Public choice and tort reform

Abstract

The common law originally was thought to be immune to rent seeking. More recently, scholars have recognized that attorneys are engaged in exactly that activity. Rent seeking by the legal profession has greatly expanded the scope of US tort law, and generated efforts to reverse its expansion. Organized groups (attorneys, businesses and doctors) are active on both sides of the issue and the partisans have numerous tools available for advancing their agendas, such as litigating, lobbying for favorable rules and attempting to elect sympathetic legislators and judges. All of this creates an ideal setting for public choice analysis. Copyright Springer Science + Business Media, Inc. 2005

Tort Reform and the Demand for Medical Care: Evidence from State-by-State Variation in Non-Economic Damages Caps

“…The key identifying restriction in this paper is that the non-economic damages cap regulation adoption is exogenous. The literature indicates that the timing of the adoption is mostly due to the vagaries of the political process (Rubin, 2005). It is nevertheless useful to investigate this assumption.…”

“…There is also limited concern of bias from reverse causality since the literature seems to indicate that tort reforms were mainly driven by relative power of diverse interest groups (Rubin, 2005). Nevertheless, any such concerns are further addressed in several ways.…”

Legal systems, institutional environment, and food safety

“…Another aspect that contributes to the more pro‐plaintiff nature of the American legal system is the fact that in the U.S., many state judges, who are elected, face political constraints that might bias their decisions in favor of the plaintiffs (Rubin, 2004). Elected judges, compared to nonelected judges, have to face direct political pressure, which might modify their incentives and consequently their behavior (Hanssen, 1999; Tabarrok and Helland, 1999, 2000).…”

“…Many critics have voiced concerns regarding the efficiency and effectiveness of the U.S. tort system to provide the incentives to take optimal levels of precautionary action by potential injurers and to deliver ex post compensation to victims (Buzby et al, 2001; CBO, 2003, 2004; Priest, 1991; Rubin, 2004; Viscusi, 1989, 2003). Thus reform of the U.S. tort system at the state and federal level has been a political matter widely debated by various groups representing differing opinions (CBO, 2004; Center for Legal Policy, 2003; Council of Economic Advisers, 2004; Hersch and Viscusi, 2002; Krauss and Levy, 2004; Levy, 2003; Merritt and Barry, 1999; Rubin, 2004; Rustad and Koenig, 2002; Saxton, 1996; Tillinghast‐Towers Perrin, 2003; Weiler, 1991).…”

“…In addition to certain characteristics that promote and facilitate litigation, the American legal environment is also considered by many to be pro‐plaintiff. Involvement of American judges in politics (Atiyah, 1987; Lord Irvine of Lairg, 2001; Tabarrok and Helland, 2000; Tetley, 1999; Zywicki, 2000), the highly specialized and eager trial lawyers driven by contingent‐fee contracts (Atiyah, 1987; Herzog, 1990; Rubin, 2004), lack of a loser pays rule (Atiyah and Summers, 1987; Posner, 1996), high likelihood of sympathy verdicts by juries (Gergen, 1999; Hans, 1996; Hersch and Viscusi, 2002; Tetley, 1999; Viscusi, 2003), availability of class action suits and excessive damage awards (Atiyah, 1987; CBO, 2003; Zywicki, 2000) together generate a setting that induces the society to use the tort system.…”