Abstract: Theory suggests that tort reform could have either of two impacts on accidents. First, reforms could increase accidents as tortfeasors internalize less of the costs of externalities, and thus, have less incentive to reduce the risk of accidents. Second, tort reforms could decrease accidents as lower expected liability costs result in lower prices, enabling consumers to buy more risk-reducing products such as medicines, safety equipment, and medical services. We test which effect dominates by examining the effect of tort reforms on non-motor vehicle accidental death rates, using panel data techniques. We find that caps on noneconomic damages, caps on punitive damages, a higher evidence standard for punitive damages, product liability reform, and prejudgment interest reform lead to fewer accidental deaths, while reforms to the collateral source rule lead to increased deaths. Overall, the tort reforms in the states between 1981-2000 have led to an estimated 14,222 fewer accidental deaths.
REF study the impact of different types of tort reforms on non-motor-vehicle accidental death rates and present significant positive as well as negative effects, depending on the type of tort reform.
Tort Reform and Accidental Deaths
The Journal of Law and Economics
Economics