Hard to Sue: A Feature Not a Bug

Good systems tune out crazy complainers

Long before there was zoning, there was the law of nuisance. Though your neighbors couldn’t tell you what to build on your own land, they could sue you if they didn’t like what you built. As Wikipedia explains:

Under the common law, persons in possession of real property (land owners, lease holders etc.) are entitled to the quiet enjoyment of their lands. However this doesn't include visitors or those who aren't considered to have an interest in the land. If a neighbour interferes with that quiet enjoyment, either by creating smells, sounds, pollution or any other hazard that extends past the boundaries of the property, the affected party may make a claim in nuisance.

Rather vague, you will notice. In principle, almost anything is arguably a “nuisance.” If a neighbor builds a skyscraper that blocks your sunlight, you could try crying “nuisance.” What, then, was the point of piling modern housing regulation on top of the pre-existing body of nuisance law?

Law professors can enlighten you on the actual legal history. Most economists, however, will confidently share the following Just-So story: Nuisance law offered inadequate protection against nuisances, because suing others is a pain in the neck. The vast majority of people who are theoretically able to sue decline to do so. As a result, the legal system under-deters negative externalities.

In principle, the court system could surmount this problem by increasing awards, forcing defendants to pay court costs, fully accounting for the opportunity cost of plaintiff’s time and aggravation, and so on. But once you recognize the extreme inconvenience and endemic under-deterrence of the legal process, why not just hire a full-time regulatory team to reliably stop problems before they start?

What’s true for zoning is true for virtually all regulation. If existing law doesn’t allow people to sue others for X, the standard solution is to create a regulatory bureau. The other, however, is to change the law so people can sue for X. Why not? Economists’ go-to answer, again, is that suing is inconvenient, so lawsuits alone lead to under-deterrence.

This is all eminently plausible, until you notice one Big Fact: Humans tend to make enormous numbers of ridiculous complaints. The whiniest humans barely do anything but complain. A single individual filed 6,500 noise complaints against DC’s Reagan Airport! Once you accept this basic psychological fact, the fear of “under-deterrence” of offensive behavior pales.

And a new fear rises: Fear that we’ll take humanity’s endless petty complaints seriously. Verily, we should be sweating bullets, because if we take the typical complaint seriously, life will grind to a halt.

Picture the current difficulty of building a skyscraper in San Francisco in spite of all the attendant complaints.

Now picture a world where everything is like that.

The mainstream case for regulation over lawsuits isn’t all wrong. Yes, regulation is indeed a (somewhat) more streamlined system for processing complaints. Suing other people is indeed a (massive) pain in the neck.

What mainstream economists miss is that given the rancorous nature of man, the inconvenience of lawsuits for the plaintiff is a great good. Truly a feature, not a bug. If you create a bureau of government employees and tell them, “Listen to people’s complaints and do something about them,” you get the firehose of whining and action that we now take for granted. In contrast, if you tell complainers, “Don’t like it? Find a good lawyer,” almost all of them will shrug and suck it up. As they should.