But the total value of medical malpractice claims is around $5 billion per year in the US
You shouldn’t compare things to the current cost of medical malpractice claims, you should compare it to the counterfactual cost where people did less to avoid lawsuits.
Also relevant. If you are a doctor then the costs of your “defensive medicine” fall on the hospital/insurance companies (here in the UK the NHS). While the costs of being sued fall a lot more on you personally, even if the actual fine/monetary costs are paid by your organisation you still get a kick to the reputation, plus costs in stress and time. Spending $9 of someone else’s money to save yourself $1 is rational in a self-serving way.
You shouldn’t compare things to the current cost of medical malpractice claims, you should compare it to the counterfactual cost where people did less to avoid lawsuits.
And presumably whoever stops doing defensive medicine first gets to pay those $5 billion.
Also relevant. If you are a doctor then the costs of your “defensive medicine” fall on the hospital/insurance companies (here in the UK the NHS). While the costs of being sued fall a lot more on you personally, even if the actual fine/monetary costs are paid by your organisation you still get a kick to the reputation, plus costs in stress and time. Spending $9 of someone else’s money to save yourself $1 is rational in a self-serving way.