Below is an exchange between Northwestern University Law professor Frank Cross and NPR's Jennifer Ludden on the Saturday 9/25 program "Weekend All Things Considered":

LUDDEN: We've just heard what sounds like a persuasive argument that excessive lawsuits may hinder the economy. Do you agree?

Prof. CROSS: In general, no. You have to understand the bigger picture. The US does have more tort liability than other comparable countries, but what that loses sight of is that we have much less government regulation than those other countries. And I think that's a good tradeoff, and I think the evidence shows it. In fact, while he says that our business climate suffers, if you look at the international surveys, you'll find the United States at the very top in terms of the rating for business climate ahead of all the Western European nations, which have less tort actions but have much more regulations.

This argument is a classic red herring. What matters is not whether the U.S. has the best business climate (this isn't a race where there is a prize for first place), but whether our legal system is conducive to our achieving the highest possible standard of living (conditional on other factors that affect growth). While some like Prof. Cross might argue yes, many others would strongly disagree.

Here's more of the exchange:

LUDDEN: Can one actually calculate the cost of lawsuits on the economy?

Prof. CROSS: You can calculate how much money is paid out in lawsuit damages. What you can't calculate is all of the effects of litigation, and a lot of those are positive. If you can't sue people for fraud, there will be more fraud. And, in fact, you find that the stronger the laws against securities fraud, the stronger and healthier the securities markets are. Also, you have to look at the health benefits. Litigation has undeniably produced some areas of major health benefits. One good example is anesthesia. Anesthesia used to be a dangerous procedure; there were a lot of lawsuits that resulted, perhaps not all of them justified. But those lawsuits motivated much safer practice of anesthesia.

While potential tort liability may create some desirable incentives for care as Prof. Cross asserts, the incentive effects are not necessarily all positive. For example, doctors may practice defensive medicine in order to avoid liability. For evidence, click here.