dojN000399.xml

dojN000399.xml

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2001-12-21

Friday, December 21, 2001 10:20 AM
Excessive growth assumptions favor rich at expense of poor

December 21, 2001


Special Master Kenneth R. Feinberg
C/O Kenneth L. Zwick, Director
Office of Management Programs
Civil Division, U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue
Washington, DC 20530

Dear Mr. Feinberg

As a forensic economist who has often testified on the economic consequences
of wrongful death, I applaud your efforts to find a distribution formula
that is both fast and fair. Unfortunately these two noble objectives are on
a collision course.

Your distribution formula is badly flawed because your assumed rates of
compensation growth are much too high. The effect of this mistake is
twofold. First, of the funds available for distribution, too much is
allocated to economic loss and too little to non-economic loss. Second,
although the faulty formula proportionately "overcompensates" everyone for
economic loss, more of the actual dollar amount is allocated to the highly
compensated, at the expense of the less highly compensated. Both of these
consequences tend to favor the rich at the expense of the poor. This is true
despite your passionately and eloquently stated reluctance to play the role
of King Solomon by deciding that some lives are worth more than others.

The appended chart documents my argument using one hypothetical worker, age
25, who earns $18,000 a year, and a counterpart earning ten times that
amount. The excessive compensation growth assumptions in this admittedly
extreme case result in a misallocation to the more highly paid individual of
$1,538,723.

At the very least, I urge you to revise your growth assumptions so that they
are in better accord with economic reality, and with customary courtroom
practice. In today¹s environment, a generalized growth rate of 3.5% is
probably appropriate, rather than the rates of up to 6.6% in your current
formula.

It would be better still, I think, to de-emphasize compensation for economic
loss, and to correspondingly increase your allocation for "pain and
suffering," hewing to your established principle of compensating everyone,
rich or poor alike, by an equal but now presumably much higher amount.

I note that you are performing this service to your country without
compensation, and if I can be helpful to you, I will gladly contribute my
services as well.

Sincerely,


Individual Comment
Rapid City, SD

2001-12-21