The following is drawn from a news release by the Economic Policy Institute, an economic policy organization established in 1986, it says, " to broaden the discussion about economic policy to include the interests of low- and middle-income workers."

The Economic Policy Institute (EPI), a nonprofit, nonpartisan think tank based in Washington, analyzed in detail the cost estimates of the U.S. tort system published by Tillinghast-Towers Perrin (TTP), a consulting firm whose clients include many of the world's largest insurance companies and whose findings are being used in various government and legislative efforts.

The 20-page study by economist Lawrence Chimerine and EPI vice president Ross Eisenbrey, entitled Frivolous Case for Tort Law Change, concludes that TTP's cost estimates are one-sided, inflate the impact of the tort system and ignore its benefits, and that corroboration supporting their numbers is weak or nonexistent.

Tort litigation has been blamed for driving liability insurance premiums to excessive levels, reducing real wages and overall employment, undermining corporate profits, dampening productivity growth, discouraging research and development, and generally reducing the willingness of corporations and individuals to take reasonable risks (such as introducing new products) that may benefit themselves and society. There is scant evidence for any of these claims, EPI contends.

EPI's examination of available data and economic trends reveals the following:

• Half of the "costs" that Tillinghast-Towers Perrin attributes to the tort system are not costs in any real economic sense. They are transfer payments from wrongdoers to victims. As the Congressional Budget Office points out, costs that "merely shift money from injurers to victims...are not true costs to society as a whole." (CBO 2003, 19). (See part I of the discussion below.)

• The tort system is not the cause of insurance premium increases in recent years. The actual causes are the collapse of the stock market; record low long-term interest rates, which reduced investment income for insurance companies; the recession, which increased claims in some lines of insurance; and high and rising medical costs, which pushed up health insurance premiums.

• No evidence has been presented that the tort system has reduced real wages and caused job loss. The claim that tort costs amount to a 5 percent "tax" on wages is founded on a gross overestimation of tort costs and extreme and false assumptions about tax shifting and the extent to which tort costs are random and excessive.

See the EPI report "Frivolous Case for Tort Law Change."

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