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The Effect of Electoral Institutions on Tort Awards

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  • Helland, Eric
  • Tabarrok, Alex

Abstract

Politicians are not neutral maximizers of the public good, they respond to incentives just like other individuals. We apply the same reasoning to those politicians in robes called judges. We argue that elected judges, particularly partisan elected judges, have an incentive to redistribute wealth from out of state defendants (non voters) to instate plaintiffs (voters). The partisan electoral hypothesis is tested first using data on 75,000 tort awards from across the states. We control for differences in injuries, state incomes, poverty levels, selection effects and other factors that may cause awards to differ across the states. One difference which appears difficult to control for is that each state has its own body of tort law. We take advantage of a peculiar aspect of American Federalism to make this distinction. In cases involving citizens of different states, aptly called diversity of citizenship cases, Federal judges apply state law to decide disputes. Diversity of citizenship cases allow us to test whether differences in awards are caused by differences in electoral systems or differences In state law. The evidence from the cross state regressions and from the diversity of citizenship cases, strongly supports the partisan election hypothesis. In cases involving out of state defendants and in state plaintiffs the average award (conditional on winning) is 42% higher in partisan than in non partisan states; approximately 2/3 rds of the larger award is due to a bias against out of state defendants and the remainder due to generally higher awards against businesses in partisan states.

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Bibliographic Info

Paper provided by Berkeley Olin Program in Law & Economics in its series Berkeley Olin Program in Law & Economics, Working Paper Series with number qt8rm9358c.

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Date of creation: 02 Apr 2002
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Handle: RePEc:cdl:oplwec:qt8rm9358c

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Cited by:
  1. Makowsky, Michael & Sanders, Shane, 2013. "Political costs and fiscal benefits: The political economy of residential property value assessment under Proposition 212," Economics Letters, Elsevier, vol. 120(3), pages 359-363.
  2. Eric Helland & Jonathan Klick & Alexander Tabarrok, 2005. "Data Watch: Tort-uring the Data," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 207-220, Spring.
  3. Eric Helland & Alexander Tabarrok, 2003. "Race, Poverty, and American Tort Awards: Evidence from Three Data Sets," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 27-58, 01.
  4. Helland, Eric & Klick, Jonathan, 2010. "To Regulate, Litigate, or Both," Working paper 32, Regulation2point0.
  5. Michael D. Makowsky & Thomas Stratmann, 2011. "More Tickets, Fewer Accidents: How Cash-Strapped Towns Make for Safer Roads," Journal of Law and Economics, University of Chicago Press, vol. 54(4), pages 863 - 888.

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