Larry Summers, the president of Harvard, stirred up a hornet’s nest when, at a recent conference on the underrepresentation of women and members of minority groups in science and engineering, he suggested the following two possible reasons why women are underrepresented. First, women’s math and science aptitude test scores exhibit less variance than men’s and this difference may have a biological basis. Second, women are on average unwilling to make the same sacrifice of time to career that men are willing to do. (A third reason, he suggested, might be discrimination against women.) Conference. (For an interesting discussion of the issues, see Saletan.) I want to consider whether there is any merit to his suggestions—but also whether he should have raised the issue at all, given his position as the president of the nation’s best-known university, and whether, having done so and been criticized, he should have apologized, as he did; he said that he had been “wrong to have spoken in a way that has resulted in an unintended signal of discouragement to talented girls and women,” although he did not repudiate the content of his remarks. Summers.
Were Summers an expert on the reasons for gender-related occupational patterns, and as a result had special insight into the issue of women’s lack of proportional representation in science careers, there might have been a real cost in his failing to speak to the issue. However, since he is not an expert in this area, there would have been no great loss to human knowledge had he kept silent and let the experts engage with the issue. Although it is a highly sensitive issue, it is not—unlike the issue of racial differences—so hot a topic that no reputable academic dares investigate it.
So the benefit of Summers’s speaking out was small. The cost would have been small, too—were he not the highly visible president of the nation’s most famous university. For as a practical matter, chief executive officers do not enjoy freedom of speech. A CEO is the fiduciary of his organization, and his duty is to speak publicly only in ways that are helpful to the organization. Not that he should lie; but he must avoid discussing matters as to which his honestly stated views would harm the organization. (Judges also lack complete freedom of speech; as I mentioned in our introductory blog posting, I am not permitted to comment publicly on any pending or impending court case.) Summers must think that his remarks did harm the university, as otherwise he would not have apologized—for he apologized not for what he said, but for saying it.
A university president might make provocative remarks because he wanted to change his university in some way, for example by encouraging greater intellectual diversity, or because he wanted to signal strength, independence, intransigence, or other qualities that he thought would increase his authority, or even because he wanted to intimidate certain faculty by seeming to be a “wild man.” But that explanation is not available to Summers, because of the apology. And the apology was probably another error, whether or not he should have raised the issue of women’s relative scientific aptitudes or tastes in the first place. The apology signaled weakness, and it cannot help a leader to appear weak. Summers has enemies in the Harvard faculty who will be encouraged by his apology to press him for concessions on issues important to them—such as diversity hiring.
The apology was also condescending. It assumed that women’s career commitments are so fragile that Summers’s remarks at the conference would actually reduce the number of women who choose a science career. Science is a tough career, both highly competitive and not very well paid. It is not for the fainthearted of either sex. If (as I doubt) women are as easily discouraged as Summers’s critics believe, their future in science is not bright.
The apology was particularly unfortunate because it dignified the criticisms of Summers’s remarks at the conference, and those criticisms were obtuse—which brings me at last to the substantive issue. The critics misunderstood Summers to have been claiming that female scientists are inferior to male scientists. Not at all. He made no comparison between male and female scientists. He was venturing possible explanations other than discrimination (the politically correct explanation) for why there are fewer female scientists than male. The ratio of female to male scientists is unrelated to the average quality of female and male scientists, and indeed is consistent with the average female scientist’s being abler than her male counterpart. In fact if, as Summers’s critics allege, and Summers admitted was a possibility, discrimination against women is a major cause of the imbalance in the number of male and female scientists, the implication is that the average female scientist is probably abler than the average male scientist. Employment discrimination usually manifests itself in a refusal to hire a person in the disfavored class unless he or she is so superior that the refusal would impose serious costs on the institution and perhaps invite a lawsuit. When anti-Semitism was rife in universities, it was assumed that a Jew had to be abler than a gentile to obtain a university appointment; it would follow that the average Jewish professor was abler than the average gentile professor in that era.
Summers’s suggestion that women on average (an essential qualification, obviously) are not as willing to invest as much time in a career as men should not have been controversial. Women who want to have children, as most do, must expect to devote more time to child care that men do. That is a brute fact and has nothing to do with scientific careers as such. Summers’s controversial conjecture was that since science-related aptitude tests exhibit less variance in female than in male scores, there are likely to be fewer women in both tails of the distribution—fewer scientific dopes but also fewer scientific geniuses. Imagine two bell curves, each with the same mean but different variance, superimposed on each other. The bell curve with the smaller variance (female) will be narrower and thus have shorter tails. So as one moves toward the end of each tail, the population with the greater variance (male) will increasingly be overrepresented. This will affect the relative number of the two populations in the tails; it may or may not affect the average quality of the members of each population who are in the tails.
