Economic vs. Non-Economic Damages in Tort Law

Economic vs. Non-Economic Damages

When a person is injured by another person’s wrongful conduct, tort law may provide a monetary remedy. But not all injuries are financial in nature.

A broken leg may generate hospital bills and lost wages. Those losses can be calculated relatively directly. But the same injury may also cause pain, anxiety, loss of enjoyment of life, or permanent disability. Those harms are real, yet they do not come with an obvious price tag.

This distinction gives rise to two fundamental categories of compensatory damages:

• Economic damages, which compensate for identifiable financial losses; and
• Non-economic damages, which compensate for intangible harms that do not have a precise market value.

Understanding the difference is essential because damages are not simply a calculation of how much money a plaintiff has spent. Tort law attempts to respond to a much broader concept of injury.

Cornell Law School Legal Information Institute — Tort

1. What Are Economic Damages?

Economic damages are monetary losses that can generally be identified, documented, and calculated using objective evidence.

They are sometimes called special damages because they compensate for specific financial consequences of an injury.

Common examples include:

• medical expenses;
• hospital and rehabilitation costs;
• prescription and treatment expenses;
• lost wages;
• loss of future earning capacity;
• property damage;
• costs of future medical care;
• costs of necessary services or assistance; and
• other objectively measurable financial losses.

The basic idea is relatively straightforward: if a tort causes a person to suffer a financial loss, the damages award can compensate the plaintiff for that loss.

Example

Suppose Alex is injured in a negligent automobile collision.

As a result, Alex incurs:

• $20,000 in medical expenses;
• $5,000 in rehabilitation costs;
• $10,000 in lost wages; and
• $15,000 in reasonably established future medical expenses.

Alex’s economic damages may therefore be approximately $50,000, assuming the losses are legally recoverable and sufficiently connected to the defendant’s conduct.

Economic damages are usually easier to demonstrate than non-economic damages because documents can often establish the amount.

Medical bills, pay records, invoices, employment records, repair estimates, and expert testimony may all provide evidence.

But “easy to calculate” does not mean “automatic.”

The plaintiff must generally establish that the loss was caused by the tort, is legally recoverable, and is supported by sufficient evidence.

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2. What Are Non-Economic Damages?

Non-economic damages compensate for harms that do not have a readily measurable financial value.

They address the human consequences of an injury rather than its direct financial consequences.

Examples include:

• physical pain and suffering;
• emotional distress;
• mental anguish;
• loss of enjoyment of life;
• disfigurement;
• humiliation;
• inconvenience;
• permanent impairment;
• loss of consortium; and
• other intangible consequences recognized by applicable law.

The difficulty is obvious.

There is no receipt for pain.

There is no invoice for losing the ability to participate in a favorite activity.

There is no objective market price for the emotional consequences of permanent disfigurement.

Yet tort law may recognize these harms as legally compensable.

Example

Imagine that Alex’s collision causes a permanent spinal injury.

Alex’s economic losses might include:

• $50,000 in medical expenses;
• $100,000 in lost earnings;
• $75,000 in future medical care.

But Alex may also experience:

• chronic pain;
• inability to play sports;
• difficulty sleeping;
• emotional distress;
• loss of independence; and
• permanent physical impairment.

The first group represents economic damages.

The second group represents non-economic damages.

Both can arise from the same injury.

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3. The Central Difference

The simplest distinction is this:

Economic Damages	Non-Economic Damages
Financial losses	Intangible harms
Usually objectively measurable	Usually require judgment and evaluation
Medical bills	Pain and suffering
Lost wages	Emotional distress
Future medical costs	Loss of enjoyment of life
Property damage	Disfigurement
Lost earning capacity	Permanent impairment
Supported by financial records and expert evidence	Often supported by testimony, medical evidence, and circumstances

The distinction is therefore not between serious and less serious injuries.

It is between different types of harm.

A plaintiff can suffer enormous non-economic harm even when economic losses are relatively small.

