Learned Hand’s False Efficiency

O’Hara, Michael J.  2014. “Learned Hand’s False Efficiency.”  The Earnings Analyst, 14: 61-76.


Judge Learned Hand famously opined a metric for efficient liability.  His calculus of negligence asserts that efficiency requires liability if B < PL.  From Judge Hand’s appellate court perspective the law held the defendant liable for breach of contract when the defendant’s burden of protective costs (B) is less than (P) the probability of the plaintiff’s injuries occurring times (L) the magnitude of plaintiff’s injuries.  Others have transformed this into an equation for tort negligence.  This manuscript will explore two issues.  The first issue is a critique of under specification (i.e., missing variables) in Judge Hand’s formulation.  The second issue is a tempting fallacy artfully used by those seeking to truncate liability in tort reform arguments.


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