million (especially when told of how those numbers had been arrived at-see Mercado, 974 F.2d at 870-71). And it is frankly bogus to massage those numbers, as both Hedonic Damages and Plausible Result have done, to create a deceptive appearance of precision rather than the true picture of an enormous spread in "value." That is both fatal in Rule 702 terms and a basis for exclusion under Rule 403's balancing test.
5. Underlying Assumptions
As to the basic assumption underlying the economic model-that the amount of individuals' willingness-to-pay for small reductions in the likelihood of death reflects how society values life--this Court shares many of the concerns expressed by our Court of Appeals in Mercado, 974 F.2d at 868-71 and mirrored in much of the academic literature (see, e.g., McClurg, 66 Notre Dame L.Rev. at 103-06; Linnerooth, 17 Econ. Inquiry at 53-54; and sources cited in each). Those criticisms focus on (1) the assumption that people have freedom of choice in deciding to confront risk, (2) the assumption that people perceive risk accurately, (3) the nonmonetary factors that drive many consumer purchases (e.g., advertising) and employment decisions (e.g., civic pride), and (4) the political aspects of government regulation (e.g., budgets, lobbyists). This Court agrees that those considerations go a long way toward undermining the basic premise behind the willingness-to-pay model.
On the other hand, a great deal has been written on the subject over a number of years, some of it in respected academic journals. P. Mem. 9-12 n. 3 lists 58 articles, papers and other works. That listing too is deceptive, for a good deal of it is fluff, but a half-dozen-or-so of the listed articles have been published in discriminating periodicals (see bibliography in Vasile Tega, Management and Economics Journals (1977)). For current purposes it is unnecessary to decide whether there has been enough testing or peer review of the underlying theory to constitute scientific knowledge. Stripped of its empirical moorings, Schelling's basic insight into risk and the value of life cannot possibly assist the jury in calculating damages, so it is plainly inadmissible under the helpfulness prong of Rule 702--regardless of its fate under Rule 702's scientific knowledge requirement.
One other consideration, already touched upon, plays out for the most part under Rule 403 and helps to explain why willingness-to-pay methodology may be an appropriate guide for regulators but not for courts and juries traversing the difficult terrain of valuing life. Those two activities have very different foci: Regulators deal in averages, while courts deal with specific cases. Thus a statistical mean may have validity in the former context, while at the same time it simply creates the already-mentioned deceptive appearance of precision in the latter.
* * *
In sum, viewed in term of "scientific knowledge" the hedonic damages proof tendered by Lillian has thus failed to survive Daubert analysis. So Lillian's motion has failed on the battleground selected by the parties.
Other Specialized Knowledge?
As already indicated, both sides' submissions have taken the position that Smith's testimony is "scientific" in nature and is therefore properly analyzed under Daubert. But at least in the present state of the art (?), a substantial argument might be made for disqualifying that testimony from the "scientific" label in the first instance. That however would not necessarily end the analysis, for Rule 702 also speaks of "other specialized knowledge" (it may be noted that "specialized knowledge" is the label attached by Mercado, 974 F.2d at 871 in upholding a trial judge's decision to bar Smith's testimony).
By its express terms Daubert speaks only of "scientific" testimony and not of "other specialized knowledge" (113 S. Ct. at 2795 n.8). It is an interesting question, not yet resolved by the lower federal courts post-Daubert, whether Daubert analysis extends to the other Rule 702 branches ("technical knowledge" is of course the third category referred to there) and, if so, with what possible adaptations. But that question need not be addressed here, not just because the parties have limited their quarrel to "scientific knowledge" but also because the factors discussed in this opinion demonstrate the inadmissibility of the Smith testimony from any perspective.
All five principal parts of Smith's proposed testimony on the issue of hedonic damages are inadmissible under Rule 702 or Rule 403 or both. Defendants' motion to exclude the testimony is granted in its entirety.
Milton I. Shadur
Senior United States District Judge
Date: May 23, 1995
[SEE Total Value of Life = A-J IN ORIGINAL]