Wednesday, January 19, 2011

Thought of the Day

Is the United States more litigious than Europe because we have traditionally lacked the same social safety net?

Conservatives complain about both our sue happy culture (until they want to bring a suit), and the idea of providing extensive social safety nets. When thinking about it today I realized that the two might be structurally related.

A lot of the ideas about liability in tort law lie in a philosophy similar to the idea of the 'lowest cost avoider.' This theory says, for example, that the producer of a dangerous product is in a better position to consider the costs and benefits of adding safety devices to the product, and that economic efficiency in this respect can be reached if the producer pays for all harm caused by the product.

In the general tort context I think of it as the 'someone has to pay' principle. When there is a harm, someone has to pay for it, that's a given. The tort system just decides *who* pays. If I slip and fall in the grocery store, and get $50,000 of harm (medical and lost working time), then that harm exists in and of itself. The tort system now decides who should pay.

On justification for the tort system in this case is that the grocery store is in the best position to know how many slip and falls happen, and how many resources to invest in avoiding them. If they bear all the costs, we should reach an efficient level of slip prevention. The counter point is that it removes my incentive to not slip.

A large part of the tort system is that sometimes it just feels unfair to make an individual bear certain burdens. We have all heard about huge jury awards in personal injury cases.

It seems possible that this sense of 'unfairness' is born from our lack of social safety net. A slip and fall in a grocery store could go from bad, to devastating if I don't have health insurance, a medical leave policy, unemployment pay, food for my family, etc. So in the United States our tort system might have developed more robustly than other developed countries in an attempt to spread the cost of risk among a larger pool of people.

Europe doesn't have the same high level of personal injury lawsuits. But, they already spread the risk by provided tax funded safety nets for individuals who are hit by difficult circumstances.

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