Summers rightly offered the variance story as a speculation rather than as an established truth, though another fact consistent with it, besides the test scores, is that at the undergraduate level women’s science performance is equal to men’s—for at that level, one is not as far out in the tail as at the graduate level. You don’t need as much science talent to obtain a B.S. as to obtain a Ph.D.
Could the difference in variance have a biological basis? That is a legitimate subject of inquiry, which is all that Summers suggested. I cited Saletan’s article, which unlike most media coverage of the controversy engaged with the issues rather than merely playing it as a fight between angry feminists and an embattled public figure. But Saletan made one silly argument. It is that the likelihood of a biological explanation for the gender imbalance in science is enhanced by the fact that a man has more genes in common with a male chimpanzee than with a female human being. It is a surprising fact, but it may well be entirely explicable by the different biological roles of male and female in reproduction; it need have no connection to scientific aptitude.
Summers said that discrimination may also contribute to the imbalance between male and female scientists. It is certainly in the national interest to eliminate such discrimination, as he strongly believes. Nevertheless the fact that there may be nondiscriminatory reasons for disparities in occupational choice deserves investigation. Discrimination has declined, yet occupational disparities between various groups persist, suggesting that we should be looking for causes that are unrelated to discrimination as well as those that are related. A glance at the composition of different occupations shows that in many of them, particular racial, ethnic, and religious groups, along with one or the other sex and even groups defined by sexual orientation (i.e., heterosexual versus homosexual), are disproportionately present or absent. For example, a much higher percentage of biologists than of physicists are women, and at least one branch of biology, primatology, appears to be dominated by female scientists. It seems unlikely that all sex-related differences in occupational choice are due to discrimination; and therefore someone who explores alternative explanations should not be excoriated. Unless perhaps he is a university president!
It is surely legitimate to raise the issue of biological differences in explaining the lower number of female than male scientists. But the issues are more complicated and to some extent different than the ones that are frequently stressed.
The basic question in this regard is: how much of the difference in numbers and achievements of male and female scientists is explained by biological factors compared to other factors? We would have been greatly mistaken if we concluded 40 years ago that the very small representation of women in law, medicine, business, engineering, and many other professions was mainly due to any limited aptitudes for these fields. For since then, the fraction of female students in medical, law, engineering, and business schools rose rapidly, and women are more represented than men in some very good graduate programs in these fields. Their biology did not change, but birth rates declined, and women’s education and labor force participation increased rapidly. These forces, combined with an assault on discriminatory barriers to entry in these fields, were clearly the major ones involved in the very rapid growth of women’s participation in these professions.
So what priority should be given to biological aptitude rather than time spent in child rearing, discrimination, social conditioning, and other non-biological factors in explaining the continuing under-representation of women among scientists, and even more among top scientists? No one knows for sure- which is why academic pressure against discussing possible biological difference in talents is disturbing. However, my own belief is that we can get a lot of explanatory power out of factors that do not rely on intrinsic gender difference in talents, including high-level talents.
The reasons behind this conclusion are simple. To be a top level scientist-indeed, to be tops in any challenging field- requires long hours of work and an intense commitment to discovery and the like. Yet as long as women continue to have the major responsibilities for child-rearing and other household activities, they will have to combine professional activities with a mother’s and other household duties. Inevitably, that will force most women to reduce their professional commitment.
These women will adjust either by lowering their scientific ambitions, or by electing not to enter these fields in the first place. Others will forego motherhood and even marriage to pursue their scientific careers, and some of these and a smaller fraction of the other women will become highly successful. But even without discrimination against women, the attempt to combine several quite different activities will continue to lower the fraction of top women scientists (or top CEO’s, lawyers, etc) compared to men.
The variance in the distributions of the required talents may well be greater among men than women-as suggested by Larry Summers and others- so that there are many more brilliant and very dumb men than women. Even so, one does not want to overestimate the importance of brilliance in explaining the so-far low representation of women among outstanding achievers, as measured by Nobel and other major prizes. For a large fraction of male high achievers are not brilliant-they are not an Einstein, Newton, Euler, or LaPlace, to name a few of the recognized geniuses in scientific accomplishment.
