Wednesday, December 19, 2012
Kip Viscusi & Joni Hersch (Vanderbilt) have posted to SSRN Assessing the Insurance Role of Tort After Calabresi. The abstract provides:
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, including risk-utility analysis and strict liability. Calabresi’s
analysis remains a powerful basis for modern tort liability. However, punitive
damages, noneconomic damages, shifts in liability rules over time, high
transactions costs, correlated risks, catastrophic losses, and mass toxic torts
pose challenges for the viability of tort liability as an insurance mechanism.
Despite limitations of tort liability as insurance, tort compensation also
serves a deterrence role. Tort liability retains a valuable insurance function
in many situations and may be superior to alternative institutional mechanisms
in fostering incentives.