The Welfare Effects of Medical Malpractice Liability.

We use variation in the generosity of local juries to identify the causal impact of medical malpractice liability on social welfare. Growth in malpractice payments contributed at most 5 percentage points to the 33% total real growth in medical expenditures from 1990-2003. On the other hand, malpractice leads to modest mortality reductions; the value of these more than likely exceeds the costs of malpractice liability. Therefore, reducing malpractice liability is unlikely to have a major impact on health care spending, and unlikely to be cost-effective over conventionally accepted values of a statistical life.