The controversy regarding the appropriate purpose of tort law continues to rage. Some advocate that tort rules should minimize accident costs as an instrument for maximizing social welfare and wealth. Others argue that tort rules should fairly protect the individual right to physical security. Although these two conceptions of tort law are fundamentally incompatible, it is a separate question whether the requirements of welfare economics can be satisfied by rights-based tort rules. This article identifies a class of rights-based tort rules that conforms to existing tort practice and satisfies the distributional requirements of welfare economics. These fair tort rules protect the individual right to physical security for reasons of individual autonomy, a justification that rules out the maximization of social welfare as a reason for compromising the right-holder’s autonomy. The tort right, however, does not constrain social welfare in all possible states of the world. The right only protects the autonomy of the right-holder and does not bar the right-holder from exercising her autonomy. The right-holder can exercise her autonomy to promote her welfare, eliminating any conflict between the tort right and the Pareto principle. In addition to being consistent with the Pareto principle, this class of rights-based tort rules satisfies the equity-efficiency criterion. These rights-based tort rules therefore satisfy the two requirements of welfare economics that are relevant for evaluating distributional rules. The substantive compatibility of rights-based tort rules and welfare economics is further confirmed by analyses showing that any rights-based tort system is likely to provide an important role for economic analysis, one that operates within the constrained space of individual welfare. As a distributional matter, there is no conflict between efficiency and fairness in tort law.
Date of Authorship for this Version
Geistfeld, Mark, "Efficiency and Fairness in Tort Law" (2006). New York University Law and Economics Working Papers. Paper 48.