The Missing Theory of Variable Selection in the Economic Analysis of Tort Law

Abstract

The Article argues that the economic analysis of tort law has yet to satisfactorily answer a critical threshold question: which of the many inputs that lead to an accident should be included in a court’s liability analysis? As a result of this missing theory, the economic analysis of tort law provides indeterminate prescriptions. The Article shows how three separate areas of the literature can be seen as being about the general problem of which variables to include in the liability test and the tension between shortand long-run optima. The Article proposes an analytical framework—a continuum from short to long run—to understand the problem and show the way in which courts have crafted tort law doctrines to address the issue. Finally, the Article concludes that no satisfactory general theory is possible and that the optimal combination of liability rules will depend upon empirical questions about specific accident contexts. * B.A. Yale University; J.D., Yale Law School. Helpful comments were made by participants in the John M. Olin Program in Law and Economics at which an earlier version of this paper was presented. I would also like to thank Susan Rose-Ackerman, Michelle Anderson, Kate Brownlee, Henry Hansmann, Alvin Klevorick, Jeff Kling, Yair Listokin, Daniel Medwed, Teemu Ruskola, Vera Scanlon, and especially Guido Calabresi, without whom this paper would not be possible.