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The Costs of the Costs of Accidents

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The Costs of the Costs of Accidents THE COSTS OF THE COSTS OF ACCIDENTS JULES COLEMAN* Guido Calabresi's The Costs of Accidents' is unquestionably the most important book written in tort theory during the past fifty years. Much of what has been written since the book's publication either extends Calabresi's insights or reacts critically to them; some essays do a bit of both. Its lessons are by now so absorbed as to constitute part of the common understanding of the subject. The Costs of Accidents not only provides the intellectual framework within which the current de- bate occurs, but the language in which it is expressed as well. In time, the expression "cheapest cost avoider" will no doubt find its way into the Italian translation of the Oxford English Dictionary and may even appear someday as an entry in the Authorized Version. The Costs of Accidents has redefined both tort law and tort theory-often, but not always, for the betterment of each. The primary aim of law is to regulate conduct through norms- usually rules-that create reasons, grounds, or warrants for action. Many of these reasons take the form of rights, privileges, and liberties on the one hand, and duties and other encumbrances on the other. Arguably, both the laws of tort and crime impose duties or prohibi- tions on agents, whereas the law of contract confers powers on individ- uals to create legally enforceable rights and duties. To be sure, we can imagine certain acts currently proscribed by statute no longer being criminalized, and others not currently prohib- ited by law coming to be proscribed. Still, it is difficult to imagine a legal regime that does not include a criminal law, that is, a body of law designed to prohibit certain conduct and to hold those who fail to comply with its demands liable to punishment-state imposed hard treatment consisting primarily of the loss of liberty and assorted legal rights. In contrast to the criminal law that imposes duties, contract law confers powers. In particular, it empowers individuals to create a le- * Wesley Newcomb Hohfeld Professor of Jurisprudence, Yale Law School; Professor of Philosophy, Yale University. I would like to thank John Gardner and members of the New York Area Tort Theory Discussion Group, especially Ben Zipursky, Mark Geistfeld, Catherine Sharkey, Anthony Sebok, Stephen Perry, and Anita Bernstein for comments on an earlier draft of this paper. 1. GUIDO CALABRESI, THE COSTS OF ACCIDENTS: A LEGAL AND ECONOMIC ANALYSIS (1970) [hereinafter THE COSTS OF ACCIDENTS]. HeinOnline -- 64 Md. L. Rev. 337 2005 MARYLAND LAW REVIEW [VOL. 64:337 gaily enforceable regime of rights and duties. Duties are imposed via the process of contracting, that is, derivatively, as the result of individ- uals exercising the powers conferred by law. In the main, the law does not impose contractual rights and duties; it confers powers on individ- uals to do so and provides a regime by which the rights and duties thereby created are enforced by law. What the law does is create a system of powers that includes the power to bind oneself to others and the power to call upon the state's authority to enforce the normative structure the exercise of those powers creates. Although the formulas for empowering individuals to change their normative relations with one another may change with time and technology, as may the mechanisms for enforcing the rights and du- ties thereby created, it is hard to imagine a legal regime lacking such empowering rules: hard, in other words, to imagine a legal regime forgoing an opportunity to provide individuals with this way of expres- sing their autonomy and of making their commitments to one an- other credible. While it may be difficult to imagine a legal regime with neither criminal nor contract law, it is not nearly so difficult these days to imagine a legal regime without tort law. Indeed, for at least the last twenty-five years, legal reformers, with varying degrees of enthusiasm, have suggested one or another plan for doing away with all of tort or with significant parts of it. Reality has in fact done reformers one bet- ter, since New Zealand has already abandoned tort law as a mecha- nism for dealing with a broad range of ordinary accidents.2 It is natural to ask whether there is something special about tort law that makes it more vulnerable in this sense. Why do various alter- natives to tort law-for example, mandatory first-party insurance or public insurance conjoined with increased public enforcement of safety norms-seem altogether plausible, whereas efforts to abandon criminal law or contract strike us not only as implausible, but unthinkable? We will not get very far in answering this question if we accept without reflection the inference