The New Old Efficiency Theories of Causation and Liability

Abstract

AbstractFor the last 40 years, efficiency theorists have attempted to demonstrate that tort liability in general and negligence liability in particular can best/only be explained by the hypothesis that judges are trying to maximize aggregate social welfare. Thirty years ago I published a pair of articles criticizing these attempts, noting especially the efficiency theorists’ inability to explain and justify the factual causation requirement in tort law. Nevertheless, the efficiency theorists have continued to make the same arguments. In this paper, I canvass the old arguments and their current restatements, including the attempts by some of the leading theorists to equate ex post analysis of actual causation with ex ante analysis of negligent conduct and attempts by others to explain the actual negligence liability rules. None of the rules proposed by the efficiency theorists is consistent with the practice of the courts, and none of them would promote efficient deterrence. Worse yet, the least descriptively plausible negligence liability rule proposed by the efficiency theorists is the one likely to be the least inefficient in actual practice, while the one assumed by most efficiency theorists will be the most inefficient. The fundamental problem with the efficiency theories is that they assume that the focus of law should be and is on the maximization of aggregate social welfare, rather than justice – the promotion of everyone’s equal external freedom in their interactions with others.