The great economist, Adam Smith, wrote the first text on economics for Americans in 1776. Trusting the “invisible hand” of the market to alleviate economic need is just not realistic to some. The Hand Formula basically says that if it would be cheaper for you to prevent the injury than the expected losses, you breached a duty of care. To recap, self-interest and competition are very important economic forces. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest. The Learned Hand rule for determining negligence has fascinated students of law and economics for many decades, partly because Judge Hand wrote an algebraic expression—an inequality with an expected value on one side—that is intuitive and attractive to economists. For example, you predict that when you go to the supermarket there will be eggs and milk for sale. America's first great economist! The invisible hand is a concept that - even without any observable intervention - free markets will determine an equilibrium in the supply and demand for goods. Note that we emphasize the Hand rule for negligence of the defendant, which is the standard usage in the law and economics literature on torts. Hand is most famous for his rule for determining negligence in the U.S. v. Carroll Towing case. His message was called 'the wealth of nations' and economics (Capitalism) derived from an 'invisible hand' theory. Expert Answer 100% (1 rating) Judge Learned Hand famously opined that if the burdens of preventing an accident outweigh its cost multiplied by its probability, it does not constitute carelessness to avoid those burdens. Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand. We use the Hand Formula to figure out if the defendant has breached a duty of care. For example, let's say you make cars. Together they form what Adam Smith called the invisible hand, which guides resources to their most valued use. Instead, they see a problem and an obvious, immediate solution—government action. Describe the Learned Hand Rule, and discuss the economic logic underlying it. Self-interest is the motivator of economic activity. The event that gave rise to the case were as follows: Several barges owned by the Connors Marine Co. were tied together off a busy Manhattan Pier. His concept was that there was an 'invisible hand' (or mind) which guided our markets so that production, distribution,… Competition is the regulator of economic activity. The most common economic definition of negligence can be seen in operation in Judge Learned Hand's famous opinion, U.S. v. Carroll Towing Co., 159 F.2d 169, 174 (2nd Circuit 1947). Do you believe the objective is being achieved? The concept of unintended consequences is one of the building blocks of economics. 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