Tort Reform Study? Not!

The Center for Justice and Democracy has a new eye-ball study.  (Take some states and see if they look the same.)  The claim being made is that tort reform was not needed because no one is raising rates anymore.  In fact, this is true no matter whether the states had damage caps.  I’ll comment more on this later, but just looking at 5 states with caps and 5 states without caps is not a study. With ten data points it is difficult to get statistical validation anyway. What is important is the relative size of the premium, the health of the market, whether other tort/liability reforms are in place and not just whether the states had premium increases.  I am always complaining about these studies because only one statistic is shown and one never knows what is really going on.  For example, here is an example using FAKE data which is consistent with the CJD’s result.  On the left hand axis I put premiums and on the horizontal axis is the year.  Note that both cap and no cap states had no price increases in 2005. 

However, we see that the no-caps state have lower premiums than the high cap states using my FAKE data.  Now just to make sure that I don’t get bombarded by people claiming my graph is fake—I admit it for the purpose of showing that one can come up with a story consistent with the story proposed by the CJD and the proponents of tort reform (note the warning graphic and the name of the jpeg file).  These one-statistic-explains-all stories are just poor research and remind me of someone else.

Comments

[Kir]

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