April 26, 2004

The Simon / Ehrlich bet

Thanks to Lynne Kiesling at Knowledge Problem, I am reminded of the great Simon / Ehrlich bet. Lynne provides a link to a website that explains it and tells a bit of what went on afterwords: bq. In 1980, economist |Julian Simon| and biologist Paul Ehrlich decided to put their money where their predictions were. Ehrlich had been predicting massive shortages in various natural resources for decades, while Simon claimed natural resources were infinite. bq. Simon offered Ehrlich a bet centered on the market price of metals. Ehrlich would pick a quantity of any five metals he liked worth $1,000 in 1980. If the 1990 price of the metals, after adjusting for inflation, was more than $1,000 (i.e. the metals became more scarce), Ehrlich would win. If, however, the value of the metals after inflation was less than $1,000 (i.e. the metals became less scare), Simon would win. The loser would mail the winner a check for the change in price. bq. Ehrlich agreed to the bet, and chose copper, chrome, nickel, tin and tungsten. bq. By 1990, all five metal were below their inflation-adjusted price level in 1980. Ehrlich lost the bet and sent Simon a check for $576.07. Prices of the metals chosen by Ehrlich fell so much that Simon would have won the bet even if the prices hadn't been adjusted for inflation. The site then goes on to talk about Ehrlich's reaction: bq. Paul [Ehrlich] and other scientists knew that the five metals in the proposed wagers were not critical indicators and said so at the time Nonetheless, after consulting with many colleagues, Paul accepted Simon's challenge rather than listen to him charge that environmental scientists were unwilling to put their money where their mouths were. They then proceed to nicely dismantle Ehrlich's comments. Sources are provided if you want to do your own fact-checking. Posted by DaveH at April 26, 2004 1:58 PM