Tort Reform and Accidental Deaths

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, and as consumers take additional precautions to avoid accidents. We test these effects by examining the relationship between tort reform and non-motor vehicle accidental death rates, using panel-data techniques. We find that caps on noneconomic damages, a higher evidence standard for punitive damages, product liability reform, and prejudgment interest reform are associated with fewer accidental deaths, while reforms to the collateral source rule are associated with increased deaths. Overall, the tort reforms in the states between 1981-2000 are associated with an estimated 24,000 fewer accidental deaths.

Keywords: tort reform, accidents, deaths

JEL Classifications: I12, K14

Working Paper Series