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In response to the perception that liability insurance coverage was becoming more costly and less available, most states enacted legislation in the mid-1980s that reformed the common-law rules and other court procedures involving tort litigation. Despite those reforms, the U.S. tort liability system remains controversial. Some critics contend that the system, which holds parties liable for injuries to people or their property, is costly and inefficient, arbitrary and open to abuse. Opponents of tort reform disagree with those criticisms and also point to a lack of evidence on the effectiveness of past reform efforts.

Several bills now before the Congress would change the rules at the federal level that govern tort claims for medical malpractice and asbestos exposure and claims litigated as class actions. Most states have already enacted reforms similar to those under consideration. This Congressional Budget Office (CBO) paper reviews the major studies that evaluate the effects of state-level tort reforms and assesses the relevance of that research to similar federal proposals. Both this report and a companion CBO study from October 2003, The Economics of U.S. Tort Liability: A Primer, were prepared at the request of the Senate Budget Committee. In accordance with CBO's mandate to provide impartial analysis, this report makes no recommendations.

Cary Elliott of CBO's Microeconomic and Financial Studies Division wrote the paper under the supervision of David Moore and Roger Hitchner. The author received valuable comments and assistance from Robert Arnold, David Austin, Perry Beider, Stuart Hagen, Allison Percy, and Shou Wang of CBO, as well as Jeff O'Hara, formerly of CBO, and Albert Yoon of the University of Chicago. (The assistance of external reviewers implies no responsibility for the final product, which rests solely with CBO.)

Christine Bogusz edited the paper, and John Skeen proofread it. Angela Z. McCollough prepared drafts of the manuscript, Allan Keaton and Maureen Costantino prepared the report for publication, and Maureen Costantino designed the cover. Lenny Skutnik printed the copies of the report, and Annette Kalicki produced the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
June 2004