Economic Analysis in a Unified Conception of Tort Law


The controversy regarding the appropriate purpose of tort law continues to rage. Some advocate that tort rules should minimize accident costs as an instrument for maximizing social welfare and wealth. Others argue that as a matter of corrective justice, tort rules should fairly protect the individual right to physical security. These two conceptions of tort law are fundamentally incompatible and mutually exclusive. It is a separate question whether the requirements of welfare economics are compatible with those of fairness. This article establishes the possibility of a unified conception of tort liability, one capable of fully accounting for the central tenets of welfare economics and the fair protection of individual rights. The unified conception incorporates economic analysis into a fair theory of tort law. Under this approach, the individual right to physical security constrains the ability of the tort system to promote social welfare. The constraint yields rights-based tort rules that are consistent with the Pareto principle and satisfy the equity-efficiency criterion, the two central tenets of welfare economics. The approach is illustrated by a rights-based conception of fairness that adequately describes the important tort doctrines while unifying the compensation and deterrence functions of tort law. As this example illustrates, the constraint imposed by a rights-based principle does not make welfare considerations irrelevant. It merely defines the conditions under which tort rules can appropriately rely upon welfare considerations. Further analysis shows why any rights-based tort system is likely to provide an important role for economic analysis, one that operates within the constrained space of welfare concerns. The economic inquiry no longer exclusively focuses on the minimization of costs. Freed from such a limited and controversial role, economic analysis becomes integral to a unified conception of tort law.



Date of this Version

February 2004