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4. Why the Distinction Matters

The distinction matters because the legal system must determine what kinds of losses are compensable and how they should be proved.

Economic damages generally involve a question such as:

How much money did the plaintiff lose because of the injury?

Non-economic damages involve a different question:

What monetary amount fairly compensates the plaintiff for the human consequences of the injury?

The second question is inherently more difficult.

A jury cannot simply add up receipts to determine the value of chronic pain or permanent disability.

Instead, the jury may consider the evidence as a whole and determine a reasonable monetary award under the governing law.

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5. Economic Damages in Personal Injury Cases

Economic damages are particularly important in personal injury litigation.

Medical expenses

A plaintiff may recover reasonable and legally attributable medical expenses resulting from the injury.

These may include:

• emergency treatment;
• hospitalization;
• surgery;
• physician visits;
• physical therapy;
• medication;
• diagnostic testing;
• rehabilitation; and
• necessary future treatment.

Future medical expenses can be more difficult because they require prediction.

Medical experts may be needed to establish the nature and probable cost of future treatment.

Lost wages

If an injury prevents someone from working, lost income may constitute economic damages.

For example, if a plaintiff earns $2,000 per month and cannot work for six months because of the defendant’s tort, the plaintiff may claim $12,000 in lost wages, subject to the applicable legal rules and proof.

Loss of earning capacity

Loss of earning capacity is distinct from past lost wages.

A person may return to work but still suffer a reduction in the ability to earn money in the future.

For example, a construction worker who suffers a permanent hand injury may technically remain employed but become unable to perform the same physically demanding work.

The relevant question is not merely:

How much money has the plaintiff already lost?

It may instead be:

How has the injury reduced the plaintiff’s future ability to earn income?

Expert testimony concerning employment, economics, medicine, or vocational rehabilitation may become important.

Property damage

Tortious conduct can also cause damage to property.

Examples include:

• damage to a vehicle;
• destruction of personal property;
• damage to real property; and
• costs reasonably necessary to repair or replace property.

The applicable measure of damages depends on the type of property and jurisdiction.

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6. Non-Economic Damages in Personal Injury Cases

Non-economic damages become particularly important when an injury affects the plaintiff’s physical or psychological life.

Pain and suffering

Pain and suffering is one of the most familiar forms of non-economic damages.

The plaintiff may seek compensation for:

• physical pain;
• discomfort;
• chronic symptoms;
• surgical pain;
• recovery-related suffering; and
• anticipated future pain.

The duration and severity of the injury may be important considerations.

Emotional distress

An injury can cause psychological consequences independent of purely physical suffering.

Depending on the applicable doctrine, these may include:

• anxiety;
• depression;
• fear;
• humiliation;
• trauma;
• emotional anguish; and
• loss of psychological well-being.

The exact availability of emotional-distress damages varies among jurisdictions and among different tort claims.

Loss of enjoyment of life

A person may be unable to participate in activities that previously gave life meaning or pleasure.

For example, an injury may prevent someone from:

• playing music;
• exercising;
• traveling;
• caring for children;
• participating in hobbies;
• socializing; or
• engaging in ordinary daily activities.

These consequences may form part of a non-economic damages award.

Disfigurement

Permanent scars, burns, amputations, or other changes to physical appearance may produce substantial non-economic harm.

Disfigurement can affect:

• self-image;
• social interaction;
• professional life;
• relationships; and
• emotional well-being.

The financial cost may be difficult to calculate, but the injury itself may be profound.

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7. Economic and Non-Economic Damages Can Overlap

The two categories are distinct, but a single injury can generate both.

Consider a plaintiff who suffers a serious burn.

Economic consequences

The plaintiff may incur:

• emergency treatment;
• hospitalization;
• reconstructive surgery;
• medication;
• lost wages;
• future treatment costs.

