Why do people file lawsuits? A NERA Economic Consulting study has found that psychological and demographic factors—such as an individual’s perception of an accident and his or her age, income, and education—matter more in the eventual decision to sue than the actual circumstances or severity of an accident.

In this study, NERA Senior Vice President Dr. Faten Sabry and former Senior Vice President Dr. Fred Dunbar explore the lawsuit filing behavior associated with various types of injuries. Their findings contrast with previous economic literature, which has focused on the cost and severity of an accident when attempting to predict litigation behavior. The study goes a step further than previous research by using a statistical model to show how the decision to seek claims is determined. It is one of few studies to model and quantify how perceptions, beliefs and demographics influence litigation decisions.

Dr. Dunbar and Dr. Sabry analyzed raw survey data from a Rand Corporation study of the claiming behavior of some 3,000 individuals who experienced an injury and determined that the propensity to sue is strongly associated with the following factors: the perception of fault, lower income, age, lower level of education, the severity of an injury, and the type of accident.

The insights contained in the study should prove valuable to the increasing number of corporations seeking to predict filing rates as part of their risk management strategies. For example, the paper reveals that on average, a person who blames another party, no matter the injury, is almost 5 times more likely to sue than one who attributes no blame.

This study was published as an article in the April 2007 issue of Business Economics.

The views expressed herein are those of the authors and not NERA. Please do not cite without the permission of the authors.