Post by Keith Hylton
Causation is a topic that has generated a lot of interest from torts theorists. Law and economics has been a bit late to the party, but at least they have brought some interesting findings with them. The innovation offered by law and economics is a set of predictions about the incentive effects of causation rules. This distinguishes law and economics from traditional moral reasoning because the law and economics approach makes statements about the actual effects of causation rules on tortious conduct. To law and economics scholars, it is only after clear predictions can be made about incentive effects that we can start to make moral assessments of the law. From the perspective of economics, it is of little use to offer a moral assessment of some legal doctrine without being able to say anything about its effects on behavior. A law may seem morally ideal in its expression, but if its effect is to encourage socially destructive behavior, then the law must be considered a moral as well as an operational failure.
I’ve recently focused on the incentive effects of causation requirement in tort law. Earlier work on the incentive effects of causation was done by Steve Shavell, William Landes and Richard Posner working together, and Mark Grady. It happens that the work of these earlier authors can be reconciled under a more general model that requires only a slight tweak on the traditional Hand Formula. Tweaking the Hand Formula to take causation into account also reveals a more troubling issue: the difference between ex ante and ex post analysis of legal standards.
When this issue – ex ante versus ex post assessment – is taken into account it turns out the effects of the causation requirement on incentives to take care are complicated. The negligence test can induce excessive care or inadequate care, depending on the probability laws governing relevant causal interventions. One immediate implication is that the moral analysis of causation must also become correspondingly complicated and nuanced. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2628321)