The Simon/Ehrlich Bet

Paul Kedrosky wrote a blog post on his Infectious Greed site on the famous Simon/Ehrlich bet. Here is a snippet:

“After a decade of soaring commodity prices, plus related worries about resource scarcity, in 1980, Paul Ehrlich, a dour population ecologist, took up Julian Simon, a cornucopian economist, on a bet. Ehrlich (on paper) put equal mounts of money into five commodities (he selected chromium, copper, nickel, tin and tungsten) whose prices would, he thought, be higher a decade later. Higher prices meant Ehrlich won; lower prices meant Simon won. The loser paid the winner the difference.
Ehrlich lost. A decade later, in 1990, all five commodities’ prices were lower than they were in 1980. Unhappy at the outcome, Ehrlich complained that he hadn’t really wanted to bet on commodities in the first place. He offered Simon a new and more complex series of decadal bets – including things like carbon dioxide, AIDS prevalence, area of viable farmland, and so on. Simon turned that bet down, comparing it to betting on a football field’s condition rather than on the game’s outcome. There never was a second Simon/Ehrlich bet, and Julian Simon died in 1998.”

I highly encourage you to read the whole thing as it is excellent. Here is the link:Kedrosky post on Simon/Ehrlich Bet