Tort Law and the American Economy

It is common to hear claims that tort law is undermining the ability of America to grow economically. Tort liability imposes costs on businesses, who complain about its detrimental effects on investment and innovation. While many of these reports are anecdotal, or even false, there is growing evidence on the economic effect of tort law. Tort reform proposals are pressed, and often passed, on the basis of economic concerns. In this narrative, the law is unduly pro-plaintiff, which discourages business investment and innovation and needlessly raises the costs of products.1 Despite these common claims of the economic harms of tort law, there is a remarkable paucity of actual study on the question. Only very limited research exists on the effects of tort law on state economies, and much of that research considers only particular tort reforms and not the overall state of a state‘s law. Many factors will influence the economies of the various states, of which tort law is but one. However, if its economic effect were truly profound, one would expect to see some economic benefit, on some measure, for states with relatively prodefendant tort law. I examine the effects of tort law using indices created by two pro-defendant organizations, the United States Chamber of