Category: Law

Vioxx and Tort

We have two systems of drug regulation in the United States, the FDA and tort law.  Unfortunately, neither system works well.  FDA incentives push for excess delay and excess cost and the tort system appears random if not perverse in its operation with good claims receiving nothing and bad claims receiving billions.

Writing in the New Yorker, James Surowiecki discusses some relevant research from Kip Viscusi:

Merck would seem to have one big thing in its favor: the company
voluntarily withdrew Vioxx from the market. But while Merck executives
may have hoped to persuade people that they were acting responsibly,
plaintiffs’ attorneys have taken the withdrawal as an admission of
guilt…internal
company documents show that Merck employees were debating the safety of
the drug for years before the recall.

From a scientific perspective, this is hardly damning. The internal
debates about the drug’s safety were just that–debates, with different
scientists arguing for and against the drug….While that kind of weighing of risk and benefit may be medically
rational, in the legal arena it’s poison. Nothing infuriates juries
like finding out that companies knew about dangers and then “balanced”
them away. In fact, any kind of risk-benefit analysis, honest or not,
is likely to get you in trouble with juries….Viscusi has shown that
people are inclined to award heftier punitive damages against a company
that had performed a risk analysis before selling a product than a
company that didn’t bother to. Even if the company puts a very high
value on each life, the fact that it has weighed costs against benefits
is, in itself, reprehensible. “We’re just numbers, I feel, to them” is
how a juror in the G.M. case put it. “Statistics. That’s something that
is wrong.”…

Before a jury, then, a firm is better off being
ignorant than informed.

My Law and Literature class today

Today I start my Law and Literature class, my reading list is here.  If you are wondering what I am excerpting, from the Bible we are doing Exodus, Deutoronomy, and Job,
from Melville we are doing "Bartleby," and from Kafka we are doing "In
the Penal Colony."  All are favorites of mine.  Check out the list for
the rest plus five films.

By the way did you know the following?

Students asked to watch five seconds of soundless videotape of a
teacher in the classroom came up with evaluations of the teacher’s
effectiveness that matched those given by his own students after a full
semester of classes.

The link is here, already supplied by Alex immediately below.

The Time to Deduct

Congress has just passed a bill which lets taxpayers deduct this month’s donations to tsunami relief on their 2004 taxes.  I think this is a good idea but why stop at one month and why stop at tsunami relief?  Taxpayers can deduct IRA contributions from their previous years taxes up until April 15, why not allow the same thing for charitable deductions?

    Allowing deductions to be made at the same time as taxes are paid will help individuals to make better decisions because it is much easier to examine the donation-tax tradeoff when you are doing your taxes in April than in the previous year when you are making your donations.  Today, in contrast, you have to make your charitable donations at least 4 and a half months before the tradeoff becomes salient.

Stupid product warnings

A toilet brush with a tag that says "Do not use for personal hygiene" has taken top prize for the wackiest consumer warning label of the year, according to an anti-lawsuit group.

The Michigan Lawsuit Abuse Watch, M-LAW, whose main mission is to reveal how lawsuits and anxiety over lawsuits have created a need for overly obvious warnings on products, sponsors the The Wacky Warning Label Contest each year.

Other top finishers this year include:

— A scooter with the warning "This product moves when used."

— A digital thermometer with the advice "Once used rectally, the thermometer should not be used orally."

— An electric blender used for chopping and dicing that reminds users to " "Never remove food or other items from the blades while the product is operating."

— And a three-inch bag of air used for packaging that read "Do not use this product as a toy, pillow, or flotation device."

Here is the link.  Read Alex too.

Paying for Kidneys

In a new paper, Gary Becker and graduate student Julio Elias estimate that for a price of $15,000 the shortage of kidneys could be eliminated from live donors.  The risk of death to a live donor is no more than 1 in a 1000.  Combine this with a value of life estimate of $3 million and add in some costs for time off work and so forth and you get the Becker/Elias figure of $15,000.

$15,000 seems too low to me but it probably would since my income is above average. As a robustness check, the authors note that in India a kidney can be had for about $1000 and US per capita income is about 15 times that in India so $15,000 looks to be in the right ballpark.  A similar calculation from Iran, where kidney sales are legal, is also consistent.  In anycase, even if they are off by a factor of 2 the point is well taken that for a modest sum many lives could be saved.  (In fact, dollars would be saved also because transplants are cheaper than dialysis.)

Becker and Elias have a useful response to (so-called) moral objections. Take any argument against kidney sales and apply it to the volunteer army.  Do kidney sales "commodify the body?"  Perhaps, but then the volunteer army commodifies life.  Would kidney sales eliminate altruistic donation?  As the example of Pat Tillman and many others demonstrate people still volunteer for the military for non-monetary reasons.  Are there difficulties for donors to calculate risks?  Again, perhaps, but these also apply to joining the military (and if so we could allow for a cooling-off period for both donating an organ or joining the military, as we do in some states for auto purchases).

If you are not in favor of the volunteer army then Becker and Elias don’t have any knock down arguments but I suspect that many people who are against kidney sales also favor the volunteer army and for these people Becker and Elias are posing a consistency challenge.

Markets in Everything – law school

Jay Wilson, a second-year law student at New York University, was
desperate to register for a popular course in constitutional law.

