Israeli injury payouts rose 12% to 17% once plaintiffs could stay anonymous

Payments on personal injury claims in Israel rose 12% to 17% after the country let plaintiffs stay anonymous in court, according to a study in Management Science by economists and legal scholars at the Hebrew University of Jerusalem and Stanford University. The authors read the gap as the price people had been paying to keep their health and income out of public judgments.

The paper, titled "Does Privacy Matter? Evidence from a Legal Reform," was published online on October 1, and the Hebrew University announced it on October 20.

How a court rule became a price tag

Before the reform, a claimant who turned down a settlement and went to trial risked having medical and earnings details printed in the judgment. The 2014 law, which took effect in August 2015, removed that risk for personal injury cases.

The researchers used claims data from Israel's five largest insurers covering 2011 to 2020, focusing on car accidents. Property damage claims from the same accidents stayed under the old rule, which gave the team a built-in comparison group.

Almost every claim settled out of court, so the higher payments did not come from trials. The authors argue insurers simply offered more once a claimant no longer faced public exposure by refusing. In their reading, claimants had previously accepted lower settlements to protect their privacy.

Who gained the most

The effect was strongest for working-age adults, who have more to lose if a future employer reads about their health. Payouts also climbed more in drawn-out, complicated cases and where a top-ranked law firm represented the claimant.

"Our findings show that privacy is not merely an abstract value," said Ehud Guttel of the Hebrew University, one of the authors. The team also includes Liran Einav of Stanford, Ilan Kremer, Guy Lakan and Sarit Weisburd.

A counterpoint to the privacy paradox

Much of the debate on privacy rests on the "privacy paradox": people say they care about it but rarely pay to protect it. Those claims mostly come from surveys and lab experiments. This study instead uses real decisions with large sums at stake, which the authors say gives strong evidence that privacy has measurable economic value.

Guttel now leads a 3.5 million euro Horizon Europe project, Incognito Justice, with nine academic and civil society partners including the University of Bonn, École Polytechnique and Oxford. It will look at how anonymous judgments affect the way judges write, how rulings are cited and covered, and how much the public trusts courts.