ECON: Simon vs Ehrlich

Hal Dunn (
Sat, 26 Apr 1997 18:19:28 -0400

>From: (Patrick Wilken)
>Date: Sat, 26 Apr 1997 15:21:53 +1000
>I watched a documentary by David Suzuki on population growth recently. Paul
>Ehrlich was featured prominently and his famous bet with Julian Simon about
>commodity prices was also mentioned.
>The story told in the documentary what that Ehrlich's group was basically
>only allowed to chose metals - no other commodities were allowed. They also
>didn't mention the amount of money he lost or the fact that he was able to
>choose the time period.
>They did mentioned that much more recently there has been a second
>challenge by Ehrlich to Simon, but that Simon had not taken up the bet.
>Does anyone know what's become of this second bet? And what the true story
>of the first bet is?

I'm not sure about the 2nd bet. But, Wired magazine published a story about
Simon called "Doomslayer." I think he was on the cover. Here's part of the
article that tells the story of the 1st bet:

. . . The battle lines now drawn, it was not long before Ehrlich and Simon
met for a duel in the sun. The face-off occurred in the pages of Social
Science Quarterly, where Simon challenged Ehrlich to put his money where his
mouth was. In response to Ehrlich's published claim that "If I were a
gambler, I would take even money that England will not exist in the year
2000" - a proposition Simon regarded as too silly to bother with - Simon
countered with "a public offer to stake US$10,000 ... on my belief that the
cost of non-government-controlled raw materials (including grain and oil)
will not rise in the long run."

You could name your own terms: select any raw material you wanted - copper,
tin, whatever - and select any date in the future, "any date more than a
year away," and Simon would bet that the commodity's price on that date
would be lower than what it was at the time of the wager.

"How about it, doomsayers and catastrophists? First come, first served."

In California, Paul Ehrlich stepped right up - and why not? He'd been
repeating the Malthusian argument for years; he was sure that things were
running out, that resources were getting scarcer - "nearing depletion," as
he'd said - and therefore would have to become more expensive. A public
wager would be the chance to demonstrate the shrewdness of his forecasts,
draw attention to the catastrophic state of the world situation, and, not
least, force this Julian Simon character to eat his
words. So he jumped at the chance: "I and my colleagues, John P. Holdren
(University of California, Berkeley) and John Harte (Lawrence Berkeley
Laboratory), jointly accept Simon's astonishing offer before other greedy
people jump in."

Ehrlich and his colleagues picked five metals that they thought would
undergo big price rises: chromium, copper, nickel, tin, and tungsten. Then,
on paper, they bought $200 worth of each, for a total bet of $1,000, using
the prices on September 29, 1980, as an index. They designated September 29,
1990, 10 years hence, as the payoff date. If the inflation-adjusted prices
of the various metals rose in the interim, Simon would pay Ehrlich the
combined difference; if the prices fell, Ehrlich et alia would pay Simon.

Then they sat back and waited.

Between 1980 and 1990, the world's population grew by more than 800 million,
the largest increase in one decade in all of history. But by September 1990,
without a single exception, the price of each of Ehrlich's selected metals
had fallen, and in some cases had dropped through the floor. Chrome, which
had sold for $3.90 a pound in 1980, was down to $3.70 in 1990. Tin, which
was $8.72 a pound in 1980, was down to $3.88 a decade later.

Which is how it came to pass that in October 1990, Paul Ehrlich mailed
Julian Simon a check for $576.07 . . . .


Hal Dunn