The Propensity to Sue: Why Do People Seek Legal Actions?

Abstract

The paper empirically analyzes the psychological and economic factors that affect the decision of an injured party to seek legal action, the filing rate or the propensity to sue. We analyze the demographics of the injured person, measures of the severity of injury, types of injury whether it be car accidents, product-related, slips and falls, medical or others, the circuits where the injury took place, the prior experience with claiming and the perception of the injured person regarding fault and severity of injury.

We find that perception of fault or cause of injury is a major determinant in the decision to take any claiming action. On average, a person who blames another person or firm for his injury is four times more likely to claim regardless of the type of injury involved. Factors regarding the perception of severity by the injured person as well as fault dominate the decision to claim. We find a negative relation between age and claiming behavior; the older the injured person, the less likely it is that he or she will take some claiming action. As expected, the severity of injury as measured by actual bruises and fractures sustained during the accident is another key factor in explaining the claiming rate. The probability of claiming increases significantly for accidents taking place in the first, third, fifth and seventh circuits have. Whether the person has had experience with filing before has no effect on the decision to claim.

Keywords: Propensity to sue, filing rates, fault and causation

JEL Classification: D12, K13, K41