The Propensity To Sue: Why Do People Seek Legal Actions?

Tort costs as a fraction of U.S. GDP have increased overv 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.Business Economics (2007) 42, 31–42; doi:10.2145/20070203