An outstanding Columbia University physicist, the late I. Rabi, years ago was supposedly asked at a gathering of Nobelists and other high achievers about how most of those present had achieved so much since they did not seem particularly brilliant. His brief answer: “hard work”. That is also my belief after being at many similar gatherings.
Women are likely to be at a much greater disadvantage in this regard, due to their child-rearing and other responsibilities, than in biological aptitude. While studies indicate that the total hours worked by women, including household “work”, are generally as high or even higher than the total hours worked by men, women’s work is less specialized toward professional and other business achievement. Moreover, they anticipate this lesser degree of specialization in determining their professional ambitions and time use at early ages.
For other reasons as well, it is difficult to infer biological differences from occupational choices. For example, biological factors could entirely explain occupational choices, and yet the lower representation of women among scientists would not imply that they have less scientific aptitude. The reason is that women could be better than men at all occupations, but would be underrepresented in science if any difference between men and women in scientific aptitudes were smaller than in non-scientific aptitudes.
In my book, A Treatise on the Family, I expressed a belief that the traditional gender division of labor between working in the marketplace and working in the household- that is, taking care of children, etc- is partly due to biological differences between men and women. However, I also stressed that this gender division of labor is consistent with women being superior to men at market activities too. Rather, it implies that differences in market “abilities” are less than at child rearing and the like. In economic jargon, observed data on occupational choices only reflects comparative advantage, not absolute advantage.
My conclusion is that the sharp differences in scientific and similar accomplishments between men and women may be partly due to differences in high-level aptitudes, but that such differences are less important than other forces. To be sure, scholarly studies of any biological differences between men and women should be welcomed. Still, I believe that studies of other influences on male-female differences in scientific and related achievements are likely to be highly productive.
There were as usual many interesting comments, not all of which I can reply to. (Among critics of my position, I particularly commend the thoughtful comment posted by Anonymous on January 24.) I was however startled by the large number of comments that compare profiling to affirmative action and ask that commenters who oppose profiling as demeaning, alienating, and so forth take an equal stand against affirmative action. Although I have serious reservations about many forms of affirmative action, and although there is indeed a conceptual parallel between it and profiling, since in both cases a single criterion, such as ethnicity, is used as the basis for imposing benefits and burdens respectively, the symmetry is incomplete. The reason is simply that most beneficiaries of affirmative action are happy to have the benefits! Most people take for granted whatever advantages they have, however adventitious and undeserved. What is more adventitious than having wealthy parents? And yet how many rich kids are bitter because they have been singled out for benefits unrelated to their merit?
My argument against racial reparations, and likewise compensation for victims of profiling, is not that the beneficiaries will lose self-esteem or otherwise be immiserated by being benefited, but that using ethnic or racial or other such criteria for benefits treats the benefited group as being importantly different from the rest of the community. I would think it healthy for Americans to become less conscious of their differences, whether the differences are based on race, sex, national origin, ethnicity, politics, or sexual orientation, and think of themselves, rather, as being "just Americans." That would certainly help in presenting a united front against the threat, which is real and probably growing, of international terrorism. It is particularly important that Arab-Americans and other Americans of Middle Eastern origins or Muslim religion feel fully American. At the risk of seeming an alarmist (a "McCarthyite," some might call me), I believe that there are almost certainly al Qaeda sleeper cells in the United States, and it is extremely important that they not receive any assistance, financial or otherwise, or protection, active or passive, from the Muslim community. Cementing the community's loyalty to the United States is a vital national project, and this has to affect the amount of profiling that is in the national interest.
I do not agree with the comment that, in defense of remedial affirmative action, describes profiling as a product of "entrenched bias." When profiling is based on a relevant characteristic, such as a known greater propensity to engage in some antisocial behavior, it need have no connection whatsoever with bias, entrenched or otherwise.
A comment I strongly disagree with is that profiling airline passengers is unsound because no terrorist has ever been intercepted as the result of profiling. First, we don't know whether this is accurate; people are occasionally stopped from boarding a plane because of a secondary search prompted by their profile, and some of these people may be terrorists though they cannot be proved to be. Second and more important, knowing that there is profiling may discourage some terrorists from attempting to board an aircraft, since if they are arrested their career as terrorists may be terminated before they can do any harm.
