Assessing the Insurance Role of Tort Liability after Calabresi

44 Pages Posted: 14 Dec 2012 Last revised: 1 Jul 2013

See all articles by W. Kip Viscusi

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Joni Hersch

Vanderbilt University - Law School; IZA Institute of Labor Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - College of Arts and Science - Department of Economics

Date Written: June 27, 2013

Abstract

Calabresi’s theory of tort liability (1961) as a risk distribution mechanism established insurance as an objective of tort liability. Calabresi’s risk-spreading concept of tort has provided the impetus for much of the subsequent development of tort liability doctrine, including risk-utility analysis and strict liability. Calabresi’s analysis remains a powerful basis for modern tort liability. However, high transactions costs, correlated risks, catastrophic losses, mass toxic torts, shifts in liability rules over time, noneconomic damages, and punitive damages affect the functioning of tort liability as an insurance mechanism. Despite some limitations of tort liability as insurance, tort compensation serves both a compensatory and deterrence role. Tort liability retains a valuable risk-spreading function in many situations and may be superior to alternative institutional mechanisms in fostering incentives.

Keywords: tort liability, torts, damages, insurance, Calabresi

JEL Classification: K13, K0, I13

Suggested Citation

Viscusi, W. Kip and Hersch, Joni, Assessing the Insurance Role of Tort Liability after Calabresi (June 27, 2013). Vanderbilt Law and Economics Research Paper No. 12-35, Available at SSRN: https://ssrn.com/abstract=2189090 or http://dx.doi.org/10.2139/ssrn.2189090

W. Kip Viscusi (Contact Author)

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Vanderbilt University - Owen Graduate School of Management

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Vanderbilt University - Strategy and Business Economics

Nashville, TN 37203
United States

Joni Hersch

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
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HOME PAGE: http://law.vanderbilt.edu/bio/?pid=joni-hersch

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Vanderbilt University - Owen Graduate School of Management

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HOME PAGE: http://business.vanderbilt.edu/bio/joni-hersch/

Vanderbilt University - College of Arts and Science - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States

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