Calabresi, Posner, and Some Common Areas of Confusion: The Value of Life in Law and Economics
London School of Economics and Political Science
February, 17 2009
The paper focuses on the problem of valuing human life, as advocated by economists and certain lawyers, and its implications for the computation of damages in tort law cases. It uses a statement by Richard Posner in order to illustrate the approach commonly employed in law and economics: "[I]f ... the value of life is infinite, then ... people would never take any risks, an obviously false description of human behaviour." The paper argues that this approach - while being perfectly legitimate for purposes of a purely economic analysis - neglects one aspect that cannot be neglected by the discipline of law and economics: The question whether our society ought to be committed to preserving life at any cost; whether the value of life (for purposes of the law) ought to be infinite. It discusses the relationship between economics and moral philosophy and concludes that law and economics, in order to arrive at meaningful, commonly acceptable conclusions, should, by implementing certain moral considerations, attach an infinite value to life. It asserts that, while protection of life is not an absolute objective of our society, risks are not accepted in order to safe costs but in order to promote other interests or principles that are considered as being as high ranking as the right to life (e.g., the right to life of other people, human dignity). The paper evaluates in how far the standard of negligence and the computation of tort damages has to be reassessed in light of these considerations.
Keywords: Tort law, Learned Hand formula, cheapest cost avoider, valuing human life
JEL Classification: K13
Date posted: February 23, 2009