Editing Simon–Ehrlich wager

{{Short description|1980 scientific wager}}
The '''Simon–Ehrlich wager''' was a 1980 [[scientific wager]] between business professor [[Julian Simon]] and biologist [[Paul R. Ehrlich|Paul Ehrlich]], betting on a mutually agreed-upon measure of [[Natural resource|resource]] [[scarcity]] over the decade leading up to [[1990]]. The widely followed contest originated 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 [[Gambling|gambler]], I would take [[even money]] that [[England]] will not exist in the year [[2000]]", Simon offered to take that bet, or, more realistically, "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".

Simon challenged Ehrlich to choose any [[raw material]] he wanted and a date more than a year away, and he would wager on the [[inflation-adjusted]] prices decreasing as opposed to increasing. Ehrlich chose [[copper]], [[chromium]], [[nickel]], [[tin]], and [[tungsten]]. The bet was formalized on September 29, 1980, with September 29, 1990, as the payoff date. Ehrlich lost the bet, as all five commodities that were bet on declined in price from 1980 through 1990, the wager period.<ref name=Gorelick>{{cite book|last=Gorelick|first=Steven M.|title=Oil Panic and the Global Crisis: Predictions and Myths|url=https://archive.org/details/oilpanicglobalcr00gore|url-access=limited|year=2009|publisher=[[Wiley-Blackwell]]|isbn=978-1405195485|page=[https://archive.org/details/oilpanicglobalcr00gore/page/n119 104]}}</ref>

==Background==
In 1968, Ehrlich published ''[[The Population Bomb]]'', which argued that mankind was facing a demographic catastrophe with the rate of population growth quickly outstripping growth in the supply of food and resources. Simon was highly skeptical of such claims, so he proposed a wager, telling Ehrlich to select any raw material he wanted and select "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.

Ehrlich and his colleagues picked five metals that they thought would undergo big price increases: 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 al. would pay Simon.

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, the price of each of Ehrlich's selected metals had fallen. Chromium, which had sold for $3.90 a pound in 1980 ({{Inflation|US|3.90|1980|fmt=eq|r=2}}), was down to $3.70 in 1990 ({{Inflation|US|3.70|1990|fmt=eq|r=2}}). Tin, which was $8.72 a pound in 1980 ({{Inflation|US|8.72|1980|fmt=eq|r=2}}), was down to $3.88 a decade later ({{Inflation|US|3.88|1990|fmt=eq|r=2}}).<ref name=doomslayer>{{cite web
 |url         = https://www.wired.com/wired/archive/5.02/ffsimon_pr.html
 |title       = The Doomslayer
 |last        = Regis
 |first       = Ed
 |work        = [[Wired.com]] (Issue 5.02)
 |date        = February 1997
 |access-date  = 2008-05-18
 |archive-url  = https://web.archive.org/web/20080516050031/http://www.wired.com/wired/archive/5.02/ffsimon_pr.html
 |archive-date = 2008-05-16
 |url-status     = dead
}}</ref>

As a result, in October 1990, Paul Ehrlich mailed Julian Simon a check for $576.07 ({{Inflation|US|576.07|1990|fmt=eq|r=2}}) to settle the wager in Simon's favor.

==Analysis==
Julian Simon won because the price of three of the five metals went down in nominal terms and all five of the metals fell in price in inflation-adjusted terms, with both tin and tungsten falling by more than half.<ref name=ehrlich-1998/><ref>[http://www.overpopulation.com/faq/People/julian_simon.html] {{webarchive|url=https://web.archive.org/web/20070703014812/http://www.overpopulation.com/faq/People/julian_simon.html|date=July 3, 2007}}</ref> In his book ''Betrayal of Science and Reason'', Ehrlich wrote that Simon asserted "that humanity would never run out of anything". Ehrlich added that he and fellow scientists viewed [[renewable resources]] as more important indicators of the state of planet Earth, but that he decided to go along with the bet anyway.<ref name=ehrlich-1998>{{cite book | last1=Ehrlich | first1=Paul | last2=Ehrlich | first2=Anne | author-link1=Paul Ehrlich | title=Betrayal of Science and Reason: How Anti-Environmental Rhetoric Threatens Our Future | pages=100–104 | year=1998 | isbn=978-1610912501}}</ref> Afterward, Simon offered to raise the wager to $20,000 and to use any resources at any time that Ehrlich preferred. Ehrlich countered with a challenge to bet that temperatures would increase in the future.<ref name=ehrlich-1998/> The two were unable to reach an agreement on the terms of a second wager before Simon died.

