A sweeping history of Russian power in the world, and of Stalin’s power in Russia (recast as the Soviet Union), full of surprises, with uncanny echoes of today’s realities.

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Stephen Kotkin

is the John P. Birkelund Professor in History and International Affairs at Princeton University, where he has taught since 1989. He is also a Research Fellow at the Hoover Institution at Stanford University.

Hedge Funds: the Craft of History

Perhaps the most succinct definition of the scientific method is, To actively seek information that contradicts what one thinks.  But let’s be honest: if someone has a hunch, chances are he or she is going to look for confirmation – and find it.  Information that contradicts one’s hypothesis, even if discovered by accident, will sometimes not even be seen.  It’s natural, and it’s got a name: confirmation bias [doi:10.1037/1089-2680.2.2.175].  But there is at least one endeavor where the scientific method is instinctual.  Strange as it might seem, the craft of history would do well to resemble more that of a hedge fund trader with skin in the game.

Let us imagine someone believes the price of aluminum is going to rise.  This view could be based on some research or on hearsay or on nothing at all.  But if this person plans on betting, say, $100 million on the hunch, and some or all of that is his or her money, he or she will vigorously seek information that contradicts the hypothesis.  Otherwise, the belief could get very, very expensive. Of course, hedge funds still commit plenty of mistakes. [] But the rewards for self-doubt and cross-checking are ample.

In the study of history, powerful incentives to prove oneself wrong do not exist.  Worse, even when others find rock-solid information that contradicts what we believe, we often stick to our views, citing the “ambiguity” of the evidence, “multiple interpretations,” and the like.  Mostly for political reasons, disagreement will always be endemic to historical analysis.  Still, I tell my students that as soon as they come up with a hypothesis, particularly one highly congenial to their political beliefs, attack it!  If after rigorous research-assault by themselves, the idea still looks good, it could amount to more than merely what they want to believe.