Simon-Ehrlich Wager
In the lead-up to the wager between Julian Simon and Paul Ehrlich about the prices of
natural resources, in 1974, Ehrlich published a new book, in which he warned that human
beings have the ability to overrun the carrying capacity of their habitat. However, Simon
believed that human beings turn to creative innovations to combat the scarcity of
resources. They find other ways around the problem, so that they do not run out of natural
resources.
These two different beliefs were challenged in the infamous bet. Ehrlich insisted that
natural resource would become more expensive: they were running out in the face of the
population boom. Simon asserted the opposite: more people meant more innovation and
creativity which meant better methods of extraction and lower usage per unit of
production. Thus prices should fall. Ehrlich could select any raw material he wanted –
copper, tin, whatever – and select any date in the future, 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;
Simon though they would be higher. Ehrlich and his colleagues picked five metals that
they thought would undergo big price rises: chromium, copper, nickel, tin, and tungsten.
Then, they bought $200 worth of each, for a total bet of $1,000, using the prices on
September 29, 1980, as a starting date. They designated September 29, 1990, 10 years in
the future, as the payoff date. If the inflation-adjusted prices of the various metals rose in
