Markets and Majorities by Steven M. Sheffrin

Author:Steven M. Sheffrin
Language: eng
Format: epub
Publisher: Maxwell Macmillan
Published: 1993-07-15T00:00:00+00:00

The Theory of Tort Law

The branch of law that we are discussing is called tort law. “Tort” means a civil wrong, and lawsuits are brought under tort law to address these alleged wrongs. Tort law has evolved dramatically over the last twenty or thirty years, and the law today bears little resemblance to the law even in the early 1960s. But before discussing the evolution of tort law, we should think about what, in principle, we hope tort law can accomplish.

Imagine that your child became sick and doctors agreed that an operation was necessary to cure a rather routine problem. The surgeon performed the operation but your child failed to recover and became permanently disabled. You later discover that the surgeon had been at fault and that his lack of attentiveness in the operation had led to your child’s permanent disability.

You are deeply distressed and outraged. You bring a lawsuit against the doctor and the hospital for a huge sum to compensate you both for your anguish and for the substantial sum required to care for the child and compensate for his loss of future earning power. In this case, the doctor was clearly negligent, so his insurance company quickly settles the matter. The doctor, in turn, loses his insurance and can no longer perform surgery.

In this example, your ability to bring a lawsuit had two consequences. First, it provided compensation for the damage done to your child. Without this compensation, you would have had to rely on much more limited private insurance or government welfare to partly compensate for the injury. Second, the ability to bring a lawsuit should deter future surgeons from being as careless in the operating room. Finally, although much harder to evaluate, the lawsuit provided a means of retribution or vengeance against the physician.

Vengeance aside, the two key elements in an ideal system of tort law would be deterrence and compensation. We would like providers of goods and services to be responsible and take the appropriate level of care in manufacturing the goods or delivering the services. In the event that the manufacturer of the good or the provider of the service failed to take adequate precautions, the victim should be provided some compensation. Holding the manufacturer or service provider responsible in this case, serves to deter inappropriate behavior. The payments in the lawsuit effectively provide insurance to the unlucky victim. Thus, the victim receives compensation.

This arrangement seems relatively simple at first. Hold producers of goods and services responsible for compensating victims of accidents when they fail to exercise the proper amount of care. 1 But upon further reflection, the apparent simplicity of the ideas disappears. Ponder the following questions in the following paragraphs.

1. What is the appropriate level of care? By spending more money and increasing the cost and price of a product, it is generally possible to make a product safer. Should we insist on ever-increasing levels of safety regardless of cost? Do the poor want the same level of safety as the

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