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Cost-Benefit Analysis of Class Actions: An Israeli Perspective

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  • Alon Klement
  • Keren Weinshall-Margel

Abstract

We propose an analytical framework for evaluating the effectiveness of class actions, in which their costs are estimated against the benefits they produce in attaining three objectives: law enforcement and deterrence; access to courts; and compensation. We outline parameters for measuring the social costs and benefits relevant to these objectives and evaluate them for Israeli class actions, based on original data including all class actions filed between 2006 and 2012 (n = 2,056). Findings indicate that class actions did not substantially facilitate access to courts and compensation, and that they had limited success in realizing law enforcement and deterrence.

Suggested Citation

  • Alon Klement & Keren Weinshall-Margel, 2016. "Cost-Benefit Analysis of Class Actions: An Israeli Perspective," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 75-103, March.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201603)172:1_75:caocaa_2.0.tx_2-1
    DOI: 10.1628/093245613X14472269022780
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    References listed on IDEAS

    as
    1. Eric Helland & Jonathan Klick, 2007. "The Effect of Judicial Expedience on Attorney Fees in Class Actions," The Journal of Legal Studies, University of Chicago Press, vol. 36(1), pages 171-187, January.
    2. Theodore Eisenberg & Christoph Engel, 2014. "Assuring Civil Damages Adequately Deter: A Public Good Experiment," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 11(2), pages 301-349, June.
    3. Stephen J. Choi, 2007. "Do the Merits Matter Less After the Private Securities Litigation Reform Act?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 598-626, October.
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    Cited by:

    1. Christoph Engel & Urs Schweizer, 2016. "Beyond Privity 33rd International Seminar on the New Institutional Economics June 10-13, 2015, Edinburgh, United Kingdom," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 1-4, March.
    2. Christoph Engel & Alon Klement & Karen Weinshall Margel, 2017. "Diffusion of Legal Innovations: The Case of Israeli Class Actions," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2017_11, Max Planck Institute for Research on Collective Goods, revised Jan 2018.
    3. Michael Heise, 2016. "Assessing Assessments of Israel's 2006 Class Action Law," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 108-112, March.

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    More about this item

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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