Fault Lines in the Positive Economic Analysis of Tort Law
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Economists routinely engage in positive analysis to identify the efficiency properties of a practice without expressly taking any position on the normative question of whether the practice should be conducted in an efficient manner. Economists confidently do so, as Milton Friedman observed in his famous essay on this methodological approach, simply because “[t]he conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained”. Friedman was discussing problems of “economic policy,” illustrated by the issue of minimum-wage legislation. Regardless of one’s position on what the minimum wage ought to be, no one seriously doubts that this matter of economic policy depends on the costs of regulation, such as increases in the unemployment rate. Merely identifying those costs and any resultant inefficiencies enables an economist to make an important contribution to wage-regulation policy without adopting any normative position about the matter. Consistent with the approach of mainstream economics, the positive economic analysis of tort law evaluates the efficiency properties of tort rules without otherwise taking a stance on whether efficiency is an appropriate norm for tort liability. Tort law is not expressly a matter of “economic policy,” however, and so the value of positive analysis is less obvious than it is for wage regulation. But like positive economic analysis in general, the positive analysis of tort law would seem to have only a limited or contingent normative message for legal decisionmakers: “To the extent that you care about efficiency as a value, you should pay attention to the following conclusions”. Despite their evident similarities, positive economic analysis of the type championed by Friedman importantly differs from the positive economic analysis of tort law. Friedman observed that positive analysis “is in principle independent of any particular . . . normative judgments.” Unlike positive economic analysis, the positive economic analysis of tort law is tied to a particular form of normative judgment. Because there is no consensus about the normative purpose of tort law, one must engage in an interpretive exercise in order to figure out the substantive rationale for tort liability. The interpretive exercise has been conceptualized in different ways by different scholars, but there is widespread agreement that any viable legal interpretation must first offer a minimally plausible description of the important doctrines and practices comprising the body of law in question. This question of “fit” is addressed by the positive economic analysis of tort law, making it necessarily relevant to legal interpretation—a normative role that is absent from positive economic analysis in general. For example, positive analysis could show that tort law can be plausibly described as furthering the objective of allocative efficiency, in which case the interpretive inquiry would then try to identify an appealing norm or value that justifies this function for tort law. So, too, if positive analysis were to show that the important doctrines of tort law are inefficient, it would effectively rule out any normative rationale for tort liability that requires efficient rules. Positive analysis is normatively valuable even if tort law ultimately cares nothing about allocative efficiency. Due to its inherent normativity, the positive economic analysis of tort law may be subject to greater biases than positive economic analysis in general. This point has been sharply made by Kahan, who claimed that the economic analysis of law suffers from a “recurring bias” based on “a preference for storytelling that bolsters the credibility of [law and economics] as a general framework of analysis by showing that [economic] arguments ‘fit’ rather than conflict with existing doctrine.” Legal economists purportedly do so “to demonstrate the plausibility of economic frameworks generally—often in the face of skepticism by noneconomic theorists—by showing that these frameworks cogently explain why these rules have the content that they do”.
Source Publication
Research Handbook on the Economics of Torts
Source Editors/Authors
Jennifer Arlen
Publication Date
2013
Recommended Citation
Geistfeld, Mark A., "Fault Lines in the Positive Economic Analysis of Tort Law" (2013). Faculty Chapters. 713.
https://gretchen.law.nyu.edu/fac-chapt/713
