Simon-Ehrlich wagers

Julian Simon had challenged Paul Ehrlich to a wager over a 10-year period, to judge who was right about resource availability.

In 1981, he challenged Ehrlich to a bet about what would happen to resource prices over the next decade. Ehrlich had jumped on the offer, having for quite some time, dismissed and mocked the optimistic views of Simon.

The bet worked this way. They agreed to bet on a portfolio of $200 on each of five commodities: copper, chromium, nickel, tungsten, and tin. Over a ten year period, one would look at the prices of these commodities, adjusting for the effects of inflation. This indicator was the adjudicating factor: if the prices of these commodities rise over 10 years, it suggests that resources had become more scarce and Ehrlich would win. If the prices of these commodities instead fell over 10 years, then falling prices reflect that resources had become more abundant instead, and Simon would win.

What happened? Simon won the bet. In October 1990, Ehrlich wrote Simon a cheque for $576.07. The inflation-adjusted prices of the commodities that Ehrlich thought we were “running out of” had fallen by almost sixty percent, despite the fact that in the same period, there was a population increase amounting to 800 million more people.