The Simon-Ehrlich Wager at Seven Billion

Back in 1980, the great libertarian economist, Julian Simon, and the prepetually wrong Malthusian biologist, Paul Ehrlich, entered into a little wager regarding population growth and resource scarcity.  They decided on using the inflation-adjusted prices of five metals to decide the bet.  Simon allowed Ehrlich to pick the five metals.  If the 1990 prices were higher, Ehrlich would win.  If they were lower, Simon would win.  With the help of a fellow perpetually wrong Malthusian, John P. Holdren, Erlich selected chromium (Cr), copper (Cu), Nickel (Ni), tin (Sn) and tungsten (W).  Julian Simon won the bet.  However, a couple of years ago, economist Paul Kedroski suggested that had the time period of the bet extended to 2010, Ehrlich would have been the winner every year since 1991…

Given its 30th anniversary, and with commodities in the news – especially oil – I thought it was an apropos time (and TED an appropriate venue) to revisit the bet’s context, outcome, controversies and implications.


Without getting into it too deeply, here are some things worth knowing. Given the above graph of the five commodities’ prices in inflation-adjusted terms, it will surprise no-one that the bet’s payoff was highly dependent on its start date. Simon famously offered to bet comers on any timeline longer than a year, and on any commodity, but the bet itself was over a decade, from 1980-1990. If you started the bet any year during the 1980s Simon won eight of the ten decadal start years. During the 1990s things changed, however, with Simon the decadal winners in four start years and Ehrlich winning six – 60% of the time. And if we extend the bet into the current decade, taking Simon at his word that he was happy to bet on any period from a year on up (we don’t have enough data to do a full 21st century decade), then Ehrlich won every start-year bet in the 2000s. He looks like he’ll be a perfect Simon/Ehrlich ten-for-ten.


In light of the fact that the world population clock recently crossed the 7 billion mark, I thought I’d see if there was a more accurate measure of the increasing scarcity (or lack thereof) of these metals over time.

Rather than “cherry-picking”  particular decades, I took a look at the full historical price record (available from the USGS). The inflation adjusted prices of Chromium (Cr), Copper (Cu), Nickel (Ni), Tin (Sn) and Tungsten (W) exhibit no statistically meaningful inflation-adjusted price trend over the last 110 years…

Cu, Ni and W have slightly negative slopes; while Cr and Sn have slightly positive slopes… Only chromium’s (R^2 = 0.3187) and copper’s (R^2 = 0.1719) trend lines approach statistical significance.

While the inflation adjusted price of these metals is a good measure of affordability, it is not a complete measure.  The price is only relevant if it is measured against the financial resources available.  Relative to world real per capita GDP all five metals have become more affordable since 1969…

The GDP slope is positive and highly statistically significant (R^2 = 0.98). The GDP slope (81.354) is almost three times larger than the largest positive metal slope (Ni, 32.506).

More importantly, from a scarcity perspective, the production output of all five metals has been rising over time. Four are rising exponentially …

While the ratio of price to output has been declining exponentially…

If these metals were becoming more scarce, the price would be rising faster than the supply.

The USGS estimates that the current proved reserves of all five metals are sufficient to meet demand for the next 20 to 59 years.  For “fun” I estimated the crustal mass of all five metals and estimated how long it would take to literally run out at the current production rate…

Debunking the Population Bomb Dud

The human population hit the seven billion mark last fall…

Published online 19 October 2011 | Nature 478, 300 (2011) | doi:10.1038/478300a


Seven billion and counting

A look behind this month’s global population landmark reveals a world in transition.

Jeff Tollefson

What’s in a number? This month, the world’s attention turns to a big one: 7 billion, the latest milestone in humanity’s remarkable and worrying rise in population.


On one level, a figure of 7 billion is incredible for the sheer momentum it represents: a full doubling of the planet’s population since 1967, with current growth adding 200,000 people each day, and a nation larger than the size of France each year. But although the 6-billion mark was reached about 13 years ago according to revised figures, it will take nearly 14 years to hit 8 billion (see ‘Snapshots of growth’). The comparison shows that population growth is decelerating; it is likely to level off at about 10 billion before the end of the century.

Between now and then, the fastest growth will be in Africa, where fertility levels remain higher than anywhere else in the world. Population levels among industrialized countries, by contrast, will remain relatively constant. Although Asia will remain the most populous continent, decreasing fertility rates there will add to the overall ‘greying’ of the planet.



The Nature article included the following graphic, indicating that the word population will most likely level off at ~10 billion ca. 2070…

Is that a problem?   I don’t think so.  The human race handled the rise from 3.5 to 7 billion rather well.  The global per capita food supply has steadily increased since 1960…


Per capita real GDP has risen at the same rate as the population…

Per capita food supply has also risen with the population…

And… Amazingly… Per capita food supply and per capita GDP are highly correlated…

The percentage of the world’s population suffering from undernourishment has steadily declined over the last 40 years, despite a rising population…

Very few nations have failed to reach the MDG 1 target of reducing the percentage of their population suffering from undernourishment by 50%…

The world isn’t running out of water either.   The UN FAO Aquastat data base showed that in the year 2000, the world’s total renewable water resource was 53,730 x 10^9 m3/yr. The total withdrawal was estimated to be 2,871 x 10^9 m3/yr. That’s a 5% utilization rate.

