Bet Blogger To bet or not to bet

Simon-Ehrlich wager

Julian L. Simon and Paul Ehrlich entered in a famous wager in 1980, betting on a mutually agreed upon measure of resource scarcity over the decade leading up to 1990. Simon had Ehrlich choose five of several commodity metals. Ehrlich chose 5 metals: copper, chromium, nickel, tin, and tungsten. Simon bet that their prices would go down. Ehrlich bet they would go up.^{[note 1]} Ehrlich ultimately lost the bet, and all five commodities that were selected as the basis for the wager continued to trend downward until 2002, when metal prices generally began to increase^[1] and at least the price of copper,^[2] tin,^[3] and nickel^[4] increased.

In 1968, Ehrlich was the author of a popular book, 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, a libertarian, was highly skeptical of such claims.

You could name your own terms: select any raw material you wanted — copper, tin, whatever — and select any date in the future, “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 rises: 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, without a single exception, the price of each of Ehrlich’s selected metals had fallen, and in some cases had dropped through the floor. Chrome, which had sold for $3.90 a pound in 1980, was down to $3.70 in 1990. Tin, which was $8.72 a pound in 1980, was down to $3.88 a decade later.^[5]

As a result, in October 1990, Paul Ehrlich mailed Julian Simon a check for $576.07 to settle the wager in Simon’s favor.

Other wagers

In 1996, Simon bet $1000 with David South that the inflation-adjusted price of timber would decrease in the following 5 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).^[6]

In recent years, there have been many bets and bet challenges related to global warming.^[7][8] For instance, J. Scott Armstrong challenged Al Gore to a climate-related bet in 2007 ^[9] that focused on year-to-year variation in temperatures but not on betting over longer term changes in global average temperatures.^[10]

Notes

1. ^ The face-off occurred 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 gambler, I would take even money that England will not exist in the year 2000″ — a proposition Simon regarded as too silly to bother with — Simon countered with “a public offer 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.”

References

Links

• Wired Magazine article on Julian Simon as Doomslayer and the wager
• Paul Ehrlich’s webpage on the two Simon bets
• http://www.overpopulation.com/simon_bet.html
• Overpopulation — The Population Explosion “Brownlash” and the wager
• “Julian Simon’s Bet With Paul Ehrlich” by Brian Carnell at Libertarian International website
• Julian Simon’s Perilous Optimism
• Graphs of carbon dioxide and nitrous oxide levels
• Armstrong-Gore climate bet
• Long Bets Organization