Bad America s liability laws are completely irrational for everyone but trial lawyers. Daniel Kessler on ways to restore the system to at least a modicum of sanity. Liability law, or tort law, allocates the costs of accidents among individuals.
Accidental injuries are frequent in modern society.
In theory, tort law has two principal goals. The first is to provide compensation to parties injured in accidents in an effort to provide a form of social insurance. If individuals were risk-averse, they would seek to insure themselves against accidental injuries caused by others. If market failures prevent individuals from purchasing such insurance in private markets, however, or if we as a society believe that it is inequitable or unfair to let individuals bear the cost of insuring against the carelessness of others, then government intervention in the form of liability laws may be warranted. The second goal is to provide potential injurers with incentives to avoid accidents for which the social costs of prevention are less than the costs created by the accident, thus deterring careless behavior by charging injurers for the accidents they cause.