Superfunding, Part 2

[Cross-posted on The Agitator.]

Superheroes also face a daunting liability problem, as the opening scenes of The Incredibles suggest.

Being a superhero is inherently risky, not just to the hero but to the people rescued. If Arachnid-Man successfully wrests Maryanne from Mr. Squid’s evil clutches, no one complains. But what if the confrontation merely goads Squiddy into killing the hostage? Maryanne's mother might take the Arachnid to court and sue him for all he's worth. He should have known better than to come crashing through the skylight! Why, he should have stood back and let the authorities handle the whole thing! Faced with threats of crippling liability, it's no wonder Arachnid-Man maintains a secret identity.

The problem here is familiar to anyone who’s thought much about medical malpractice. Virtually any surgical procedure creates some risk of death (or greater injury than the problem being treated), even if the doctor performs with great care and skill. Holding doctors legally responsible for any death or injury during surgery makes it more expensive to be a doctor. (Malpractice insurance reduces the risk of liability payments, but not their average cost.) Imposing liability for poor performance at least gives the doctor an incentive to take greater care, so the higher cost corresponds to higher quality. But imposing liability for events largely unaffected by the doctor’s behavior raises costs with no compensating benefit. In some cases, this can induce doctors to leave the profession (the outflow of obstetricians is especially notable). Similarly, some superheroes might hang up the cape -- or never don it in the first place -- for fear of hero malpractice suits.

But superheroes have it worse than surgeons, for at least two reasons. First, surgeons at least charge prices, so they can pass at least some of the higher costs on to patients. But as discussed in the previous post, superheroes typically lack a direct pricing mechanism. Heroes funded by charity, for instance, can only "raise prices" by convincing the public that liability concerns justify ramping up their contributions.

Second, the risks created by surgery are typically limited to patient. Superheroes, on the other hand, regularly create risk to the general public. The nefarious Doc Drastic has just removed the brakes from a Megalopolis trolley, and if it's not stopped it will crash into another trolley car and kill all 40 passengers. Uberman has just enough time to divert the trolley onto another track, where it will kill five unsuspecting pedestrians. What should Uberman do? Surely he should divert the trolley (at least according to the Doctrine of Double Effect). But if he does, he could face lawsuits from the pedestrians' families. A successful defense will depend on the jury's willingness to weigh up the lives and see the superiority of Uberman's choice. And maybe the jury will be that smart. But what if diverting the trolley doesn't kill five people with certainty, but instead creates a 5% chance of killing 100 (and a 95% chance of killing no one)? In expected value, diverting the trolley still makes sense. But can the jury be trusted to resist the claims of 100 grieving families? With the financial stakes for our hero 20 times higher (ex post), and the necessary sophistication of the jury higher as well, perhaps our hero won't be motivated to make the right choice. Or maybe he'll give up superheroing altogether.