Thread by @life_is_art___

“Daniel Kessler and Mark McClellan (1996) found that these incentives translated into “defensive medicine”—use of precautionary treatments with minimal expected medical benefit out of fear of legal liability”
🧵#DoNoHarm #DEACenteredCare #TortReform #CAM
nber.org/system/files/c…

“The 1990s brought a new phenomenon: the use of litigation to impose regulation. In this scenario, exec-branch agencies or even private parties sue alleged wrongdoers and obtain settlements that govern the defendant’s future behavior through a system of highly specific rules.”

“However, the use of litigation as a means to force companies to accept regulation outside of the normal political process raised several new questions about litigation’s dynamic costs and benefits”. (Viscusi 2002; Moriss, Yandle, and Dorchak 2009) -cont. ⬇️

“On one hand, to the extent that litigation-inspired regulation addressed risks that, because of political market failures, were unacknowledged, then it might improve welfare”.

“Fredrick Schauer and Richard Zeckhauser explore a specific failure of litigation: its dependence on particular cases. They argue that making policy on the basis of cases is problematic because aberrational, rather than representative, cases tend to be the subject of lawsuits.”

“The fact that litigated cases are nonrepresentative is well known. But, as Schauer & Zeckhauser point out, failures of rationality, may nonetheless preclude parties from correctly translating nonrep. case outcomes into decision rules to govern behavior in ordinary situations”.

“More importantly, the cognitive availability of unrepresentative cases may lead judges to focus on the wrong issues; rules will be made to deal with the wrong events in the world.“

“Although this is a particular problem with litigation, they observe as well that many leg- islatively or administratively created rules and regulations, like Megan’s Law & the Brady Bill, are also spurred by unusual cases, & thus often suffer from their case-inspired origins.”

“Steve Parente evaluates the performance of a new regulatory mechanism to detect rx drug misuse. As he and many others have pointed out, prescription drug misuse generates large negative externalities. Most efforts at controlling misuse, however, are based on ex post approaches..

.. implemented by generalized law enforcement agencies. Parente proposes a medical-claims-based algorithm that compares a prospective drug pur- chaser’s observable characteristics to those that have been historically associ- ated with misuse.“

“He finds that several commonly-observable characteristics are significant predictors of misuse. He concludes with a discussion of how point-of-service fraud detection and intervention systems used by banks and credit card vendors could be adapted to this setting.”