Non-economic consequences

The plaintiff may also experience:

• severe pain;
• permanent scarring;
• embarrassment;
• emotional distress;
• loss of enjoyment of life; and
• psychological suffering.

The injury is one event, but its consequences exist in multiple dimensions.

This is why tort damages cannot be understood simply as reimbursement for expenses.

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8. Proving Economic Damages

Economic damages are often supported by documentary evidence.

Common evidence includes:

• medical bills;
• invoices;
• employment records;
• tax records;
• payroll information;
• repair estimates;
• receipts;
• expert economic calculations;
• medical opinions; and
• vocational evidence.

But the plaintiff must still establish the legal connection between the defendant’s conduct and the claimed loss.

A medical bill alone does not necessarily establish that the defendant legally caused the underlying medical expense.

Causation remains fundamental.

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9. Proving Non-Economic Damages

Non-economic damages require a different type of evidence.

Possible evidence includes:

• plaintiff testimony;
• testimony from family members;
• testimony from friends or coworkers;
• medical records;
• physician testimony;
• psychological evidence;
• photographs;
• evidence concerning daily limitations;
• evidence of permanent impairment; and
• evidence concerning changes in ordinary activities.

The plaintiff’s own testimony can be particularly important.

A jury may need to understand not merely what medical diagnosis occurred, but what living with that condition actually means.

For example, “permanent shoulder injury” is a medical description.

Evidence that the plaintiff can no longer lift a child, sleep normally, play tennis, or perform ordinary household tasks translates that medical condition into its human consequences.

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10. How Do Juries Value Non-Economic Harm?

There is no universal formula for converting pain into dollars.

That is one of the central difficulties of tort damages.

Jurors may consider:

• severity of the injury;
• duration of suffering;
• likelihood of recovery;
• permanence;
• physical limitations;
• emotional consequences;
• impact on daily activities;
• age and circumstances of the plaintiff;
• effect on relationships; and
• the overall evidence presented.

Some jurisdictions permit or restrict particular methods of presenting these damages.

For example, lawyers sometimes use a per diem argument, assigning a monetary amount to each day of suffering.

Other approaches compare the injury to awards in similar cases.

Whether particular methods are permitted depends on applicable law and judicial practice.

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11. There Is No Perfect Monetary Equivalent

The law faces a philosophical problem here.

Money can replace a destroyed object relatively easily.

If a defendant damages a $10,000 vehicle, the legal system can attempt to determine the vehicle’s monetary value or reasonable repair cost.

But what is the monetary equivalent of losing the ability to walk?

Or living with chronic pain?

Or losing the ability to participate in a beloved activity?

Money does not literally restore these things.

Instead, damages serve as a legal approximation of compensation.

The objective is not to pretend that money and human suffering are identical.

It is to provide a legally meaningful remedy when restoration is impossible.

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12. Economic Damages Are Not Always Certain

Although economic damages are generally easier to quantify, they can still involve significant uncertainty.

Future losses may depend on:

• medical prognosis;
• future treatment;
• inflation;
• employment prospects;
• career progression;
• life expectancy;
• retirement;
• changes in earning capacity; and
• economic assumptions.

For example, a young plaintiff who suffers a permanent disability may claim decades of lost earning capacity.

Calculating that loss requires assumptions about a future that cannot be known with certainty.

Courts therefore often rely on expert evidence and legally permissible methods of estimation.

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13. Future Damages and Present Value

Future economic damages may need to be converted into a present value.

Suppose a plaintiff is expected to lose $50,000 per year for many years.

Receiving the entire future amount immediately is economically different from receiving it gradually over time.

Present-value calculations attempt to account for the investment or interest value of money received today.

The precise rules vary by jurisdiction.

The same general problem can arise with future medical expenses and future care.

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14. Caps on Non-Economic Damages

Some jurisdictions impose statutory limits, or caps, on certain categories of damages.

Caps are especially controversial when applied to non-economic damages.

