The Perryman Group has released a study estimating that excessive tort costs impose a $674.4 billion annual burden on U.S. consumers through higher inflation and reduced earnings.
According to the study, these excessive tort costs act as a hidden tax on American families, increasing inflation by an estimated $320 billion annually. This translates to approximately $955 per person or $2,437 per household. The impact varies by state, with households in the District of Columbia facing the highest costs at $9,096 annually, followed by California and New York at nearly $3,900 each. In contrast, Mississippi and West Virginia experience the lowest burden, with costs remaining under $1,100 per household.
The report further indicates that excessive tort costs reduce economic productivity and shrink earnings, costing U.S. workers nearly $354.4 billion annually—about $1,058 per person or $2,698 per household. When combined with inflation-related losses, the total consumer burden reaches $674.4 billion each year or approximately $2,014 per person and $5,135 per household. These burdens disproportionately affect certain states and contribute to broader issues such as fewer healthcare providers and slower innovation. The findings underscore the potential benefits of tort reform.
The Perryman Group is a Texas-based economic and financial analysis firm specializing in impact assessments, forecasting, and policy analysis across various sectors of the economy. With decades of experience, it provides comprehensive economic studies for clients ranging from major corporations to government agencies.