Against the Gods: The Remarkable Story of Risk

The Library Essay

Risk Had to Be Invented

For most of history the future belonged to the gods, and men consulted oracles about it rather than arithmetic. Peter Bernstein's history follows the long labour of bringing it within human reach, from the gamblers whose questions drew Pascal and Fermat into probability, through the Enlightenment actuaries and the underwriters of Lloyd's, to the measured and modelled markets of the twentieth century.

Bernstein wrote it near the end of a long career as an economist and investment manager, and the book benefits from that. The mathematics is explained by a man who watched it used, and misused, with real money at stake. Published in 1996, it became the standard popular account of how probability grew up, and its closing caution, that the tools for measuring risk tempt us to take more of it, aged uncomfortably well.