Supporters argue that caps can:

• reduce excessive awards;
• make liability more predictable;
• control insurance costs;
• discourage litigation abuse; and
• promote consistency.

Critics argue that caps can:

• undervalue severe injuries;
• disproportionately affect plaintiffs with catastrophic but difficult-to-quantify harm;
• interfere with the jury’s traditional role; and
• reduce compensation where economic damages are comparatively small.

The constitutionality and scope of damages caps vary considerably among jurisdictions.

Accordingly, a damages analysis should always ask whether a statutory limitation applies.

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15. Damages and the Plaintiff’s Conduct

A plaintiff’s own conduct can affect damages.

For example, under comparative responsibility rules, a plaintiff who contributed to an injury may have the damages award reduced according to applicable law.

This can affect both economic and non-economic damages.

Suppose a jury determines that a plaintiff suffered:

• $100,000 in economic damages; and
• $200,000 in non-economic damages.

The total compensatory damages would be $300,000 before any applicable reduction.

If the plaintiff is determined to be 20 percent responsible under a comparative-fault regime, the final recovery might be reduced accordingly, subject to the jurisdiction’s rules.

The important point is that the categories of damages and the rules governing plaintiff responsibility are separate analytical questions.

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16. Economic Loss Does Not Automatically Mean Tort Recovery

A person may suffer a financial loss without having a valid tort claim.

For example, the economic loss doctrine can restrict recovery for certain purely economic losses, particularly in negligence cases involving no accompanying personal injury or property damage.

The doctrine is complex and varies by jurisdiction.

It illustrates an important principle:

The existence of an economic loss does not by itself establish a tort remedy.

The plaintiff must still establish an underlying cause of action and satisfy its elements.

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17. Damages in Different Types of Torts

Economic and non-economic damages can arise across many areas of tort law.

Negligence

A negligent act may cause:

• medical expenses;
• lost income;
• property damage;
• pain and suffering; and
• emotional distress.

Intentional torts

Battery, assault, false imprisonment, defamation, and other intentional torts may produce different forms of compensable harm.

Some intentional torts can support damages even where economic loss is difficult to establish.

Strict liability

Strict liability may also produce both economic and non-economic damages when the plaintiff suffers legally recognized injury.

Products liability is a common example.

Defamation

Defamation can involve economic losses such as lost business or employment opportunities, as well as reputational and emotional harm.

Constitutional limitations and state-law rules can significantly affect damages in defamation cases.

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18. Economic vs. Non-Economic Damages: A Hypothetical

Consider Maria, who is injured because a defendant negligently fails to maintain a sidewalk.

Maria suffers a permanent knee injury.

Her losses include:

• $30,000 in medical expenses;
• $8,000 in lost wages;
• $40,000 in future medical expenses;
• $50,000 in reduced future earning capacity;
• chronic pain;
• inability to run;
• inability to participate in recreational activities;
• anxiety about her permanent disability.

The first four categories are primarily economic damages.

The remaining consequences are primarily non-economic damages.

The court or jury must evaluate both categories under the governing law.

The fact that the non-economic losses cannot be reduced to receipts does not make them legally insignificant.

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19. The Relationship Between Damages and Compensation

The compensatory purpose of tort law is often expressed through the idea of making the plaintiff whole.

But “whole” does not necessarily mean returning the plaintiff to a literal pre-injury condition.

Some injuries cannot be reversed.

A person who loses a limb cannot be restored to the physical condition that existed before the tort merely by receiving money.

Compensation therefore operates symbolically and practically.

It can provide resources for:

• medical treatment;
• rehabilitation;
• assistance;
• replacement services;
• changes in living arrangements; and
• adaptation to a new physical condition.

It can also legally recognize that a serious wrong has caused a serious loss.

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20. Corrective Justice and the Two Categories of Damages

Economic and non-economic damages also illustrate the theory of corrective justice.

Corrective justice views tort law partly as a mechanism for addressing wrongful losses imposed by one person upon another.

