Lauren blogged about a new article by Omri Ben-Shahar, who has written a number of interesting and often (deliberately) provocative articles about consumer contracts. This new article certainly fits in that vein. Its basic point is that requiring arbitration is more favorable to weaker (read poorer) consumers than allowing in-court litigation because all litigation has a regressive distributional effect: the well-to-do are more likely to litigate and gain the benefits of litigation, while the costs are borne more generally by all consumers. Open access to courts acts as a regressive litigation tax.
There is a clear implication to Ben-Shahar's argument, namely that binding mandatory arbitration should be the favored method for resolving consumer suits. In fairness to Ben-Shahar, however, he does not make this policy prescription, and he does note that distributional concerns are not the only factor that should be considered in policy-making. Instead, his point is simply to point out that there are distributional effects from permitting access to courts. I do, however, expect to see this paper cited in the future in support of attempts to restrict consumers' access to courts, and that's unfortunate.
I don't have any quibbles with the basic point that it is possible that access to courts could have regressive distributional effects. It's a neat theoretical observation. Still, I don't think Ben-Shahar's observation is likely to hold up as an empirical matter in many, if not most cases, however. And even if it does, I don't think Ben-Shahar has really grappled with the logic of his argument, which proves too much: it is really an argument for banning all consumer litigation. In fact, Ben-Shahar might not disagree: he's proposed as much previously. (I think Ben-Shahar's faith in the market in that article is perhaps naive, but that's another story.)