Table of Contents

Research Handbook on the Economics of Torts

Research Handbook on the Economics of Torts

Research Handbooks in Law and Economics series

Edited by Jennifer H. Arlen

This pioneering Handbook contains specially-commissioned chapters on tort law from leading experts in the field. This volume evaluates issues of vital importance to those seeking to understand and reform the tort law and the litigation process, taking a multi-disciplinary approach, including theoretical economic analysis, empirical analysis, socio-economic analysis, and behavioral analysis. Topics discussed include products liability, medical malpractice, causation, proximate cause, joint and several liability, class actions, mass torts, vicarious liability, settlement, damage rules, juries, tort reform, and potential alternatives to the tort system. Scholars, students, legal practitioners, regulators, and judges with an interest in tort law, litigation, damages, and reform will find this seminal Handbook an invaluable addition to their libraries.

Chapter 2: Economic analysis of medical malpractice liability and its reform

Jennifer Arlen

Subjects: economics and finance, law and economics, law - academic, law and economics, law of obligations


Patients seeking medical treatment face a serious risk that they will be severely injured or killed by the treatment they receive. Studies suggest that 4 to 18 percent of patients seeking care in hospitals are the victims of preventable medical error, with many suffering serious injury. About 1 percent of hospital patients suffer errors that constitute medical negligence (Brennan et al. 1991). Moreover, medical error reaches beyond hospital walls. Many patients seeking care from their regular physicians routinely receive less than medically recommended care. These medical errors cause enormous human suffering. They also are costly. Medical error increases average hospital costs by $1,246 per patient admission, and increases average costs in the riskiest hospitals by $4,769 per patient admission (Mello et al. 2007, 847). Overall, medical error costs about $17–29 billion per year (Institute of Medicine 2000).

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