Economic damages repair the financial consequences of that wrong.

Non-economic damages address consequences that cannot be reduced to straightforward financial accounting.

From this perspective, limiting compensation only to receipts could understate the actual injury.

A person is not merely an economic unit.

Tort law therefore recognizes that physical integrity, emotional well-being, dignity, reputation, and ordinary human activities can have legal significance.

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21. The Economic Analysis of Damages

Economic analysis approaches damages somewhat differently.

From an economic perspective, tort damages can encourage parties to take efficient precautions.

If a business knows that negligent conduct may generate substantial liability, the expected cost of accidents can influence decisions concerning:

• safety measures;
• employee training;
• product testing;
• maintenance;
• insurance; and
• risk management.

Non-economic damages also affect these incentives.

If the legal system ignored pain, disability, or emotional suffering entirely, defendants might face liability that systematically underrepresented the actual social cost of injuries.

Thus, both categories can influence deterrence.

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22. Why Non-Economic Damages Can Be Larger Than Economic Damages

There is no universal rule that non-economic damages must be smaller than economic damages.

Consider a person who suffers a relatively inexpensive but permanent injury.

The medical bills might be modest.

Yet the injury could cause lifelong pain or permanent impairment.

In such a case, the non-economic consequences may be substantial even though the economic losses are limited.

Conversely, a person might suffer enormous economic losses while experiencing comparatively limited non-economic harm.

The two categories measure different dimensions of injury.

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23. Damages Are Not the Same as Punishment

Economic and non-economic damages are generally compensatory.

They should be distinguished from punitive damages.

Compensatory damages attempt to address the plaintiff’s legally recognized losses.

Punitive damages, where available, serve a different purpose: punishment and deterrence of particularly wrongful conduct.

For example:

Economic damages = financial loss.

Non-economic damages = intangible harm.

Punitive damages = punishment for sufficiently egregious wrongdoing.

These categories should not be confused.

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24. Common Mistakes

Mistake 1: Assuming economic damages are only medical bills

They may also include lost income, future earning capacity, property damage, future care, and other financial losses.

Mistake 2: Treating pain and suffering as an economic loss

Pain and suffering are generally classified as non-economic damages.

Mistake 3: Assuming non-economic damages are speculative and therefore unavailable

Their value may be difficult to calculate, but difficulty of valuation does not necessarily eliminate legal compensability.

Mistake 4: Forgetting causation

A plaintiff must generally connect claimed damages to the defendant’s legally actionable conduct.

Mistake 5: Assuming every jurisdiction uses the same rules

Rules concerning damages, caps, evidence, comparative responsibility, future damages, and particular categories of harm vary by jurisdiction.

Mistake 6: Confusing compensatory and punitive damages

Economic and non-economic damages ordinarily compensate. Punitive damages serve a different function.

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25. A Practical Exam Framework

When analyzing damages on a tort-law examination, proceed systematically.

Step 1: Identify the underlying tort

Ask whether the plaintiff has established negligence, an intentional tort, strict liability, or another recognized cause of action.

Step 2: Identify the injury

What legally recognized harm did the plaintiff suffer?

Step 3: Identify economic losses

Look for:

• medical expenses;
• lost wages;
• future medical costs;
• lost earning capacity;
• property damage;
• rehabilitation costs; and
• other financial consequences.

Step 4: Identify non-economic losses

Look for:

• pain and suffering;
• emotional distress;
• disability;
• disfigurement;
• loss of enjoyment of life;
• loss of consortium; and
• other legally recognized intangible harms.

Step 5: Analyze causation

Ask whether the defendant’s conduct caused the claimed losses.

Step 6: Consider foreseeability and scope

Determine whether the claimed damages fall within the legally recoverable consequences of the tort.

Step 7: Consider mitigation

Determine whether the plaintiff reasonably attempted to reduce avoidable losses.

