Tort Liability as a Tool for Achieving Efficiency and Equity
Different observers describe tort liability as serving various combinations of purposes—among them, compensation, deterrence, risk spreading, and punishment or retribution. In economic terms, those various purposes can be related to the overarching social goals of efficiency and equity. The efficiency goal is to allocate scarce resources so as to maximize the total benefits available to society; the equity goal is to distribute those benefits in accord with some (necessarily subjective) conception of fairness or justice. Metaphorically speaking, efficiency involves making the pie as big as possible, and equity focuses on slicing it appropriately.