The U.S. tort system, which consumes more than 2 percent of gross domestic product and is the world's most expensive, isn't making Americans any safer. In fact, the opposite is probably true.

The Association of Trial Lawyers of America claims that "the fact that the U.S. has the world's strongest economy demonstrates, in and of itself, that the tort system's substantial benefits outweigh the relatively small costs that may legitimately be charged to it."

At first glance, that assertion seems plausible. Every manufacturer weighs the costs and benefits of making his product safer. Since a dangerous product can impose costs on society that the producer does not bear, he may choose to under-invest in safety. A well-functioning tort system can force a producer to assume those costs.

A classic example is the case of the Ford Motor Co.'s Pinto, which had a fuel tank that sometimes exploded when hit from behind. Some of the plaintiffs in lawsuits against Ford alleged the company was aware the Pinto had a design flaw but didn't want to spend the money needed to correct it. While there is still some debate concerning the presence of a flaw in the Pinto, the design itself is, of course, a thing of the past. Absent an effective legal system, it might not be.

Accident Rate

On the other hand, the tort system can lead to inefficient outcomes if it is poorly targeted, or if juries impose costs on firms that are unreasonably large. To see whether the net impact is positive or negative, let's compare accident rates in the U.S. with rates in other countries where the tort system is less costly.

The result is surprising: The U.S. actually has a higher accident rate than many other countries. For example, in 2000, the U.S. had 19 non-transport accidental deaths per 100,000 people, which is greater than the rates in Australia, Canada, Germany, Spain and the United Kingdom. Moreover, tort costs as a percentage of GDP were more than half a percentage point higher in the U.S. than in those other countries.

Why is the U.S. accident rate so high? An important new study suggests it might actually be because of the tort costs themselves.

Bicycle Helmets

Paul Rubin and Joanna Shepherd of Emory University decided to investigate the impact of the legal system on accidental deaths. Their key insight is that torts are factored into the costs of new products, and that new products that are risk-reducing, such as bicycle helmets, often cost more because of large legal liabilities associated with accidents. Since large legal liabilities can drive up the costs of helmets and other risk-reducing products, they can actually discourage safety.

To test this theory, they gathered data in states that have adopted rules capping damages. If the high costs of torts drive up the costs of safety, then you'd expect to see large reductions in accidental deaths in states that pass significant change in tort rules. This is exactly what Rubin and Shepherd found. Accidental deaths declined by an average of 4.7 percent in the 15 states that adopted caps on non-economic damages.

Saving Lives

The result is startling, and suggests the high costs of the U.S. tort system lead to significantly more accidental deaths each year.

How many? The Census Bureau currently estimates the U.S. population is approximately 297 million. According to my own calculations, if every state adopted the tort revisions of the 15 studied by Rubin and Shepherd, then given accident rates and responses in their study, accidental deaths in the United States would decline by about 2,100 a year.

To put that in perspective: 27 people died in accidents involving Ford Pintos in which the gas tank exploded. If that number of deaths can prompt a media and legal storm that forces change, perhaps the 2,100 deaths that will occur this year because of an incomplete overhaul of the tort system can do the same.

Kevin A. Hassett is a resident scholar and director of economic policy studies at AEI.