Deterrence and liability for intentional torts

Law and economics suggests that liability for intentional torts is motivated by deterrence. The tortfeasor’s investments in undertaking the intentional act and the victim’s investments in precautions against the harm arising from the act are likely to be socially wasteful. Further, especially in the case of battery, the benefit of committing the intentional act will generally fall short of the loss to the victim. For these reasons, it makes sense to impose liability on the tortfeasor for the full loss experienced by the victim of an intentional tort. This deterrence theory requires that intentional tortfeasors are sensitive to liability exposure. To test this assumption, we examine changes in state-level homicide rates in response to caps on non-economic damages in tort. We find that murder rates increase by more than 5 percent when states adopt caps on non-economic damages.