Volume 2, No. 2 (February, 1992) pp. 33-34

REFORMING PRODUCTS LIABILITY by W. Kip Viscusi. Cambridge: Harvard University Press, 1991. 215pp Cloth $39.95.

Reviewed by William McLauchlan, Department of Political Science, Purdue University.

Kip Viscusi has contributed a good deal to the literature on and our understanding of economics and regulation. REFORMING PRODUCTS LIABILITY is his most recent work dealing with some aspect of the general topic. It sheds interesting and important light on features of the products liability "system," problems and effects of the current judicial system for awarding damages for injuries caused by products, and various policy proposals for producing more satisfactory results. Viscusi's work is not the exhaustive and systematic treatise one might expect. His results do not conclusively establish the policy choices that must be made. However, these results are partially due to the fractured nature of the "system" and the problems it generates. The analysis does contribute greatly to our understanding.

Viscusi's thesis is that the traditional legal system has produced a variety of unpredictable and inconsistent results. The author recognizes that this situation is not the result of a single problem, but rather the product of a complex collection of intended and unintended consequences of the "system" under which we operate. The allocative results of the "system" do not achieve the objectives he sets forth for the system -- hence the failure of the products liability system. Regardless of which liability regime the judiciary uses -- negligence, design defect, or strict liability -- or what kind of issue is litigated -- individual damages or toxic tort injury to a class of people -- damage awards are ad hoc, unpredictable and delayed, and do not achieve the appropriate objective through the resulting allocation of resources. Viscusi's goal is (1) deterrence, i.e., the reduction or reallocation of risk at appropriate levels, and/or (2) insurance sufficient to compensate victims. Given these objectives, Viscusi develops a set of analyses to establish the nature and the features of the "products liability crisis" and proposed remedies that some intend to solve the problem.

The methodologies Viscusi employs yield interesting and striking results. Although the data are somewhat limited and out-of-date, they contribute a perspective on the nature of the crisis that we have lacked so far. However, some of the data and the analysis suffer from insufficient explanation. Thus, several of the tables do not have adequate textual explanation with the result that their meaning and their significance is unclear (e.g., Tables 2.7 and 3.2). Nevertheless, the data do contribute a good deal because they are new and relevant to the policy debates treated in the book.

The documentation in this book is excellent. It is both current and exhaustive. It provides an extensive bibliography for anyone interested in this subject generally or in the particular policy debates that are ongoing about products liability specifi- cally.

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If there is a disappointment with this work, it is the lack of a complete or comprehensive perspective on products liability. Viscusi takes the view that there is a liability "system" but he fails to recognize that its component parts are unique and perhaps non-systemic. There are a variety of explanations for the operation of the current system that may make it more under- standable. However, Viscusi's economic perspective forces one to view the current system as not working (i.e., failing to achieve either social insurance or risk reduction and allocation objec- tives) and as requiring correction. The discussion of pain and suffering damages in Chapter 5 illustrates this problem with his approach. Furthermore, as Viscusi recognizes, there is no single problem or single solution for this subject. All the problems, e.g., mass toxic torts (asbestoses), cannot be treated identically, such as by ad hoc jury damage awards used in a design defect or inadequate hazard warning case. His view of these kinds of problems both restricts the understanding and analysis of products liability issues and it precludes a definitive "solution" to the problems or failures of the system.

The recommendations Viscusi makes for correcting flaws in the system are discussed in the last chapter. This presentation provides intriguing and interesting elaborations of some of the issues presented in the book. They provide a set of views about the problems and solutions to the individual and collective inefficiencies that the system produces. The end result of the analysis, however, is somewhat unsatisfactory because of Viscusi's limiting, initial assumptions about the subject.