Costs of the Tort System -- Another Take

We have posted previously in this space about the periodic reports of Tillinghast-Towers Perrin, an insurance consulting firm, on the "costs of the U.S. tort system." (See our posts of 12/28/03 and 1/19/05.) Now a new report from the Economic Policy Institute reflects a decidedly different take. The EPI study, entitled "The frivolous case for tort law change: Opponents of the legal system exaggerate its costs, ignore its benefits," offers this summary of its findings in the opening paragraph:

Tort litigation has been blamed for driving liability insurance premiums to excessive levels, reducing real wages and overall employment, undermining corporate profits, dampening productivity growth, discouraging research and development, and generally reducing the willingness of corporations and individuals to take reasonable risks (such as introducing new products) that may benefit themselves and society. There is scant evidence for any of these claims. To the contrary, macroeconomic trends since the early 1990s are especially inconsistent with the argument that supposedly high and rapidly rising tort costs have inflicted serious harm on the economy. Yet the legal system's critics continue to argue that there is a tort liability "crisis" that warrants changing the tort system, and that change is a key element in bolstering economic growth in the future. Yet these critics provide no credible evidence to support their assertions. In fact, what little effect changing the tort system will have on the economy might hurt job creation rather than help it.

The Kansas City Star has more -- including a quote from Russ Sutter, primary researcher for the Tillinghast-Towers Perrin report, to the effect that "tort reform" advocates have used the TTP data "in a way that's probably misleading."