The Bet That Changed How We See the Future
What the Simon–Ehrlich Wager Teaches About Predictions and Human Potential
As the world waits to evaluate the accuracy of predictions about a potential second Trump administration, it’s worth reflecting on the value we place on projections and forecasts. One fascinating lens through which to examine this is the Simon–Ehrlich wager from 1980—a bet that offers timeless lessons about resource scarcity, human ingenuity, and the limits of predictive certainty.
The Simon–Ehrlich Wager
In 1980, economist Julian Simon and biologist Paul Ehrlich engaged in a high-stakes bet. Ehrlich, author of The Population Bomb, predicted that rapid population growth would lead to resource scarcity, environmental degradation, and soaring commodity prices. Simon, however, believed that human ingenuity and market dynamics would counteract these challenges through innovation and adaptation.
To test their opposing worldviews, Simon challenged Ehrlich to “put his money where his mouth was.” Ehrlich selected five raw materials—chromium, copper, nickel, tin, and tungsten—believing their inflation-adjusted prices would rise over the next decade due to scarcity. Simon wagered they would fall.
Using 1980 prices as the baseline, the two created an imaginary portfolio, purchasing $200 worth of each material (a total of $1,000). On September 29, 1990, the bet would be settled: if the total inflation-adjusted prices had risen, Simon would pay Ehrlich the difference. If they fell, Ehrlich would pay Simon.
The Outcome
Ehrlich lost the bet despite the global population growing by over 800 million during the decade. By 1990, the inflation-adjusted prices of all five materials had dropped significantly:
• Chromium: From $3.90/lb in 1980 (equivalent to $14.42 in 2023) to $3.70/lb in 1990 ($8.63 in 2023).
• Tin: From $8.72/lb in 1980 (equivalent to $32.25 in 2023) to $3.88/lb in 1990 ($9.05 in 2023).
In October 1990, Ehrlich mailed Simon a check for $576.07 (equivalent to $1,343.48 in 2023), conceding defeat—but not his beliefs. “The bet doesn’t mean anything,” Ehrlich said in an interview. “Julian Simon is like the guy who jumps off the Empire State Building and says how great things are going as he passes the 10th floor.”
Key Lessons from the Simon–Ehrlich Wager
1. Resource Scarcity is Relative, Not Absolute
Ehrlich assumed resources would run out as demand rose. Simon believed scarcity would drive innovation, leading to substitutes, efficiency, and technological advances.
Lesson: Human ingenuity often finds ways to adapt and create alternatives, preventing inevitable shortages.
2. Markets Respond to Scarcity
Rising prices signal producers' innovation and consumers' adaptation. This dynamic played out in the 1980s as mining technology improved, reducing production costs and increasing supply.
Lesson: Functioning markets can self-correct through incentives, balancing supply and demand.
3. The Complexity of Predictions
Ehrlich underestimated human adaptability, while Simon overlooked potential long-term consequences like environmental degradation.
Lesson: Predicting the future is complex, and oversimplifying trends often leads to inaccurate forecasts. Projections must consider social, economic, and environmental variables.
4. Human Ingenuity as a Resource
Simon argued that human creativity is the “ultimate resource.” As populations grow, so does the innovation potential.
Lesson: Ingenuity can mitigate resource constraints, but it requires investment in education, infrastructure, and research to realize its full potential.
5. Short-Term vs. Long-Term Perspectives
Simon won the bet in the short term, but some of Ehrlich’s broader concerns, such as biodiversity loss and climate change, remain urgent challenges.
Lesson: Short-term solutions may not address longer-term sustainability risks, highlighting the need for balanced thinking.
Broader Implications
The Simon–Ehrlich wager is more than a historical curiosity; it’s a reminder that our predictions—about resources, politics, or society—often reflect underlying assumptions about human behavior and adaptability. The wager underscores the value of considering multiple perspectives, embracing uncertainty, and collaborating to solve shared challenges.
As for the predictions about a second Trump administration, one thing is certain: most of them—on both sides—will likely be wrong. And just as Ehrlich refused to admit he was mistaken, few will openly concede their errors. After all, being wrong is rarely a story we enjoy telling ourselves.