$600 Billion-$900 Billion Per Year…$8,000-$12,000 Per Year For Family Of Four
March 18, 2009
That’s how must our litigation-happy culture costs American families and America’s economy every year, according to Ted Frank, Director of the American Enterprise Institute Legal Center for the Public Interest. In recent testimony before the Senate Republican Conference, Frank adds more hard facts to the legal reform debate. Some highlights:
- The direct costs to the U.S. economy from excessive tort litigation are at least $128 billion per year.
- The indirect costs to the American economy include:
- Over $400 billion per year of loss from the effect of tort litigation on wages;
- Between $30 billion and $120 billion per year from deadweight loss on defensive medicine;
- Between $30 billion and $120 billion from deadweight loss from the deterrence of manufacturing innovation;
- Between $11 billion and $104 billion per year from lives lost due to lost innovation in the pharmaceutical industry.
All in all, the total “tort tax” on America’s economy comes down to between $600 billion and $900 billion per year or $8,000 - $12,000 every year on a family of four. Although Frank uses different methodology, his final tally is in the same ballpark as a 2007 report issued by the Pacific Research Institute, which estimated that “America wastes $589 billion each year from excessive tort litigation” or $7,848 for a family of four.