MHJ
Literature reviews, by category
Peter L. Bernstein
Against The Gods: The Remarkable Story of Risk

Rating: * * * * *
Reviewed: 17.6.2002

With Against the gods, Bernstein takes us on a magnificent and beautifully written journey through the history of risk, uncertainty and probability. The authors knowledge of history and science is stunning, and he uses references in every turn, linking events and people to other contemporaries or like-minded thinkers of different ages, even from outside the primary fields of statistics, economics and finance.
At first thought, it is easy to consider book on the history of statistics and probability theory dry to the least – but Bernstein doesn’t once fall victim to being even slightly uninteresting. From the beginnings of theories of chance and probability, he ties the concepts into the colorful characters – philosophers, mathematicians, physicists and even gamblers – and other remarkable achievements that have been made possible by the steady advancement of probability theory and risk management in the society as a whole.
The theme of the book is the notion of risk and managing it, and how understanding and quantifying uncertainty has enabled mankind to rise from the shackle of fatalism and fear of the unknown. Bernstein’s background and primary focus is in finance and investing, where the history of risk manifests constantly in everyday business. Understanding the history of probability and man’s rationality – or lack of it – when facing risks of losing or gaining gives an entirely new view of the discipline. Suddenly, the hustle and bustle of Wall Street has a deeper, more meaningful underlying purpose. Putting the modern financial markets and economics into perspective with the history and development of risk management coupled with behavioral theories explains and justifies their very existence. Also, for a student of business, seeing the big picture is extremely helpful and even encouraging.
Bernstein receives five stars. I can warmly recommend the book to anyone with interest in history, science, economics, finance or even just human behavior – Bernstein has distilled the best of many fields of study. I know I will keep this book handy for a long time.

[b a c k]