Let me reply briefly to the main comments.
One theme in the negative comments is that if one profiles terrorists, or groups believed to be more likely to commit other crimes, the terrorists or criminals simply change whom they use, or new criminals replace those who are profiled. Sometimes that does defeat profiling, but not usually. Terrorists cannot change that easily whom they use since the supply of types willing to give up their lives to kill Americans or others is highly limited. Similarly, the supply of criminals typically has a limited elasticity of response. These considerations explain why the police "profile" ex-convicts, young people congregating at various suspicious locations, and in other ways. Are the critics saying the police should not be doing this? I doubt if they would carry that position through consistently.
Yes, we can spend more on various types of deterrence, but do we really want to search elderly women at airports as much as young men of Middle Eastern origin? (Let me add that my wife and her brothers are of such origin, and accept that they do get profiled.)
I recognize that being singled out for extra attention can be embarrassing. I suggested compensation for that. Someone mentioned that Steve Landsburg has also suggested compensation-good for Steve! Such compensation may not be sufficient to offset fully the damage from being singled out, but along with courteous and respectful treatment, it can go a good ways toward reducing the distastefulness of the process.
One last point. I work weekends in my university office when the doors are locked and few persons are in the building. I "profile" in judging whether to call the campus police by whether I believe a person belongs in the building- in fact I have called the police on more than one occasion. Do the critics of profiling suggest that instead of such profiling I call the police every time I see someone in the building-that is the purest example of no profiling- or every time I see someone in the building that I do not recognize, or when I judge they do not belong in the building, even though my judgment may depend on age, race, or other group characteristics?
This is not only costly, but borders on the absurd. I believe that the commentators who claim to oppose profiling do in fact profile in this and thousands of other situations. I do not know if this is true, but the media reported a few years ago that Jesse Jackson profiled when he heard someone walking behind him, and turned around to determine what group they belonged to!
As usual, I wish I had some of these comments before I wrote mine! Just a few reactions.
Yes, the Macdonald's case is more complicated, but no one made a convincing case that the customer could not have tasted the coffee first to determine how hot it was. Macdonald's criteria in serving hot coffee are not the real issue if it were easy for customers to check the nature of the product they consume. That surely was true in this case.
One can separate, at least to some extent, who gets punitive damages from who gets the compensatory damages. But one also wants to give victims sufficiently strong incentives to sue.
I generally do support allowing customers and providers of medical care, other services, or goods, to reach contracts ahead of time about rights to sue, compulsory arbitration, and so forth. Still, the same considerations that justify lawsuits-lies, withholding relevant information, and terrible service- would also be relevant in interpreting such contracts.
The value of using group membership in judging unobserved characteristics is uncontroversial most of the time, and so is hardly noticed. For example, automobile insurance companies consider young unmarried males as a relevant group in determining driver insurance premiums because they tend to have more car accidents than older males or young women. These higher insurance rates also help cut down the number of auto accidents by reducing driving by accident-prone young males. Yet given that group membership is almost always an imperfect predictor of unobserved characteristics, some individuals will be treated much worse (or better) than their true characteristics justifies. In the driving case, young unmarried males who are careful and responsible drivers will pay more for insurance than they would in a world with better information. They might be discouraged from driving because they suffer from the bad driving of other young unmarried males.
Still, limited information about individuals means that group identities is often useful in gaining information about them. However, the use of religious, racial, or ethnic characteristics for national security protection and in fighting crime has been a political hot potato, and has led to accusations of discrimination on the basis of race and other characteristics. For the use of group identities in order to treat different groups differently may be the result of a desire to discriminate against various minority groups instead of a desire to act effectively to prevent some undesirable actions.
On top of the current agenda is the effort by organizations fighting terrorism to treat Muslim with greater suspicion. Is it justified to single out young Moslem males from the Middle East for much more careful searches at airports, or for tougher requirements to gain tourist visas and green cards? Or are employees at stores that are trying to prevent theft of their goods justified in watching minority customers more carefully than they watch others? Macy’s was recently fined for allegedly watching blacks and Hispanics more carefully, although the company denies that such profiling of customers is their policy.
Efficient actions would say minimize the amount of terrorist activities in the US, given a limited amount to be spent on preventing terrorism, or would minimize store theft, given a budget for security personnel. Then security checks at airports would try to both catch terrorists before they board a plane, and to discourage future airport terrorism by raising the chances that they are caught at the airport. Similarly, store security both tries to apprehend thieves, and to discourage future store theft.
