The Simon–Ehrlich wager was a scientific bet made in 1980 between economist Julian Simon and biologist Paul Ehrlich. They agreed to bet on how the prices of natural resources would change over the next decade, up to 1990. The bet began in the journal Social Science Quarterly, where Simon asked Ehrlich to prove his claim that resource scarcity would increase. Ehrlich had previously said, "If I were a gambler, I would bet that England will not exist in the year 2000." Simon responded by offering to bet $10,000 on his belief that the prices of raw materials not controlled by the government (such as grain and oil) would not rise over time.

Simon asked Ehrlich to pick any raw material and a date more than a year in the future. Simon would bet that the prices of these materials, adjusted for inflation, would decrease instead of increase. Ehrlich chose copper, chromium, nickel, tin, and tungsten. The bet was officially recorded on September 29, 1980, with September 29, 1990, as the date to settle the wager. Ehrlich lost the bet because the prices of all five materials chosen decreased between 1980 and 1990.

Background

In 1968, Ehrlich wrote a book called The Population Bomb, which stated that the world’s growing population would cause serious problems because food and resources would not increase fast enough to meet the needs of more people. Simon disagreed with Ehrlich’s ideas and suggested a bet. He asked Ehrlich to choose any raw material and a date more than one year in the future. Simon promised to bet that the price of the material on that date would be lower than its price at the time of the bet.

Ehrlich and his team selected five metals they believed would become more expensive: chromium, copper, nickel, tin, and tungsten. On paper, they purchased $200 worth of each metal, making a total bet of $1,000. They used the prices from September 29, 1980, as a reference point. They agreed to check the prices again on September 29, 1990, 10 years later. If the prices of the metals, adjusted for inflation, were higher than $1,000, Simon would pay Ehrlich the difference. If the prices were lower, Ehrlich and his team would pay Simon.

From 1980 to 1990, the world’s population increased by more than 800 million, the largest population growth in one decade in history. However, by September 1990, the prices of all five metals had decreased. For example, chromium cost $3.90 per pound in 1980 (equivalent to $15.24 in 2025) but dropped to $3.70 in 1990 (equivalent to $9.12 in 2025). Tin cost $8.72 per pound in 1980 (equivalent to $34.07 in 2025) but fell to $3.88 in 1990 (equivalent to $9.56 in 2025).

As a result, in October 1990, Paul Ehrlich sent Julian Simon a check for $576.07 (equivalent to $1,419.63 in 2025) to settle the bet in Simon’s favor.

Analysis

Julian Simon won the bet because the prices of three of the five metals decreased in actual terms, and all five metals had lower prices when adjusted for inflation. Tin and tungsten both dropped in price by more than half. In his book Betrayal of Science and Reason, Ehrlich wrote that Simon claimed "humanity would never run out of anything." Ehrlich also noted that he and other scientists believed renewable resources were better indicators of Earth's health, but he agreed to the bet anyway. After the bet, Simon offered to increase the wager to $20,000 and to use any resources Ehrlich preferred. Ehrlich then suggested a new bet about future temperature increases. The two men could not agree on the terms of a second wager before Simon died.

Some people have said Ehrlich might have won if the bet had used a different time period or start date. Ehrlich wrote that the prices of the five metals had risen between 1950 and 1975. Asset manager Jeremy Grantham wrote that if the bet had covered a longer time (from 1980 to 2011), Simon would have lost on four of the five metals. Economist Mark J. Perry noted that over an even longer period (1934 to 2013), the inflation-adjusted price of the Dow Jones-AIG Commodities Index showed a clear downward trend. He concluded Simon was "more right than lucky."

Kiel et al. (2010) found that if the bet had used any time period from 1900 to 2008, Simon would have won only 38.4% of the time. Ehrlich would have won more often and by a larger margin. They considered the period from 1980 to 1990, when the bet was active, to be one of the 15 worst periods in their study. They argued that the bet does not prove raw materials are never in short supply, but rather that luck can influence outcomes more than expertise.

The proposed second wager

Simon wanted to make another bet, so Ehrlich and climate scientist Stephen Schneider offered a new challenge. They asked Simon to bet $1,000 that 15 specific environmental trends would worsen over a ten-year period. The trends included:

• The average temperature during 2002–2004 would be higher than during 1992–1994.
• Carbon dioxide levels in the atmosphere in 2004 would be greater than in 1994.
• Nitrous oxide levels in the atmosphere in 2004 would be greater than in 1994.
• Ozone levels in the lower part of the atmosphere (troposphere) in 2004 would be higher than in 1994.
• Sulfur dioxide emissions in Asia in 2004 would be much higher than in 1994.
• Fertile cropland available per person in 2004 would be less than in 1994.
• Agricultural soil available per person in 2004 would be less than in 1994.
• The average amount of rice and wheat grown per person during 2002–2004 would be less than during 1992–1994.
• Firewood available per person in developing countries in 2004 would be less than in 1994.
• The area of virgin tropical moist forests in 2004 would be much smaller than in 1994.
• Oceanic fishery harvests per person in 2004 would be lower than in 1994.
• The number of plant and animal species still living in 2004 would be fewer than in 1994.
• More people would die of AIDS in 2004 than in 1994.
• Sperm cell counts in human males and reproductive disorders would continue to increase between 1994 and 2004.
• The wealth gap between the richest 10% and the poorest 10% of people in 2004 would be larger than in 1994.

Simon refused the bet and explained his decision using an example from his 1981 book, The Ultimate Resource. He argued that not all changes in resources or environmental conditions directly affect human wellbeing. He suggested that some pollution levels might be acceptable if they improve overall quality of life, though any pollution still has costs. Simon’s ideas also predicted some of the trends, such as less cropland needed per person due to improved farming efficiency. However, some predictions were incorrect, like the decrease in ozone levels in the lower atmosphere between 1994 and 2004.

If Simon had accepted the bet, he would have lost on 11 of the 15 trends.

Other wagers

In 1996, Simon made a bet with David South, a professor at Auburn University's School of Forestry. He wagered $1,000 that the price of timber, adjusted for inflation, would drop over the next five years. In 1997, before his death in 1998, Simon paid David South the $1,000 because he believed the price of timber would stay above the 1996 level, which it did.

In 1999, The Economist published an article titled, "$5 a barrel oil soon?" at a time when oil was trading for about $12 per barrel. David South then offered $1,000 to any economist who would bet with him that oil prices would be higher than $12 per barrel in 2010. No economist accepted the offer. However, in October 2000, Zagros Madjd-Sadjadi, an economist from The University of the West Indies, bet $1,000 with David South that the inflation-adjusted price of oil would fall to $25 by 2010 (from $30 per barrel at the time). In January 2010, Madjd-Sadjadi paid David South an inflation-adjusted $1,242. At that time, the price of oil was $81 per barrel.