When does product liability reform improve economic well-being?

by Walter Olson on February 4, 2013

A new empirical study from Joanna Shepherd (Emory) in the Vanderbilt Law Review looks at the question (via Chris Robinette/TortsProf). Among the conclusions:

My empirical results indicate that several reforms that restrict the scope of products liability have a significant impact on economic activity. Statutes of repose that limit the time period for which manufacturers are liable for product defects, comparative negligence reforms that reduce damage awards when plaintiffs engage in negligent activity, and reforms that eliminate strict liability for nonmanufacturer product sellers are all associated with statistically significant increases in economic activity. Specifically, my results suggest that these reforms increase the number of businesses, employment, and production in the industries that bear most of the products liability claims: the manufacturing, retail, distribution, wholesale, and insurance industries.

In contrast, other reforms have a weak effect on economic activity. My results suggest that caps on noneconomic damages and reforms to the traditional collateral source rule are only weakly associated with increases in economic activity. Meanwhile, caps on punitive damages and reforms eliminating joint and several liability are weakly associated with decreases in certain measures of economic activity.

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The Real Economic Impact of Product Liability Tort Reform | Litigation & Trial Lawyer Blog
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