If young Moslem Middle Eastern males were in fact much more likely to commit terrorism against U.S. than were other groups, putting them through tighter security clearance would reduce current airport terrorism. Whether such religious and ethnic profiling furthers the second goal, of deterring future terrorism, depends on the degree of responsiveness of different potential terrorists to a greater likelihood of being caught. If the degree of response by different groups were proportional to their average propensity to engage in terrorism, then checking young Moslem Middle Eastern males more carefully would also help deter future terrorism at airports.
On the other hand, profiling by average propensities might be inefficient if the marginal propensity to reduce terrorism with more careful checks were smaller for groups like Moslems that might have higher average propensities. That could well be true if these groups were more fanatical and less easily deterred by the prospects of being caught. Then the “deterrent” effect on future terrorism would be opposite to and might be stronger than the “apprehension” effect on current terrorism.
The deterrent effect is less likely to dominate the apprehension effect when the difference in average behavior is greater. This is why it is efficient to profile young male Middle Eastern Moslems for terrorist attacks at airports, and perhaps it is efficient also to watch minority shoppers more carefully at stores. To be sure, such profiling is “unfair” to the many young male Moslems who are not terrorists, and to the many minority shoppers who are honest. That could be made up in part by compensating groups who are forced to go through more careful airport screening through putting them in shorter security lines, or in other ways. Similarly, innocent shoppers who are stopped and searched could be compensated for their embarrassment and time.
To be sure, some profiling by governments and the private sector has been due to prejudice against various groups, not as a way of achieving efficiency. So it is crucial to be able to distinguish whether a profiling is efficient from whether it is evidence of discrimination. This distinction can be made in the terrorist field (similar considerations apply to fighting crime) by keeping records on the fractions of young Moslem males and others who were searched and found with weapons or other evidence of intent to commit a terrorist act. If the fraction were much greater among Moslems searched than among others, this would at least be consistent with an emphasis on efficiency rather than discrimination.
A further test would be to determine what happens to apprehension rates as the amount spent on airport security increased or decreased. The profiling policy would again be consistent with efficiency if greater spending on airport security reduced the apprehension rates of young male Moslems who were searched about as much as the apprehension rates of others.
So it is possible to provide analytical criteria and guidelines to determine when particular types of profiling are explained by efficiency considerations rather than discrimination. By using these guidelines to analyze data on apprehension rates, one can determine in an objective manner whether discrimination rather than efficiency is responsible for different treatment of members of ethnic, religious, or racial groups.
At one level, “profiling” is unexceptionable. If witnesses report a theft by a young black male, it would be absurd for the police to look for suspects among other groups in the population. Profiling becomes interesting only when the differential probability of “guilt” is much smaller. Even then, it is unproblematic, as Becker notes, when the disfavored group is not a sensitive minority. No one objects when smokers are charged a higher price for life insurance than nonsmokers, even though many smokers outlive many nonsmokers. Even when the condition that puts one in the disfavored class is involuntary, such as having a family history of cancer or heart disease, “discrimination” on this basis (what economists call “statistical discrimination”) is generally considered permissible because it is not exploitive or based on hostility or contempt and it does promote a more efficient allocation of resources.
Profiling based on race, sex, or national origin, however, is intensely controversial. It is helpful in discussing it to make two distinctions: between ordinary crimes and Islamist terrorism (e.g., al Qaeda), and in the terrorist case between profiling U.S. citizens and profiling foreigners. I will be discussing these issues purely as issues of policy rather than of law.
In the case of ordinary crimes, where for example profiling might take the form of disproportionately frequent searches of vehicles driven by Hispanics because Hispanics are disproportionately represented in illegal drug trafficking, I would expect profiling to have little effect on the crime rate. The reason is the positive elasticity of supply of persons who commit victimless crimes, which is to say crimes resulting from the outlawing of products or services for which there is a demand. If one class of suppliers is driven out of business, this makes room for others. Given the fixed budget for law enforcement assumed by Becker, the increased apprehension of Hispanic drug couriers would be offset by a reduced risk to non-Hispanics of being apprehended for transporting drugs, and so the non-Hispanics would flock to replace the Hispanics as couriers. The ethnic composition of the illegal work force would be altered by profiling, but the crime rate would be affected only to the extent that Hispanics are more efficient drug couriers because of language and other ties to major drug supply countries; the net effect on the crime rate would probably be small.
