44 Pages Posted: 14 Dec 2012 Last revised: 1 Jul 2013
Date Written: June 27, 2013
Calabresi’s theory of tort liability (1961) as a risk distribution mechanism established insurance as an objective of tort liability. Calabresi’s risk-spreading concept of tort has provided the impetus for much of the subsequent development of tort liability doctrine, including risk-utility analysis and strict liability. Calabresi’s analysis remains a powerful basis for modern tort liability. However, high transactions costs, correlated risks, catastrophic losses, mass toxic torts, shifts in liability rules over time, noneconomic damages, and punitive damages affect the functioning of tort liability as an insurance mechanism. Despite some limitations of tort liability as insurance, tort compensation serves both a compensatory and deterrence role. Tort liability retains a valuable risk-spreading function in many situations and may be superior to alternative institutional mechanisms in fostering incentives.
Keywords: tort liability, torts, damages, insurance, Calabresi
JEL Classification: K13, K0, I13
Suggested Citation: Suggested Citation
Viscusi, W. Kip and Hersch, Joni, Assessing the Insurance Role of Tort Liability after Calabresi (June 27, 2013). Vanderbilt Law and Economics Research Paper No. 12-35. Available at SSRN: https://ssrn.com/abstract=2189090 or http://dx.doi.org/10.2139/ssrn.2189090