Products Liability and Economic Activity: An Empirical Analysis of Tort Reform's Impact on Businesses, Employment, and Production

By Shepherd, Joanna M. | Vanderbilt Law Review, January 2013 | Go to article overview

Products Liability and Economic Activity: An Empirical Analysis of Tort Reform's Impact on Businesses, Employment, and Production


Shepherd, Joanna M., Vanderbilt Law Review


For decades, advocates of tort reform have argued that expansive products liability stifles economic activity by imposing excessive and unpredictable liability costs on businesses. Although politicians aspiring to create jobs, attract businesses, and improve the economy have relied on this argument to enact hundreds of reforms, it has largely gone empirically untested. No longer. Using the most comprehensive dataset to date on products liability reforms and economic activity, I find that many reforms that restrict the scope of products liability improve economic conditions. Specifically, these reforms increase the number of businesses, employment, and production in the industries that face most of the products liability claims: the manufacturing, retail, distribution, wholesale, and insurance industries. However, several other popular reforms have either a weak effect or no effect on economic activity. My results have important implications for recently enacted reforms and proposed legislation: while many of these reforms will improve economic conditions as lawmakers hope, others will have no effect. In the current economy, as business groups intensify their demands for tort reform, my findings provide critical evidence for courts and legislatures that are reassessing the appropriate scope of products liability.

INTRODUCTION ...............................258

I. THE EVOLUTION OF PRODUCTS. LIABILITY LAW ..............................262

A. Early American Law ..............................263

B. Modern American Law ..............................265

C. The Liability "Crisis" ..............................266

D. A Period of Reform ..............................267

1. Statutes of Repose ..............................269

2. Reforms to Product- Seller Liability ..............................270

3. Reforms to Joint and Several Liability ..............................271

4. Reforms to the Collateral Source Rule ..............................272

5. Nonecono mie Damage Caps ..............................272

6. Punitive Damage Caps ..............................274

7. Comparative Negligence ..............................275

8. Other State-Level Reforms ..............................276

9. Federal Reforms ..............................276

II. BENEFITS AND COSTS OF PRODUCTS LIABILITY LAW ..........278

A. Benefits of Products Liability Law ............279

1. Compensation of Victims ..............................279

2. Improvements in Product Safety ...........281

3. Reduction in Purchases of Risky Products ....285

B. Costs of Products Liability Law ..............................285

1. Excessive Transaction Costs ..............................286

2. Deterrence of Socially Beneficial Purchases.......................................................................287

3. Reduction in Economic Activity...................................287

III. Empirical Analysis of the Relationship between Products Liability and Economic Activity...........................290

A. Measures of Products Liability......................................291

B. Measures of Economic Activity.....................................293

1. Number of Small Business Establishments..................................................................294

a. Small Businesses...........................................................294

b. High-Risk Industries......................................................296

2. Employment..................................................................297

3. Gross State Product.......................................................298

C. Econometric Methodology..............................................298

D. Empirical Results...........................................................301

1. Business Establishments..................... …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Products Liability and Economic Activity: An Empirical Analysis of Tort Reform's Impact on Businesses, Employment, and Production
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.