Sorry, Sorry and Economics, Economics

This would have more credibility had we posted it earlier, but we're coming up on our 100th post and have been trying to figure out a redesign and relaunch of the site. So, please forgive, and stay tuned.

I also have two random economics thoughts, one topical and one not.

Topical: Exxon v. Baker, one of yesterday's Supreme Court decisions, addressed a popular topic in the area of tort reform - punitive damages. In a lawsuit, most damages tend to be compensatory; that is to say, they compensate the plaintiff for losses, be they physical, financial, or even intangible. A punitive damage is levied on top of compensatory ones, because of the egregious behavior of the defendant. Maybe you already know this. In any case. Exxon addressed the reasonableness of punitive damages (in the test case, stemming from the Valdez spill), and ultimately provided a curiously mathy standard for it - a maximum ratio of 1:1 (punitive: compensatory).
But perhaps a bigger source of un-reasonableness in punitive damages, bigger than confusion about their limits, is the nature of their payment. (I'd like to issue a caveat here, and that is punitive damages probably aren't awarded all that often, and worries about them, especially from right-of-center tort attackers, tend to strike me as bogeymanesque.) They are paid to the plaintiff by the defendant, just as compensatory damages would be. This is a little off, I think. The plaintiff, already having been compensated for losses both concrete and intangible, has no further claim on the punitive damages. Rather, the punitive damages need only be paid by the defendant, to punish him; they don't need to be paid to any one person. The requirements of justice are simply that he forgo such-and-such amount of money. So who should get it? Well, when we seek to punish egregious behavior beyond its economic costs, we're treating the egregiousness as a negative externality. It is a cost borne by society - therefore, the public should get it. What would that do? I think so long as a plaintiff's attorney is getting a 40% contingency on that amount, it won't really affect how often they're requested or awarded. But there is something grotesque about a private plaintiff's attorney getting such a big chunk of the public's money. Maybe we'd need a cap too.

Nontopical: Dares as a Veblen good. A Veblen good is one which demand has a direct, instead of the typically inverse, relationship to price. A Veblen good tends to be something snobby, something where greater price leads to greater sales because people like its expensiveness. What do I mean by calling dares a Veblen good? Well, let me back up. I've started a new job and I'm back in a writers' room - a place of many food dares. It occurred to me, when I was asked how much it would take for me to drink a quart of fat free half-and-half, that the number of dares you'd do for free is probably greater than the number you'd do for just one dollar. In other words, there are some dares you'd do for free, but as soon as payment gets involved, $1 is insulting, and you wouldn't do them again until the price was raised to, oh, depending on your station in life, $5. You're losing, not gaining utility, from dollars 1 through 4, and the supply curve has a little dip in it at the beginning.

Since this is on the low end and not the high end, and since it's about supply (of dares) rather than demand (for Cristal), maybe we need a term other than "Veblen good." Suggestions? Did you make it this far in the post?