ABSTRACT

The year is 1980 and two prominent academics are about to engage in a rather unusual exercise: a wager. One of these academics was the American biologist Paul Ehrlich. In 1968 Ehrlich had published an influential book entitled The Population Bomb, in which he predicted that rising levels of global population would lead to shortages in the availability of resources (such as food and energy) and significant forms of human suffering (Ehrlich, 1968). The other academic involved in this wager was Julian L. Simon. Simon was a professor of business administration, who was best known for his economic analysis of the relationship between population and resources. Simon’s work contradicted that of Ehrlich to the extent that he claimed that population growth did not lead to resource scarcity. Moreover, Simon claimed that population growth provided a basis for renewed social innovation and for making more resources available (Simon, 1981). In order to resolve their academic dispute Simon proposed a wager to Ehrlich. The wager involved Ehrlich (actually he and his colleagues John Harte and John Holdren) betting on the price of five commodity metals (chromium, copper, nickel, tin and tungsten). Ehrlich’s bet was that by 1990 the prices for these commodities would have increased (as you would expect if population growth was increasing demand for resources), while Simon wagered that the prices for these metals would decrease in real terms (as you would expect if you believed that population growth would lead to social innovation and the rising availability of resources) (Ehrlich and Ehrlich, 1996). Simon ultimately won the wager of $1000: while the global population increased rapidly during the 1980s (by somewhere in the region of 800 million people), the adjusted prices of three of the five commodities went down over the same period (Ehrlich and Ehrlich, 1996). Ehrlich wrote Simon a cheque for $576.07 to settle the bet (a settlement relative to the prices that went up and down), which in some ways actually proved both parties to be right and wrong at the same time.