that doing away with criminal law and contract, for example, is in fact unthinkable. While it may be hard today to imagine a legal regime without either, it was not always so. It was not all that long ago that Grant Gilmore proclaimed the death of 2. See generally Donald A. Rennie, The New Zealand Accident Compensation Scheme, in COMPENSATION FOR PERSONAL INJURY IN SWEDEN AND OTHER COUNTRIES 143 (Carl Oldertz & Eva Tidefelt eds., 1988). HeinOnline -- 64 Md. L. Rev. 338 2005 2005] THE COSTS OF THE COSTS OF ACCIDENTS contract: a death owing in part to the fact that contract law was being swallowed up by-of all things-tort law.3 And there have always been reform movements that would have us abandon the criminal law in favor of a system of "treatment." How familiar at one time was the thought that so-called criminal wrongdo- ing does not so much evidence morally culpable conduct worthy of punishment as it reveals the existence of a psychosocial disorder that calls for health care, not hard time! Many areas of the law have been the object of the reformer's eye-not just tort law. The vulnerability of areas of the law to the reformer's knife can depend on a variety of factors, often having little to do with the intrinsic nature of the law itself. In the case of the criminal law, for example, reform movements have largely sprung from a view about the nature of human motivation, or, in some cases, skepticism about the possibility of free will. What explains the particular vulnerability of tort law at this point in time? I want to suggest that three factors have played a prominent role in the current conceptualization of tort law, and that this way of conceptualizing tort law has had the effect of rendering it vulnerable to the reformer's knife. Two of these factors receive their most impor- tant expression in Calabresi's The Costs of Accidents. I fear I have to take at least partial responsibility for the third. Some good, but more bad, has come out of the reconceptualization of tort law. In this Essay, then, I want to demonstrate the contributions that both Calabresi and I have made to the reconceptualization of tort law. Calabresi's key contribution in this regard is not his emphasis on the goal of efficiency as a standard for assessing tort law. Rather, it is his claim that the domain of tort law is "accidents taken as a whole," as well as his emphasis on "costs" as the normatively most important con- ceptual category for thinking about accidents. My contribution has been to emphasize that philosophical appropriateness of separating two sets of questions from one another. The first is the distinction between the grounds of the claim to repair and the grounds of the duty to compensate. The second is the distinction between the grounds of each and the modes of each, that is, between the sources of rights to repair and duties to provide it on the one hand, and the institutional mechanisms for doing so on the other. Unlike my teacher, in retrospect, I think this reconceptualization has proven more harmful than insightful. 3. GRANT GILMORE, THE DEATH OF CONTRACT (1974). HeinOnline -- 64 Md. L. Rev. 339 2005 MARYLAND LAW REVIEW [VOL. 64:337 Part of what I hope to do then is rectify the wrongs I have com- mitted to tort theory. I. ACCIDENTS AND COSTS In The Costs of Accidents Calabresi asks a straightforward question: How should the costs of accidents be distributed? To answer that question, he introduces two general criteria of assessment: cost avoid- ance and fairness.4 Cost avoidance is further divided into three cate- gories: primary, secondary, and tertiary.' Roughly, these categories cover the costs of avoiding accidents-that is, deterrence-the costs of bearing the costs of accidents-that is, cost spreading-and the costs of administering systems of deterrence and spreading. In general, we want to avoid accidents that are not worth their costs and to spread the costs of accidents that are not worth the costs of preventing them. We do not want to deter or spread without regard to the costs of do- ing so. We want optimally to reduce and spread risk. Or to put it in the language that has come to be represent the very idea of the effi- cient allocation of accident costs: We want to minimize the sum of the costs of accidents and the costs of avoiding them. And more. We want not only to optimize accident costs, but we want to do so in a way that is fair or that meets the demands ofjustice. The relationship between fairness and justice in Calabresi's work has always been somewhat unclear. Nor is it clear whether in Calabresi's view justice (and fairness) are side constraints on the pursuit of cost avoidance or simply other goals to be balanced against the goal of optimally reducing accident costs.6 These issues can be and have been much debated, but they are of no concern to us here.
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