Download of the Week

The Download of the Week is Harry Potter and the Trouble with Tort Theory by Scott Hershovitz. Here is the abstract:

Economists argue that tort law promotes an efficient allocation of resources to safety, while philosophers contend that it dispenses corrective justice. Despite the divide, the leading tort theories share something in common: They are grounded in an unduly narrow view of tort. Both economists and philosophers confuse the institution of tort law with the rules that are distinctive of it. They offer theories of tort’s substantive rules, but for the most part ignore the procedures by which those rules are implemented. As a consequence, both miss and misconstrue much about tort law. 

The problem is particularly acute for economists. They analyze the impact of tort’s substantive rules on accident and accident avoidance costs. Yet, the institution of tort law generates many other costs and benefits for society, and those costs and benefits affect the optimal arrangement of tort’s rules. The fact that economists have not factored these additional costs and benefits into their analyses calls into question their descriptive and normative claims about tort. 

Corrective justice theory is not in as much trouble as the economic approach, but it is troubled still. Philosophers’ neglect of the procedural dimension of tort has caused them to overlook ways that tort does justice between wrongdoers and victims. And it has led them to make misleading claims about the nature of both corrective justice and tort law. 

This article draws out the trouble with tort theory through a thought experiment, starring Harry Potter. Potter’s magic helps to highlight the features of tort that the leading theories overlook. Once they are in view, the article considers the ways in which the omissions cast doubt on the claims those theories make, investigates ways they might improved, and offers several observations about the choice between them.

And from the paper:

Imagine that upon graduation from Hogwarts School of Witchcraft and Wizardry, Harry Potter goes to law school. As a 1L, he takes torts from a pro- fessor with an economist’s view of the institution. She teaches Potter that tort law aims to minimize the sum of the costs of accidents and the costs of accident prevention.4 Tort law does this, she explains, by giving people incentives to take account of costs they impose on others.

Like many first-year students, Potter is enamored with economic analysis. He appreciates the elegance with which it accounts for central features of tort law, and he finds the normative theory underpinning it attractive. But the more enchanted Potter becomes with the economic account of tort law, the more disenchanted he becomes with tort law itself. “Tort law is awfully expensive,” he thinks. “Surely, there must be a cheaper way to reduce the costs of acci- dents.” Then, remembering that he is the world’s most powerful wizard, he raises his wand. Potter casts a spell that works like this. Every time a person imposes a cost on another that would be compensable by the tort system (say, by flying carelessly and knocking someone off her broomstick), the spell transfers a sum of money equal to the cost from the bank account of the injurer to the account of the victim and dispatches a message informing the person of the debit to their account and the reason for it. Potter eliminates the ad- ministrative costs of the tort system with one swoop of his wand, and the results are impressive. The spell pushes accident costs nearer their optimal level than the tort system, because all and only those who are liable are made to pay, they are made to pay immediately, and they cannot avoid paying by investing in lawyers rather than safety.

That is no small feat, yet Potter’s professor will surely tell him he has cast the wrong spell. Tort’s rules, she will explain, are shaped by administrative costs. Because Potter can dispense with them, he should not replicate tort doc- trine blindly. Potter’s professor will start by encouraging him to cast a spell that charges cheapest cost avoiders, rather than tortfeasors.5 Tort law, she will tell him, does not hold cheapest cost avoiders liable consistently only because the cost of identifying them is high.6 Potter does not face that constraint. He can cast a spell that effortlessly determines whether, for example, it is more cost effective for a municipality to invest in accident prevention by installing a traf- fic light than it is for drivers at an intersection to take extra care. If the munici- pality faces lower accident avoidance costs, the spell will better reduce accident costs by charging the municipality for mishaps, whatever tort doctrine might tell us about the drivers’ responsibilities.

Potter’s professor will also point out that the money taken from cheapest cost avoiders need not be given to victims. She will explain that tort requires defendants to pay victims primarily so that victims have an incentive to sue de- fendants.7 No inducement to litigation, however, is needed once Potter casts his spell. Of course, other considerations may support transferring money to vic- tims. If a defendant is in a better position to absorb a loss than a plaintiff, com- pensation may reduce the costs of bearing the costs of accidents. Moreover, compensating victims encourages them to take optimal care.8 However, it is an open question whether these are the most productive uses to which the money the spell seizes could be put. Perhaps the money is better transferred to the state’s treasury, or channeled to the poor, or spread among all those suffering physical infirmities, regardless of their source.9 If Potter’s spell can identify the cheapest cost avoider of an accident, surely it can determine the optimal reci- pient of seized funds.

Potter’s professor may continue to tinker. She might suggest that Potter’s spell take money from those who create risk, whether or not the risks are realized. She might suggest that Potter adjust tort’s mix of strict liability and fault where necessary to encourage efficient activity levels. Or that the spell hold people liable for causing pure economic loss. Or . . . well, you get the point. As the professor revises Potter’s spell, it will look less and less like tort law, but it will better achieve tort law’s aims.

Highly recommended! Download it while its hot!