Unfortunately for him, the course, taught by the youthful Daryl
Levinson, was completely booked for the upcoming spring semester.
Fortunately, Mr. Wilson had some money to spare. In a posting on an
online bulletin board at the law school, Mr. Wilson offered $300 to any
student willing to drop the course to make room for him…

Students interviewed at the law school said the practice of
exchanging course spots is common at the school. As a kind gesture,
some cash-strapped students have promised to bake cookies for willing
traders or pass them invitations to exclusive parties.

Mr. Wilson, they said, took things to a new level: a no-nonsense
business deal, the sort of financial transaction that they expect to
deal with only after graduation.

Of course, the authorities soon moved to quash such deals.  The dean, however, did not explain why paying to get into a class is wrong but paying to get into law school is good.  Hmmm….perhaps Mr. Wilson would have had better luck had he offered to pay the dean rather than another student.

I have pioneered this approach even further.  Students in my classes have been known to offer payment to get out. 🙂

Thanks to Ray Lehmann for the link.

Jail Mail

I edited a book, Changing the Guard, on private prisons and crime control.  Last week I received an interesting letter from an expert in the field….a prisoner in Tennessee.  Frankly, I was expecting a crank but in fact the prisoner, who shall remain anonymous, had a lot of intelligent things to say about how the prison system operates.  Here is one observation:

A privately owned and publicly traded company like CCA has no incentive to rehabilitate criminals.  It is in the best interests of the company for even more criminals to exist.  Unfortunately, the same is true of government run prisons.  And contrary to what you may have been told, prisoners are not paroled because they have indicated by their actions or behaviors while inside that they are less likely to reoffend; they are let go because the Parole Boards believe that will commit another crime.  This way the prison lobbyists can then "prove" that parole doesn’t work.  The Department of Corrections gets less money from paroled prisoners than it does for those kept inside.  And also, "good" inmates are less trouble (less labor) than the trouble-makers, and so trouble-makers get released.

Good analysis.  I hope, however, that he does not test his theory on how to gain early release.

Halloween Banned!

A school in Puyallup Washington has banned all Halloween activities. Why?

“We have been contacted by followers of the Wiccan religion, and they indicated they have been offended after seeing elementary school depictions of witches with long noses, warts, cauldrons and such,” said Tony Apostle, the superintendent who banned Halloween.

Halloween activities have also been banned elsewhere in the country but for a different reason:

Complaints about Halloween from Pentecostal parents in Texas have forced a significant number of that state’s school districts to cancel in-school parties, said Richard W. Stadelmann, a professor of religious studies at Texas A&M University.

There is a geographical pattern to the grumbling, according to Stadelmann and others. Christian complaints come mostly from the South and Midwest, whereas Wiccan complaints are more likely to come from California and the Pacific Northwest.

Gay marriage and the deficit

What would happened if all of America’s roughly 600,000 cohabitating gay couples decided to marry?

For one thing, they would all start paying the marriage penalty. Each year, over the next five years, the deficit would fall about $350-450 million per year. Yes that is about one-tenth of one percent of the yearly deficit, but at least a move in the right direction. It is also estimated that social security and related expenditures would increase only slightly as a result of the marriages.

That is from The Atlantic Monthly, October issue, p.64. If you are looking for a good historical introduction to some of the issues surrounding gay marriage, I recommend George Chauncey’s recent Why Marriage?.

China fact of the day

China is stepping up its hard line against internet pornography by threatening life imprisonment for anyone caught peddling porn.

Ne’er-do-wells involved in the production and distribution of online adult content – including “phone sex” – face a range of punishments including compulsory surveillance and imprisonment. Those behind sites that generate more than 250,000 hits will be treated as “very severe” and could face life imprisonment.

Linking the jail sentence to the number of hits, now that is a saddening use of optimal punishment theory. Here is the full story.

We will not rock you

Virginia and 39 other states sued eight music distributors and retailers accusing them of price-fixing and all I got was a lousy Michael Bolton CD. Well, not me personally, but that is what lots of libraries and public schools in Virginia and across the nation are getting as their share of the $75 million non-cash part of the settlement. Other CDs distributed as part of the deal include teen band Hanson’s “Snowed In” and, get this, Martha Stewart’s “Spooky, Scary, Sounds for Halloween.” Not every CD is a dud but it’s fair to say that the value of the CDs is substantially less than $75 million. If you were a member of the class and signed up you could also get a check for almost $13, $67 million in total.

According to the judge, pure transaction costs were $6-8 million and the lawyers got just over 14 million so depending on how you evaluate the free CDs (I think $35 million is generous) total transaction costs might eat 20-30 percent of the settlement – not bad as far as these things go. Note, however, that the plaintiff’s claim was that consumers were being overcharged by 23 cents a CD. Personally, I’d be happy to pay the extra 23 cents to be free of class-action lawsuits like this. But then again I don’t buy as many CDs as Tyler.

Courses (markets) in everything

How about a $10,000 class for teaching top executives how to cope with prison? Students are taught the following:

1. Learn meditation and physical exercise routines.

2. Get used to the fact that nothing changes and everything is outside your control.

3. Discard your addictions and vices.

4. Bring a cheap watch.

5. Never make eye contact with anyone; no one is your friend.

6. “If you are going to hurt somebody, drag them into your cell, because then you have an excuse that they invaded your privacy.”

Here is the full story. The entrepreneurs claim they have had twelve clients a year for the last two years.