In the case of terrorism, a similar replacement effect can be anticipated, although it would probably be smaller. Assume a fixed budget for screening airline passengers and a reallocation of funds within the budget limit to enable more young male airline passengers who appear to be Muslim (or of Middle Eastern origin, but for simplicity I’ll assume that Muslim-appearing is the screening criterion) to be subjected to intensive screening, as distinguished from the limited screening to which all passengers are subjected. Then fewer passengers who do not fit the profile will be screened (this is implied by the fixed budget), which will induce terrorist groups to make greater use of female Muslims (as happened in suicide attacks in Israel), older Muslims, and young Muslims who do not appear to be Muslim, for members of these groups will now be less likely to be apprehended than before the adoption of profiling. The elasticity of supply of terrorists is probably not as great as that of drug couriers, but it is positive and will reduce the effect of profiling. A parallel analysis recommends against concentrating too many of our antiterrorist resources on the protection of New York and Washington, since terrorists can substitute other targets.
The benefits of airline passenger profiling are thus likely to be modest, and the costs may be great in the case of Muslims who are U.S. citizens. Being singled out on the basis of race, religion, or ethnic origin is intensely resented by the people who are discriminated against and could undermine their loyalty to the United States if they have strong ethnic and religious ties with the nation’s enemies. A paramount goal of U.S. antiterrorist policy should be to prevent the disaffection of U.S. citizens of the Muslim faith and Middle Eastern ethnicity. That goal would be undermined by profiling. I do not think compensating them financially for the additional inconvenience would rectify the problem; indeed, it would underscore their differentness from their fellow citizens. (This is also an argument against reparations for blacks and American Indians.)
The argument for the efficiency of profiling is further undermined by relaxing Becker’s assumption of a fixed security budget. By increasing the budget for airline security, it would become possible to screen everybody carefully. I suspect that the optimal policy is to subject more U.S. citizens of apparent Middle Eastern origin or Muslim religious identity to intensive screening than other citizens, but to subject enough of the other citizens to the same intensive screening so that the (lightly) profiled group does not feel markedly discriminated against--and so that substitution of terrorists who do not fit the profile is held in check.
My view with regard to profiling noncitizens is different. Noncitizens are not expected to be loyal to the United States and so the concern with alienating them by profiling is less acute. No foreigner expects to be treated identically to a citizen.
As usual, there were many excellent comments. Let me respond to some:
Several comments point out correctly that the determination of medical malpractice (that is, medical negligence) by the courts is very often inaccurate; there are many false positives and false negatives. To that problem, capping damages judgments is no solution. An attractive solution is testimony by a neutral expert witness. The fact that judges may have difficulty determining who is neutral is no objection; the judge can ask the parties' medical experts to jointly nominate a third; he would be the neutral and the judge and jury would appropriately rely heavily on his testimony. The procedure I am suggesting is similar to a widely used procedure for picking a neutral arbitrator: each party designates one arbitrator, the two arbitrators choose the third, who is neutral, and he then provides the deciding vote.
An alternative, mentioned in one comment and already in force in a number of states, is to require the malpractice plaintiff before suing to submit his claim to a panel of physicians, whose findings, if unanimous, are admissible in court should the claim result in a lawsuit.
One comment pointed out that medical errors are often systemic, i.e., they result from erroneous procedures or practices by hospitals, drug companies, and other institutions rather than from mistakes by individual physicians. However, those entities are suable.
It was also noted that heavy insurance premiums might drive some physicians from practice and deter some people from becoming physicians in the first place. That is true, but if the result is less medical negligence, the benefits might exceed the costs. In addition, the overall effect on medical expenses is likely to be slight, because physicians' fees are only a moderate component of overall medical expenses. Furthermore, if physicians are driven out by high premiums, the resulting reduction in the supply of physicians should enable those who remain to raise their fees.
A slightly esoteric point: one comment suggested that pain and suffering, disfigurement, and other nonpecuniary losses imposed by medical errors are not real costs because people rarely try to buy insurance against such losses. However, the reason they do not buy insurance is not that the losses aren't real, but that insurance is designed primarily for replacing income or defraying an expense.