Some observers have argued that Ehrlich could have won if the bet had been for a different period, or if the start date had been different.<ref name="Betting on the Apocalypse">{{cite news|last=Sabin|first=Paul|title=Betting on the Apocalypse|work=The New York Times |url=https://www.nytimes.com/2013/09/08/opinion/sunday/betting-on-the-apocalypse.html |archive-url=https://web.archive.org/web/20130911052344/http://www.nytimes.com/2013/09/08/opinion/sunday/betting-on-the-apocalypse.html |archive-date=2013-09-11 |url-access=subscription |url-status=live|access-date=24 October 2013|date=September 7, 2013}}</ref><ref name=worstall-2013>{{cite news|last=Worstall|first=Tim|title=But Why Did Julian Simon Win The Paul Ehrlich Bet?|url=https://www.forbes.com/sites/timworstall/2013/01/13/but-why-did-julian-simon-win-the-paul-ehrlich-bet/|access-date=24 October 2013|newspaper=[[Forbes]]|date=2013-01-13}}</ref><ref name=Grantham>{{citation | last=Grantham | first=Jeremy | title=Resource Limitations 2: Separating the Dangerous from the Merely Serious | periodical=GMO Quarterly Letter | page=12 | date=July 2011 | url=http://davidruyet.files.wordpress.com/2011/08/jgletter_resourcelimitations2_2q11.pdf | publisher=GMO LLC | access-date=2013-06-05}}</ref> Ehrlich wrote that the five metals in question had increased in price between the years 1950 and 1975.<ref name=ehrlich-1998/> Asset manager [[Jeremy Grantham]] wrote that if the Simon-Ehrlich wager had been for a longer period (from 1980 to 2011), then Simon would have lost on four of the five metals.<ref name=Grantham/> Economist Mark J. Perry noted that for an even longer period of time, from 1934 to 2013, the inflation-adjusted price of the [[Dow Jones-AIG Commodities Index]] showed "an overall significant downward trend" and concluded that Simon was "more right than lucky".<ref>{{cite web | url=http://www.aei.org/publication/julian-simon-still-more-right-than-lucky-in-2013/ | last=Perry | first=Mark J. | title=Julian Simon: Still more right than lucky in 2013 | work=AEI | publisher=[[American Enterprise Institute]] | date=January 12, 2013 | access-date=April 28, 2017}}</ref>

==The proposed second wager==
Understanding that Simon wanted to bet again, Ehrlich and climatologist [[Stephen Schneider (scientist)|Stephen Schneider]] counter-offered, challenging Simon to bet on 15 current trends, betting $1,000 that each will get worse (as in the previous wager) over a ten-year future period.<ref name=ehrlich-1998/>

The bets were:
* The three years 2002–2004 will, on average, be warmer than 1992–1994.
* There will be more [[carbon dioxide]] in the [[Earth's atmosphere|atmosphere]] in 2004 than in 1994.
* There will be more [[nitrous oxide]] in the atmosphere in 2004 than 1994.
* The concentration of [[ozone]] in the lower atmosphere (the [[troposphere]]) will be greater than in 1994.
* Emissions of the air pollutant [[sulfur dioxide]] in [[Asia]] will be significantly greater in 2004 than in 1994.
* There will be less fertile [[cropland]] per person in 2004 than in 1994.
* There will be less [[Agriculture|agricultural]] soil per person in 2004 than 1994.
* There will be on average less [[rice]] and [[wheat]] grown per person in 2002–2004 than in 1992–1994.
* In [[developing nations]] there will be less [[firewood]] available per person in 2004 than in 1994.
* The remaining area of virgin tropical moist [[forest]]s will be significantly smaller in 2004 than in 1994.
* The [[ocean]]ic [[fishery]] harvest per person will continue its downward trend and, thus, in 2004, will be smaller than in 1994.
* There will be fewer [[plant]] and [[animal]] [[species]] still extant in 2004 than in 1994.
* More people will die of [[AIDS]] in 2004 than in 1994.
* Between 1994 and 2004, [[Male infertility crisis|sperm cell counts of human males will continue]] to decline, and reproductive disorders will continue to increase.
* The [[Income inequality|gap in wealth]] between the richest 10% of humanity and the poorest 10% will be greater in 2004 than in 1994.

Simon declined Ehrlich and Schneider's offer to bet, and used the following analogy to explain why he did so:<ref>{{cite web| url = http://jasoncollins.org/2011/05/20/the-simon-ehrlich-bet/| title = The Simon-Ehrlich bet - Jason Collins blog| date = 20 May 2011}}</ref>

{{Blockquote|Let me characterize their offer as follows. I predict, and this is for real, that the average performances in the next [[Olympic Games|Olympics]] will be better than those in the last Olympics. On average, the performances have gotten better, Olympics to Olympics, for a variety of reasons. What Ehrlich and others says {{sic}} is that they don't want to bet on athletic performances, they want to bet on the conditions of the track, or the weather, or the officials, or any other such indirect measure.}}

