Cost-Benefit Analysis of Class Actions – An Israeli Perspective

תקציר

This paper proposes an analytical framework for evaluating the effectiveness of class actions and applies this framework to Israeli class actions. According to the proposed approach, the costs of class actions should be estimated against the benefits they produce in attaining three main objectives: Deterrence and prevention of violations of law; access to courts; and compensation for injured parties. We outline the parameters for measuring the social costs and benefits relevant to these three objectives and evaluate them for Israeli class actions. We analyze data from an original database which includes all class actions filed since the enactment of the Class Action Law in 2006 and through the end of 2012 (n=2,056 cases). Findings indicate that Israeli class actions did not substantially facilitate access to courts and compensation for the injured. Initial findings also suggest a limited realization of the deterrence objective, though we identify structural difficulties in empirical-observational assessment of realizing the latter objective.