A lot of you will have most likely learn concerning the well-known wager in 1980 between Julian Simon and Paul Ehrlich. I wrote about it right here. The wager was based mostly on their underlying views of the world. Ehrlich, the pessimist, thought inhabitants progress would run up in opposition to useful resource constraints, driving the costs of assorted supplies increased. Simon, the optimist, thought that people would advance expertise in order that extra items could possibly be produced with out rising costs and possibly even dropping them. Simon, by the way in which, at all times admitted that it was a wager he might lose. The wager was concerning the motion of costs of 5 supplies between 1980 and 1990.
He received.
I’m writing a biography of Julian Simon for my Concise Encyclopedia of Economics as a result of I feel extra individuals ought to learn about him and that he was extra necessary than some Nobel Prize winners.
As I’ve been writing, I’ve been paying extra consideration to the literature on the wager. It seems that there’s a brand new article and the article is illuminating.
It’s Hannah Ritchie, “Who would have received the Simon-Ehrlich wager over completely different many years, and what do long-term costs inform us about useful resource shortage?” Our World in Knowledge, January 5, 2024.
Ritchie goes decade by decade, stating that inside a decade there have been typically massive swings in costs in order that in some many years Simon would have received an identical wager and in different many years Ehrlich would have received.
However, she factors out, Simon particularly and Ehrlich considerably had been involved about the long term and 10 years is hardly the long term. The issue, after all, is that it’s arduous to make bets about the long term as a result of at the very least one of many bettors won’t be round to pay up or obtain the winnings. Keynes had one thing to say about that.
So Ritchie appears to be like at costs from 1900 to 2022 and concludes:
The important thing takeaway for me is that, over the long term, costs didn’t change dramatically. Loads has modified since 1900, however the costs of the 5 metals are, surprisingly, not a lot completely different from what they had been in 1900. Chromium is, maybe, the one exception the place common costs in the previous couple of many years have been increased than they had been within the early twentieth century (though costs in 2020 had been precisely the identical as they had been in 1900).
She then writes:
Crucially, that is although the world produces far more of those supplies. The chart beneath exhibits the change in international manufacturing of every of the 5 supplies since 1900.
At present, the world produces 40 instances as a lot copper yearly and 250 instances as a lot nickel because it did in 1900.
The truth that we produce much more supplies than we did up to now, but costs have barely modified, means that opposite to Ehrlich’s prediction, we’re not near working out of those supplies any time quickly. That’s what brings me nearer to Simon’s worldview.
By the way in which, I provided Paul Krugman a model of the Simon/Ehrlich wager in 1997. He didn’t reply.
The pic is of Julian Simon.