In his 1981 book ''[[The Ultimate Resource]]'', Simon noted that not all decreases in resources or increases in unwanted effects correspond to overall decreases in human wellbeing.<ref name="Simon-1981">{{cite book|last1=Simon|first1=Julian|title=The Ultimate Resource|date=August 1981|publisher=Princeton University Press|location=Princeton|isbn=069109389X|edition=Hardcover|url=https://archive.org/details/ultimateresource00juli|url-access=registration}}</ref> Hence, there can be an "optimal level of pollution", which accepts some increases in certain kinds of pollution in a way that increases overall wellbeing while acknowledging that any increase in pollution is nevertheless a cost that must be considered in any such calculation.{{R|Simon-1981|p=143}} Simon's theory of resource development actually predicts some of the aforementioned trends, which do not in and of themselves even qualify as costs (unlike pollution). E.g., he pointed out that, due to increased efficiency, the amount of cropland required and actually used to grow food for each person has decreased over time and is likely to continue to do so {{R|Simon-1981|p=5}}. The same might potentially be true of decreased reliance on firewood in developing countries and per capita use of specific food sources like rice, wheat, and fish if economic development makes a diverse range of alternative foods available. Some have also proven false, e.g., the amount of ozone in the lower atmosphere has decreased from 1994 to 2004.<ref>{{Cite web |last=US EPA |first=OAR |date=2016-05-04 |title=Ozone Trends |url=https://www.epa.gov/air-trends/ozone-trends |access-date=2024-05-23 |website=www.epa.gov |language=en}}</ref>

If Simon had taken the bet, he would have lost on 11 out of 15 trends.<ref>{{cite journal |last1=Desrochers |first1=Pierre |last2=Geloso |first2=Vincent |last3=Szurmak |first3=Joanna |title=Care to Wager Again? An Appraisal of Paul Ehrlich's Counterbet Offer to Julian Simon, Part 2: Critical Analysis |journal=Social Science Quarterly |date=March 2021 |volume=102 |issue=2 |pages=808–829 |doi=10.1111/ssqu.12920 |url=https://onlinelibrary.wiley.com/doi/full/10.1111/ssqu.12928}}</ref>

==Other wagers==
In 1996, Simon bet $1,000 with David South, professor of the Auburn University School of Forestry, that the inflation-adjusted price of timber would decrease in the following five years. Simon paid out early on the bet in 1997 (before his death in 1998) based on his expectation that prices would remain above 1996 levels (which they did).<ref>{{cite web |url=http://www.forestry.auburn.edu/sfnmc/web/bet.html |title=The Simon South Bet On Pine Sawtimber |publisher=Forestry.auburn.edu |date=1998-02-08 |access-date=2009-09-07 |url-status=dead |archive-url=https://web.archive.org/web/20080510190007/http://www.forestry.auburn.edu/sfnmc/web/bet.html |archive-date=2008-05-10 }}</ref>

In 1999, when ''[[The Economist]]'' headlined an article entitled, "$5 a barrel oil soon?" and with oil trading in the $12/barrel range, David South offered $1,000 to any economist who would bet with him that the [[price of oil]] would be greater than $12/barrel in 2010. No economist took him up on the offer. However, in October 2000, Zagros Madjd-Sadjadi, an economist with The University of the West Indies, bet $1,000 with David South that the inflation-adjusted price of oil would decrease to an inflation-adjusted price of $25 by 2010 (down from what was then $30/barrel). Madjd-Sadjadi paid South an inflation-adjusted $1,242 in January 2010. The price of oil at the time was $81/barrel.<ref>{{cite web |url=https://fp.auburn.edu/sfws/sfnmc/web/oilbet.html |title=The Madjd-Sadjadi South Bet On Oil |publisher=Forestry.auburn.edu |date=2010-01-31 |access-date=2012-01-29 |url-status=dead |archive-url=https://web.archive.org/web/20120608030701/https://fp.auburn.edu/sfws/sfnmc/web/oilbet.html |archive-date=2012-06-08 }}</ref>

==See also==
* [[Long Bet Project]]
* [[Malthusian catastrophe]]
* [[Oil price increases since 2003]]
* [[Peak oil]]
* [[Richard Rainwater]]
* [[Simmons–Tierney bet]]
* [[Scientific wager]]

==References==
{{Reflist}}

==Further reading==
* Sabin, Paul (2013), ''The Bet'' ([[Yale University Press]]).
* Desrochers, Pierre and Vincent Geloso, "[http://www.cevroinstitut.cz/data/nppe-12.pdf Snatching the Wrong Conclusions from the Jaws of Defeat: A Historical/Resourceship Perspective on Paul Sabin's The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth's Future (Yale University Press, 2013), Part 2: The Wager: Protagonists and Lessons]." ''New Perspectives on Political Economy'', vol. 12, no. 1-2 (2016), pp.&nbsp;42–64.
* Desrochers, Pierre and Vincent Geloso, "[http://www.cevroinstitut.cz/data/nppe-12.pdf Snatching the Wrong Conclusions from the Jaws of Defeat: A Historical/Resourceship Perspective on Paul Sabin's The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth's Future (Yale University Press, 2013). Part 1: The Missing History of Thought: Depletionism vs Resourceship]."  ''New Perspectives on Political Economy'', vol. 12, no. 1-2 (2016), pp.&nbsp;5–41.

==External links==
* [http://www.stanford.edu/group/CCB/Pubs/Ecofablesdocs/thebet.htm Paul Ehrlich's webpage on the two Simon bets]

{{Population}}

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[[Category:Energy economics]]
[[Category:Wagers]]
[[Category:1980 establishments]]
[[Category:1990 disestablishments]]