I also disagree that negotiation of the level of medical care should be left to physician and patient, because they have a preexisting contractual relationship. The principle is fine (though it would require a chance in existing law), but the transaction costs would be prohibitive because of the patient's ignorance of particular procedures, risks, and so forth. In addition, a physician who told his patient that he would operate on him only if he waived his right to sue for medical malpractice would be signaling the likelihood of an unfavorable outcome. Hence physicians would be reluctant to suggest such waivers.
I was pleased to learn from two of the comments that some insurance conmpanies do experience-rate medical malpractice insurance. Why others do not is a mystery, but it occurs to me that one possibility is that the inaccuracy of judicial determinations of malpractice is so great that being sued and losing a malpractice case does not provide useful information about the likelihood of being sued in the future. On this view, malpractice liability is random. One hopes not; but if so, reforms, such as those suggested above, aimed at increasing the accuracy of malpractice determinations are urgently needed.
There is a movement afoot, assisted by the strengthening of Republican control over Congress, to impose federal limits on tort litigation, particularly medical malpractice; premiums for malpractice insurance have soared in the last two years and physicians are protesting vigorously.
The costs of malpractice premiums are only about 1 percent of total U.S. health-care costs. Moreover, insofar as physicians are forced to swallow the cost of the premiums rather than being able to pass them on to their patients or their patients’ insurers in the form of higher prices, the premiums do not actually increase total health-care costs. There is an indirect effect, however, insofar as malpractice liability causes doctors to practice defensive medicine. But there may be offsetting benefits, to the extent that defensive medicine actually improves outcomes for patients; and surely it does for at least some. What is more, because malpractice insurance is not experience-rated—physicians are not charged premiums based on their personal liability experience—malpractice liability may have only a slight effect on physicians’ methods or carefulness, except insofar as physicians are pressured by their insurers to change their methods in order to reduce the amount of malpractice litigation.
The relation between malpractice premiums and malpractice judgments is also uncertain. No doubt capping judgments, which is the principal reform that is advocated, has some tendency to reduce premiums, but perhaps not much, because there is evidence that premiums are strongly influenced by the performance of the insurance companies’ investment portfolios.
A better reform would be to permit, encourage, or even require insurance companies to base malpractice premiums on the experience of the insured physician, much as automobile liability insurance is based on the driver’s experience of accidents. That would make malpractice liability a better engine for deterring malpractice—which in turn would reduce malpractice premiums by reducing the amount of malpractice. Capping judgments, in contrast, would reduce the incentive of insurance companies and their regulators to move to a system of experience-rated malpractice insurance.
It is always important to distinguish between financial and real costs. Insofar as malpractice liability merely transfers wealth from physicians to (some) patients, aggregate costs are unaffected. The real cost of malpractice liability is limited to the cost of the actual resources consumed by such liability, principally the time of lawyers and expert witnesses (roughly half the total amount awarded in judgments goes to pay lawyers and expert witnesses), unless defensive medicine is assumed to cost more than its benefits in improving treatment outcomes. The real benefit of malpractice liability is its effect if any in deterring medical negligence; reducing that benefit would impose a real cost. Hence it is simplistic to assume that the total annual malpractice premiums paid is a good index of the net social cost of malpractice liability, or that measures to reduce those premiums by capping malpractice liability would result in a net improvement in welfare. To repeat, part of the premiums represent simply a wealth transfer from physicians to the patients who receive malpractice judgments or settlements paid by insurers. The part (roughly half) that pays for lawyers and expert witnesses should be understood as the cost of maintaining a system for increasing medical safety; the efficacy of the system could be improved, I have argued, by experience rating, but not by capping judgments.
In any event, there is no compelling case for federal limitations on malpractice liability. The issue belongs at the state level, and as reported in a New York Timesarticle last Friday, a number of states have adopted or are seriously considering adopting the kind of caps being advocated in Congress. Federal legislation would simply stifle state experimentation with different methods of regulating physicians and prevent us from learning which is best.
There is a stronger case for federal regulation of class actions, as in the case of suits against asbestos manufacturers. When the members of a plaintiff class are scattered across the country, the class lawyer has a wide range of places in which to sue, and there are certain counties in the United States in which judges and juries are disproportionately generous to tort plaintiffs. Most of the costs of a large judgment or settlement in such a case are exported to other states, while the benefits are concentrated in the locale where the suit was litigated, because of the business generated for local lawyers, as well as the judgments or settlements received by the members of the class in the locale. This is a formula for abuse, concretely for a tendency for such judgments and settlements to exceed an unbiased estimate of the true costs imposed on the class by the defendants’ misconduct. Malpractice litigation does not give rise to such an abuse to any very great extent, because patient and physician are usually in the same state, and a single plaintiff has only a limited choice of courts in which to sue. This is another reason not to make medical malpractice the principal object of federal tort reform.
