Luck or Insight? The Simon–Ehrlich Bet Re‐Examined

Abstract

After a long argument about the effect of population growth on the availability of resources, Julian Simon and Paul Ehrlich undertook a $1,000 bet in October1980. The wager concerned the inflation‐adjusted prices of five metals. If, over ten years, prices rose, Simon would pay Ehrlich. If they fell, Ehrlich would pay Simon. In October 1990 Ehrlich mailed Simon a cheque, as the real price of the five‐metal basket of commodities had fallen by 36 per cent. Since then, some researchers have argued that Simon ‘got lucky’; over other periods the result would have been different. We review data from 1900–2019 and find that, if war years are excluded, Simon would have won the bet 69.9 per cent of the time. During this 119‐year period, the time price of the five‐metal basket fell by 87.2 per cent despite both US and world populations having grown substantially.