Judicial Expenditures and Litigation Access: Evidence from Auto Injuries

Abstract

Despite claims of a judicial funding crisis, there exists little direct evidence linking judicial budgets to court utilization. Using data on thousands of auto injuries covering a 15-year period, the authors measure the relationship between state-level court expenditures and the propensity of injured parties to pursue litigation. Controlling for state and plaintiff characteristics and accounting for the potential endogeneity of expenditures, they show that expenditures increase litigation access, with their preferred estimates indicating that a 10% budget increase increases litigation rates by 3%. Consistent with litigation models in which high litigation costs undermine the threat posture of plaintiffs, increases in court resources also augment payments to injured parties.

Keywords: judicial system, state budget, litigation

JEL Classification: K13, H72, K41