Mental health professionals and the duty to warn: An economic analysis

Abstract

Economists have a long history of interest in the impact of law on economic behavior. Until 1960 academic interest was primarily focused on antitrust and tax law. With the publication of a now classic article by Coase (1960), economists began to examine how the common law, and, in particular, the assignment of property rights, influenced the allocation and distribution of society’s resources. The Coase article was followed by a book by Calabresi (1970) outlining a combined law and economic approach to the prevention of accidents and injuries. Not long thereafter, textbooks (Posner, 1972; Polinsky, 1983), empirical studies (e.g., Chelius, 1976), and new journals in law and economics began to appear. Today no aspect of the law seems to lie outside the purview of economists. Mental health law is no exception. Work in this area includes assessing the impact of commitment laws on institutionalization (Michaels, 1976) and the effect of a right to treatment on the cost of care (Rubin, 1978; Rubin, 1980). In this paper I extend the literature on economic analysis of tort law and mental health law to a concept of growing legal importance and one of great concern to psychiatrists and other mental health providers: the imposition on therapists of a duty to warn others about the possible dangerousness of a client. The logic of how a choice of liability rules influences behavior is well developed (Hirsch, 1979). But, as shown below, there are several aspects of a duty to warn which complicate the basic model. Moreover the extension of economic analysis to issues raised by judicial recognition of a duty to warn can clarify the social value of this concept and lead to some implications regarding its application. The paper begins with an overview of the basic concepts, principles, and conclusions of previous economic analysis of tort rules. In the next section these principles are discussed in the context of a general duty to warn. To make the effort more concrete I then turn to a review and discussion of the major legal opinions articulating a duty to warn, with a special concern about the economic issues previously discussed. This is followed by a graphical presenta-