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Monday

Malpractice! Thank You, God!

Economists who calculate the economic damages due a malpractice victim have to compare what that person would have earned without injury to what he will earn once injured...lost earnings. If the victim is young, one also has to consider what kind of education that perosn will receive, as education leads to different job prospects and different pay. If you go to college, you can generally expect better job security and higher salary than those who don't go to college.

So what affects a person's decision to go to college? The clearest economic factor is the opportunity cost of going: the amount you pay to go to college, plus the amount you could have earned if you didn't go. That can be a high number for most people, but the long-term benefits make it worth it to us. Still, college is an expensive choice.

Now consider a malpractice victim whose arm was crushed by doctors during a botched delivery. One of his arms is less-than-functional, so his family is suing the doctor who permanently injured him at birth. An economist's question: what effect has this injury had on his financial prospects?

If you grant that most manual labor is done by people who do not need a college degree to compete, and most non-manual labor jobs (jobs that are, say, mentally or verbally intensive) require a college education, something strange emerges. A malpractice victim with a crippled arm will need a college degree to compete for jobs in which his injury won't be a liability. Those jobs also, by and large, pay better. His opportunity cost of going to college is lower than it is for the rest of us because his job prospects if he DIDN'T go to college are relatively grim as a disable person. He likely wouldn't make as much as the rest of us if he tried to work without a college degree...

...so his injury has made college less costly. It has made a lucrative decision easier, without significantly harming his chances of success in many college-grads' jobs. In this case, it could be argued, his injury has yielded him economic benefits. How, then, can we quantify the damages the doctor owes this boy? That is, if we're not comfortable arguing that the doctor has done him a favor...

Labels: economics, malpractice