Research in Law and Economics: Volume 19

Discrimination law has evolved from litigating or prosecuting overt, individual cases of egregious behavior solely by means of anecdotal evidence and eyewitness testimony. Statistical evidence came to bear the imprimatur of the United States Supreme Court in the Seventies as a probative means of discerning guilt or liability, and has been used to shore up patterns of prejudice at a systemic level since. Courtrooms of the Twenty-First Century have struggled to define discrimination through a quantitative lens, nonetheless relying on qualitative evidence to assist the factfinder in rendering a verdict. Some definitions carry more precision and accuracy than others. Consider the inflammatory National Law Journal's indictment of the United States Environmental Protection Agency (‘EPA’) as an example of the latter. In 1992, the National Law Journal ran a Special Investigation of the EPA, claiming that the federal government had fostered a racist imbalance in hazardous site cleanup and its pursuit of polluters. Kudos to the columnists for bringing environmental equity into the spotlight of public debate and for forewarning and encouraging the EPA to conduct its enforcements reflectively, in order to avoid being on the receiving end of a Title VI lawsuit. Nonetheless, the methodology used by the National Law Journal belies a total understanding of the bureaucratic structure that pursued these actions and of the notion of statistical significance. This Article confines itself to Region X's actions between 1995 and 1999, applying linear regression and other statistical tests to determine whether biases, found using the National Law Journal's naive methodology, stand after due consideration of chance. The NLJ approach finds evidence of bias, but the author also conducts more complicated and appropriate analyses, such as those contemplated by the National Guidance. After issuing some provisos, the author dismisses charges of racism or classism. While the National Guidance represents a positive first step in identifying environmental justice communities, those with an above-average proportion of lower-class or non-Caucasian inhabitants, it lacks statistical sophistication and econometric depth. This Article concludes by recommending the use of normalized racial distributions, Gini coefficients, and Social Welfare Functions to the EPA and to other organizations conducting environmental justice analysis.

This paper provides a theoretical and empirical analysis of statutes of limitations for accident cases. The theoretical model formalizes the tradeoff underlying a finite statute of limitations; while a shorter statute limits injurers' exposure to liability, thereby curbing incentives for care, it also limits costly litigation associated with legal error. The model yields several comparative static results that are tested using cross-state variation in statutes of limitations for personal injury cases and accidental damages to property. In order to minimize the impact of historical inertia in the statutes, we used census data from 1910 and statute lengths from 1916. This represents the earliest period when there were both adequate census data to construct the explanatory variables, and a convenient survey of the statutes for the forty-seven states. Despite difficulties in constructing the data, the empirical model performs reasonably well in explaining variation in the statute lengths.

Zerbe has elsewhere developed a concept of economic efficiency that has implications for common law efficiency. Here we explore aspects of this concept of efficiency for the relationship between common law efficiency and considerations of distributive justice. In particular, we consider examples from criminal law — the law of rape, from contract law-exculpatory clauses, and from tort law-contribution. We find that including considerations of distributive justice better explains common law efficiency than traditional Kaldor-Hicks effficiency.

This paper examines and tests the implications of the court congestion hypothesis of Posner (1972) and Priest (1989). This hypothesis suggests that the effects of delay reduction programs may be largely or completely offset by a resulting increase in demand for litigation. We also analyze the effect on the pace of litigation of certain factors not explicitly considered by the Posner-Priest model.

We find that a delay reduction program was successful in reducing the time to settlement, and the time to verdict for tried cases, over the period covered by the data. As for behavioral responses, there is no evidence of an increase in the trial rate; there is, however, strong evidence of an increase in the number of cases filed annually in the court in question. Other results are consistent with the model's predictions about the effects of the prejudgment rate of interest.

This paper analyzes the perception by researchers, public policy makers, and physicians that the medical malpractice system is in disarray and in need of reform. The perception of a medical malpractice crisis arose because of what was viewed as sudden and dramatic increases in physician liability for malpractice. Contrary to the common perception, however, previous research has shown that historical growth rates in physician liability are similar in magnitude to current growth rates. This paper focuses on explaining the conditions under which increased physician liability would be optimal. According to the theoretical model, increased physician liability would be optimal when (1) physicians become more adept at curing patients, especially by increased technological ability, (2) the costs of physicians' time increases, or (3) the cost to physicians of defending against malpractice claims decreases. The paper carefully examines the available historical evidence that indicates that these three reasons account for much of the increased liability of physicians in the United States. The finding that much of the historical increases in physician liability are consistent with the model, further questions the existence of a medical malpractice crisis.

This paper empirically tests whether the nonprofit hospital is influenced by the community benefit standard by analyzing differences in nonprofit and for-profit hospital inpatient Medicaid share, while controlling for the effects of hospital market competition. Hospital specific data for this study are from the 1991 American Hospital Association Annual Survey of Hospitals and the 1991 Medicare Minimum Cost Report by the Health Care Financing Administration. The sample includes 192 for-profit, 899 nonprofit and 221 government-owned general acute care hospitals. Key variables in the multivariate analysis include hospital inpatient Medicaid share as the dependent variable and Medicaid demand, market competition and input quality as independent variables. The principal findings are that nonprofit hospitals serve a larger share of Medicaid inpatients than for-profit hospitals although the greater the presence of for-profit hospitals in the market (one measure of market competition) the smaller the nonprofit hospital Medicaid share. It is concluded that nonprofit hospitals reduce their level of community benefit, where community benefit is measured as a hospital's percent Medicaid share, in markets with a greater presence of for-profit hospitals.