We should be cautious about tort reform. It would be unfortunate if interest-group politics, and anecdotes concerning outlandish lawsuits (such as the suit against McDonald’s by the customer who spilled hot coffee in her lap), were allowed to obscure the difficult policy issues.
I agree with Richard Posner that the ability to sue against medical malpractice, drunk drivers, and sellers of defective and dangerous products induces doctors, producers, and others to pay closer attention to what they do. I also agree that reforms are generally better left to the states than to the federal government in order to allow competition among state legal rules. However, without reform of class action suits, Posner’s appropriate criticism of the right to bring class suits in more generous jurisdictions undermines the argument to leave legal reforms entirely to the states.
He is right too that a few foolish cases should not be the basis for policy. Yet there is need for some tort reform because there is too much litigation, compensatory damages are often too low, and punitive damages have sometimes been grossly excessive.
“Compensatory” damages are supposed to compensate individuals for their losses from medical malpractice, and other careless or reckless behavior. In practice, they commonly refer to the loss of earnings due to injury or death from such actions. Yet the correct measure of compensatory damages should equal what individuals are willing to pay to avoid death or the injuries in question. The value placed on loss of life, or on substantial disabilities, are usually many times greater than the loss in earnings.
Critics of the American tort system generally neglect this tendency to underestimate compensatory damages. To be sure, this is not easily corrected by legislation, although it might be possible to have useful rules of thumb about the appropriate ratio of full damages to lost earnings. And greater recognition that compensatory damages are often much too low would be helpful to juries and judges.
“Punitive” damages are often imposed in order to encourage doctors, drivers, and producers to be more careful and responsible. The system would be working well if any underestimated compensatory damages were just about offset by inflated punitive damages. But punitive damages have sometimes been huge multiples of compensatory damages -occasionally exceeding 50 or 100 times compensatory damages- and may only reflect a jury’s or judge’s perception about how deep are the pockets of defendants. Although huge punitive damages tend to be reduced on appeal, they often remain much too large.
The rule of thumb in anti-trust litigation is that punitive damages equal to three times compensatory damages sufficiently recognizes that many anti-trust violators are undetected and are not punished. A limited ratio of punitive to compensatory damages would also be appropriate in the great majority of other tort cases.
The Supreme Court in a couple of cases in recent years has in fact suggested that punitive damages should generally not exceed nine times (I would add correctly measured) compensatory damages, and their ruling applies to state as well as federal punitive damages. I believe that as in anti-trust cases, the ratio should typically be much less than 9. One exception, first articulated in an opinion by Judge Posner, is when compensatory damages to each person harmed are very low, while the total harm may be large because many persons suffer small loses. In these cases, it would be desirable to raise the punitive-compensatory ratio to encourage lawsuits to discourage the behavior that produced these harms.
Excessive litigation in the United States creates inefficient defensive practices by doctors and others, and sometimes destroys good companies, as in the asbestos litigation, and perhaps now in the looming Vioxx class action suits against Merck. Litigation against doctors and others is justified when they could have but did not take sufficient care to insure safety, if they lied, or if they withheld evidence about safety. In these cases, doctors and producers should be responsible because they have much easier access to the relevant information than do patients and consumers.
On the other hand, consumers should bear responsibility for their actions when they could have easily prevented the damage. The MacDonald’s customer who drove with hot coffee on her lap should not have won her lawsuit, and perhaps should have been forced to pay at least some of MacDonald’s legal expenses. Similarly, parents who carelessly allow their children access to dangerous medicines should be responsible, not the manufacturer of medicine bottles.
In many cases there is reasonable doubt as to whether patients or doctors, consumers or producers, could more readily have avoided the harm. I believe in these cases there should be a presumption toward “caveat emptor”- buyer beware. A bias toward buyer beware when there is considerable doubt about who could have more readily avoided the damages would cut out much useless and costly litigation without discouraging the justified cases where there is negligence, fraud, or information suppression by doctors, drivers, producers, and others.