The Propensity To Sue: WhyDo People Seek Legal Actions?
A Sense OfF Grievance Appears To Be As Important As Economic Factors
By Frederick C. Dunbar and Faten Sabry
Frederick C. Dunbar is senior vice president and founder of the mass torts and securities practices at NERA Economic Counsulting. He has been an adjunct professor at Fordham University School of Law and Columbia University School of Law. Prior to joining NERA, he taught at Tufts University and the Graduate School of Northeastern University. He has written numerous papers and is coauthor of the book Estimating Future Claims: Case Studies from Mass Torts and Product Liability. He received a B.A. in mathematics from Reed College and a Ph.D. in economics from Tufts University.
Faten Sabry is a vice president in the securities and mass torts practices at NERA Economic Consulting. She was a postdoctoral fellow at the International Food Policy Research Institute and was awarded several scholarships while at Stanford University, including the J.M Olin research fellowship. She received her B.A. and M.A. in economics from the American University in Cairo and her Ph.D. in business from Stanford Graduate School of Business.
Tort costs as a fraction of U.S. GDP have increased over three-fold in the past 50 years, now hovering slightly above two percent. Although there has been much ink spilled blaming the plaintiffs’ bar and so-called hellhole jurisdictions, less has been written about the behavior and attitudes of individual plaintiffs. Using a unique survey from the RAND Corporation, this paper empirically analyzes the perceptual and economic factors that affect the decision of an injured party to seek legal action. We find that, independent of economic incentives, perception of fault is the most important factor in the decision to make a claim. On average, a person who blames another person or firm for his or her injury is four times more likely to claim regardless of the type of injury involved. Unsurprisingly, the severity of injury—either as perceived by the claimant or as measured by actual injury during the accident—is another key factor in explaining the claiming rate. Also, as expected, there is a negative relation between age and claiming behavior. Somewhat unexpectedly, whether the person has had experience with filing before has no independent effect on the decision to claim.
