Efficiency and safety

by Ted Frank on September 18, 2006

Justinian Lane writes in the comments: “I oppose any tort reform measure that places corporate efficiency ahead of the public safety.”

I don’t believe him. I mean, perhaps Lane honestly believes that one can always put safety ahead of efficiency, but if so, it’s because he hasn’t thought about it very deeply.


There’s a very simple efficiency versus safety measure that could be implemented now that would save more than 35,000 lives and hundreds of thousands of injuries a year in the United States, and I would be stunned if Lane supports it: a nationwide speed limit for automobiles of 10 mph.

Automobile manufacturers design cars that can go faster than 10 mph even though they know, as a matter of statistical certainty, that thousands of people will die every year because they were traveling faster than 10 mph. For the most part, the liability system doesn’t hold these manufacturers liable for these tens of thousands of deaths and hundreds of thousands of injuries, even though it’s certain that the motivation for designing cars to go faster than 10 mph is profit (after all, very few would buy an expensive car that couldn’t go faster than 10 mph). It’s simply not the case that safety always trumps efficiency, nor should it be.

Once one concedes that cost-benefit analysis appropriately permits automobiles to be sold even though they can go faster than 10 mph, why is it so terrible that reformers seek to avoid the imposition of punitive damages in the liability system for second-guessing of other legitimate cost-benefit tradeoffs?

Of course, many reform measures have nothing to do with the efficiency-safety tradeoff. For example, the Class Action Fairness Act has nothing to do with safety: it just ensured that plaintiffs couldn’t force defendants to play Russian Roulette with dozens of identical parallel nationwide class-action suits taking place in individual state courts. Expert-evidence reforms seek to improve the accuracy of the litigation process. Procedural reforms seek to reduce the expense of litigation.

Still other reform measures improve efficiency and safety. For example, research has shown that some types of medical malpractice reforms reduce infant mortality rates: any risk from increased carelessness by doctors is more than offset by the increased incentive for doctors to practice free from excessive liability risk. Rubin and Shepherd have argued that reforms have saved thousands of lives in the states that have implemented them. Reform would also improve safety in the case of product liability, where many life-saving medicines and vaccines have been driven from the market by the risk of liability.

In contrast, ATLA has shown that it cares not a whit about efficiency nor safety; its support or opposition to changes in the liability system is solely driven by the effect on attorney incomes.

{ 9 comments }

1 E-Bell 09.18.06 at 1:29 pm

Don’t give the plaintiffs’ bar any ideas. They have already tried (albeit, unsuccessfully) to sue gun makers and fast food restaurants for selling “unreasonably dangerous” products.

Cars could be next, and it only takes one crazy judge to get the precedential ball rolling.

2 John 09.18.06 at 2:14 pm

Of course, golf carts only go about 10 mph, and there are still significant injuries and deaths associated with their use (and, particularly, misuse). I think you need to lower the bar. People walk at about 3 mph; why would you need to go any faster than that?

3 riskprof 09.18.06 at 3:04 pm

Everything is risky and can lead to loss of life. We need to ban planes, guns, cars, electric power plants, dynamite, nuclear power plants, petroleum refineries, cell phones, blackberries, spinach, schools, and the Internet to name some dangerous activities or goods. It is not corporate efficiency that we care about, it is overall efficiency which includes consumer and producers costs and benefits. If we make corporate activity more expensive merely because it hurts corporations, it hurts consumers too in the form of a reduced set of goods and higher prices.

4 greedytriallawyer 09.18.06 at 3:56 pm

What deep thinking! I now understand why corporate efficiency should guide the reform of our civil justice system. How shallow of me to have thought the tort law was intended to further the safety of the public!

5 Jim 09.18.06 at 4:21 pm

Ted’s excellent analogy reminds me of one my torts professor Guido Calabresi — certainly no right-wing tort reformer he — made: there is indeed what approaches a perfectly safe car, but it’s one no one really wants to buy. It costs well over $1 million, and it’s called the Sherman tank.

As flawed as I consider some of the analysis that led to the real “tort deform” — the work of those Peter Huber calls “the Founders” — you won’t see Calabresi or Posner, or Wade or Prosser, ever making the kind of silly arguments that imply it’s illegitimate ever to trade off safety for efficiency, like those Lane is making or his colleague Dugger makes here. This can’t be the best the trial lawyers can put up, can it?

6 Deoxy 09.18.06 at 6:17 pm

“How shallow of me to have thought the tort law was intended to further the safety of the public!”

Ys, it IS shallow of you.

Tort law is intended to further the safety of the public **from the actions of OTHERS**, not themselves. Go look up “assumed risk”, among other things.

For yet another example (besides the obvious ones above), DEADLY POISON is available at the supermarket. It is clearly labeled and has many important uses, but it is still quite deadly, and people do die from it every year.

Do we need to get rid of mosst household clansers and all mouse and insect poisons? Afterall, it’s for “the saftey of the public”!

7 David Nieporent 09.18.06 at 9:52 pm

Jim, what’s really puzzling about that rant from Dugger that you linked to is that it isn’t about “profit” or “corporate efficiency.” It’s about the EPA.

And Greedy Trial Lawyer may want to refresh his recollection of Learned Hand. B

8 Jim 09.18.06 at 10:13 pm

David, Dugger’s post as I read it is comparing the government’s response to 9/11 to the “Safety is Too Expensive Business Model,” which to me, as I read him, is roughly the same as Lane’s “plac[ing] corporate efficiency ahead of the public safety.”

9 Eh Nonymous 09.20.06 at 10:06 am

Ted: I like this post.

Full stop.

I also wish I could get more of this sort of post, which accurately discusses the things that tort law requires, reforms, in order to improve the chances of meeting our global interests (efficiency; spreading risk appropriately; preventing shakedowns; preserving truth as a goal of the adversarial system; improving global welfare, as in vaccination programs).

Unfortunately, I see too little of this, and too much of something different.

You and I both know we’re tired of the villainy posts. Mostly of the ones maligning our side. “Your” side tends to depict plaintiffs’ attorneys as villains, and without going into detail about Lanier or any other individual, let it stand that I’m offended that when people try to talk about torts, they talk about him. I know why you do it, and I know the other reasons why doctors’ organizations say the things they say, and why insurance companies (and not all of them, but some) say certain objectionable things.

You also, hopefully, understand why folks on my side call for punitive damages for vindictive, irrational-but-profitable, vicious practices such as deliberately denying claims which are acknowledged to be valid; tormenting victims-I-mean-plaintiffs; and other things rather unique to the big-vs.-little scenario.

I’m glad that you post on better things than personality. We need to agree on the big stuff. We can work on those who taint the process once we’ve forced them to agree that truth is better than lies, a car that goes 50 (or 70) is better than one that goes 10, etc. Fuzzy-headed defenders of my side (and of yours) really should be corrected.

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