Step 8: Check jurisdiction-specific rules

Consider:

• damages caps;
• comparative responsibility;
• evidentiary requirements;
• statutory restrictions;
• present-value rules;
• collateral-source rules; and
• special rules for particular torts.

Step 9: Calculate

Only after identifying the legally recoverable categories should the monetary calculation begin.

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26. A Simple Formula

A simplified damages analysis can be expressed as:

Total Compensatory Damages = Economic Damages + Non-Economic Damages

For example:

Economic damages: $150,000

Non-economic damages: $250,000

Total compensatory damages: $400,000

The actual amount recoverable may then be affected by applicable rules concerning comparative responsibility, damages caps, collateral sources, settlements, statutory restrictions, or other doctrines.

This formula is therefore a starting point rather than a universal legal rule.

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27. Key Takeaways

• Economic damages compensate identifiable financial losses.
• Non-economic damages compensate intangible harms.
• Medical bills and lost wages are typical economic damages.
• Pain and suffering and loss of enjoyment of life are typical non-economic damages.
• The same injury can generate both categories.
• Economic damages are usually easier to quantify but can involve substantial uncertainty concerning future losses.
• Non-economic damages are harder to value because there is no objective market price for many human harms.
• Causation remains essential for both categories.
• Future damages may require expert evidence and present-value calculations.
• Some jurisdictions impose statutory limits on particular damages.
• Comparative responsibility can reduce a plaintiff’s recovery.
• Economic and non-economic damages are generally compensatory, not punitive.
• The precise rules governing damages vary by jurisdiction.

Frequently Asked Questions

What is the difference between economic and non-economic damages?

Economic damages compensate financial losses that can generally be calculated using objective evidence. Non-economic damages compensate intangible harms such as pain, suffering, emotional distress, and loss of enjoyment of life.

Are medical bills economic damages?

Yes. Medical expenses are a classic form of economic damages when they are legally attributable to the defendant’s conduct and otherwise recoverable.

Is pain and suffering an economic or non-economic damage?

Pain and suffering is generally classified as a non-economic damage because it does not have a precise financial value.

Can non-economic damages be greater than economic damages?

Yes. There is generally no universal rule requiring non-economic damages to be smaller than economic damages. A relatively modest financial loss can accompany severe permanent pain or disability.

Are lost wages economic damages?

Yes. Lost wages are generally economic damages because they represent an identifiable financial loss.

Is emotional distress a non-economic damage?

Generally, yes, although the precise rules depend on the underlying tort and applicable jurisdiction.

Can a plaintiff recover both economic and non-economic damages?

Yes. A single injury can produce both financial and intangible harm, and both categories may be recoverable when supported by the applicable law and evidence.

Are punitive damages economic or non-economic damages?

Neither. Punitive damages are a separate category of damages designed primarily to punish particularly wrongful conduct and deter similar conduct.

Does every tort allow non-economic damages?

No. The availability and scope of non-economic damages depend on the underlying cause of action and applicable law.

Why are non-economic damages difficult to calculate?

Because there is no objective market price for things such as pain, emotional suffering, loss of enjoyment, or permanent impairment. Courts and juries must translate these human consequences into a monetary remedy using evidence and legal standards.

Conclusion

The distinction between economic and non-economic damages reveals one of the central challenges of tort law: how can money compensate for harm that is both financial and deeply human?

Economic damages address losses that can generally be measured in dollars—medical expenses, lost income, property damage, and future financial consequences.

Non-economic damages address another dimension of injury—pain, emotional suffering, disability, disfigurement, loss of enjoyment, and other intangible consequences.

Neither category is inherently more important than the other. Together, they reflect the principle that a tort can affect both a person’s economic position and quality of life.

For students of tort law, the essential distinction is therefore simple:

Economic damages measure financial loss. Non-economic damages compensate for intangible harm.

The difficult legal work begins when the law must determine exactly what losses fall within each category, how those losses should be proved, and what monetary award fairly responds to them.