Document Type

Article

Publication Date

December 2002

Abstract

The academic literature generally assumes that an aggregate-risk-utility test is employed to determine whether conduct was reasonable or negligent. This aggregate-risk-utility test is a transparent implementation of the basic impartiality and aggregation principles of utilitarianism and the most popular (Kaldor-Hicks) interpretation of economic efficiency. Thus, the test's assumed prevalence as the criterion of reasonableness in negligence law has been highlighted by legal economists as confirmation of the utilitarian efficiency foundations of tort law, while those, including Ronald Dworkin, who think that the law, including tort law, is or should be grounded on principles of justice have sought to demonstrate that, contrary to appearances, the aggregate-risk-utility test is consistent with and best explained and justified by the principles of justice. As this article discusses, the attempts to explain and justify the aggregate-risk-utility test as an elaboration of the principles of justice have all failed. The leading justice theorists all now acknowledge, indeed insist, that the aggregate-risk-utility test cannot be reconciled with the principles of justice. The attempts to affect such a reconciliation were and are based on a fundamental error: treating the basic principles of utilitarianism, which are in direct conflict with the equal-freedom norm that underlies the principles of justice, as principles of justice. These attempts were motivated by a misunderstanding of actual negligence law. As is discussed in related articles (also available on SSRN), the aggregate-risk-utility test, although pervasive in the secondary literature and mentioned by a small minority of courts, is almost never used by the courts to decide whether particular conduct was negligent. Instead, the courts employ, explicitly or implicitly, a number of different criteria, depending on the rights and relationships among the parties, that are based on the principles of justice. Why, then, is the aggregate-risk-utility test pervasive in the secondary literature? The secondary literature is primarily the province of legal academics. The aggregate-risk-utility test of negligence was invented by legal academics and inserted in the first Restatement during the first part of the twentieth century, when utilitarianism was a popular moral and political theory, and its adoption in the Restatement assured its prominence in the secondary literature, although it continued to be infrequently mentioned and almost never used by the courts. Although it is now rarely noted, the risk-utility test in the first and second Restatements was significantly qualified. For example, it emphasized socially valuable rather than purely private benefits, and its drafters seemed to view it as a prohibitive-cost test, which requires risks to be reduced to the maximum extent feasible without significantly impairing (much greater) social benefits, rather than a literal aggregate-risk-utility test. Unfortunately, these qualifications have all been abandoned in the draft Restatement Third, which, despite widespread criticism, for the first time sets forth an explicit, reductionist, aggregate-cost-benefit test of negligence and then implausibly claims that this transparently utilitarian test is consistent with the principles of justice.

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