Harmful Precautions

According to the conventional definition of reasonableness, commonly known as the Hand formula, a person acts unreasonably (hence negligently) toward another if they fail to take precautions whose cost for the actor is lower than the expected loss for the other that these precautions can prevent.1 While law-and-economics theorists have advocated and courts have often embraced adjustments to both sides of this algebraic formulation,2 the idea that the expected loss must be compared with the cost of precautions for the potential injurer has remained mostly uncontested.3 This Article unveils an overlooked yet fundamental flaw in the orthodox understanding and application of the Hand formula, namely the exclusion of the negative externalities of risk-reducing precautions from the analysis. Simply put, precautionary measures that potential injurers can take to reduce the risk of harm to potential victims might expose the latter or others to different risks or deprive them of certain benefits. Caselaw and academic literature have mostly ignored these harmful repercussions. This Article advocates their inclusion in the analysis of reasonableness and explains how and to what extent this can be achieved.