The far from perect human condition doesn’t negate the fact that clear progress has been made over the last half-century to reduce hunger, despite a growing population.

Almost all of the population growth over the next 60 years will be in Africa and Asia – the two largest land masses on Earth.

Assuming that the populations of Asia and Africa reach 5 billion and 3.6 billion respectively, their population densities will be 114 and 119 people per km^2.  The population densities of the rest of the world will remain about the same or decline. Asia’s density is currently 95 per km^2. The greatest stress will be on Africa, which is currently underutilizing its resources more than any other continent.

Water resources are underutilized in Africa across the board, yet conflicts between water uses are common

Africa has plenty of potentially arable land, plenty of water and plenty of resources. Africa just lacks the economic and political infrastructure to realize its own potential.

Current and potential arable land use in Africa. Out of the total land area in Africa, only a fraction is used for arable land. Using soil, land cover and climatic characteristics a FAO study has estimated the potential land area for rainfed crops, excluding built up areas and forests – neither of which would be available for agriculture. According to the study, the potential – if realised – would mean an increase ranging from 150 – 700% percent per region, with a total potential for the whole of Africa in 300 million hectares. Note that the actual arable land in 2003 is higher than the potential in a few countries, like Egypt, due to irrigation…


The “world” isn’t running out of anything.   Global proven oil reserves have doubled since 1980. 

Most  other commercial mineral resources have seen its proven reserves grow at least as fast as consumption has grown.

The world has plenty of food, water, space, mineral resources and the Earth’s environment is generally cleaner now than it was 35 years ago. Crop yields have continued to maintain an increasing upward trend for 40 years… And there is every reason to believe that crop yields will continue to improve (unless we really are on the verge of returning to Little Ice Age climate conditions).

But it will get worse in the future!!!

The “bear” is always just out of sight in the woods. For centuries, Malthusians have trotted out one invisible bogeyman after another (Malthusians pre-date Malthus by at least a few thousand years). The disaster is just over the horizon, just around the corner or lurking in the woods.

The Earth is finite; but humans have barely tapped its resources… We will still barely be tapping the Earth’s resources when we hit the 10 billion mark about 90 years down the road… And the Malthusians will still be warning us about the bear in the woods.

The only thing the world has a genuine shortage of is honest and competent people in gov’t. Almost all of our problems are due to political interference with market forces.


The world isn’t running out of water either. The UN FAO Aquastat data base showed that in the year 2000, the world’s total renewable water resource was 53,730 x 10^9 m3/yr. The total withdrawal was estimated to be 2,871 x 10^9 m3/yr. That’s a 5% utilization rate.

After a more detailed review of the Aquastat data, I noticed that many nations did not list water withdrawal amounts. So I removed all of the incomplete nations and revised the calculations. The most complete year in the FAO Aquastat database was 2000. Resource and withdrawal data are available for 144 countries…

2000 Water resources: total renewable (actual) (10^9 m3/yr): 45,701

2000 Total water withdrawal (10^9 m3/yr): 2,846

2000 Utilization Rate: 6%

There are areas in the world, like the Middle East and North Africa, where water utilization approaches the renewable resource… However, the world has plenty of water to support 10 billion people.

As a group, the top ten water consumers withdrew 14% of their renewable water resources in 2000.


3 Responses to “The Simon-Ehrlich Wager at Seven Billion”

  1. David Middleton Says:

    polistra says:
    January 25, 2012 at 4:28 am
    Middleton’s final sentence is dangerously wrong.

    Commodity prices have gone wild in the last decade or two, but NOT because of population. Prices have gone wild because governments did EXACTLY WHAT MIDDLETON RECOMMENDS. They deregulated speculators.


    What we need now is a return to the government rules that held from 1936 to 1990, a return to FDR’s rules. During that period speculators were a minor part of the system, so real supply and demand determined most prices.

    The commodity price spikes in the 1970’s to early 1980’s were worse than the 2007-2008 spikes.

    Periodic supply-demand imbalances will always lead to episodic price spikes and crashes, irrespective of regulation. Price controls actually exacerbate the problem…

    In the election year of 1980 interest rates peaked at 21%, the highest since the Civil War. The so-called energy crisis still persisted. Unemployment and poverty rates were high. Ronald Reagan took the oath of office during the greatest economic crisis since the Great Depression. Was this the final crisis of capitalism that leftists, beginning with Karl Marx, had long predicted?

    Ronald Reagan didn’t think so. He came to Washington with the most ambitious program since the New Deal and a serene confidence that its adoption would turn the country around. He advanced a program of across-the-board tax cuts, deregulation and inflation-fighting, even at the cost of considerable economic pain.

    Immediately after delivering his inaugural address in 1981 Reagan performed his first official act as President: He signed an executive order eliminating price controls on gasoline that had been in place for a decade. Yes, price controls. Incredible as it may now seem, some of Reagan’s predecessors, Richard Nixon among them, had believed price controls could curb inflation. Critics of Reagan’s action, like Senator Howard Metzenbaum (D-Ohio), warned that without government-imposed limits gas prices would rise to $2 a gallon. Instead, they fell dramatically; and have remained low. With a stroke of his pen Reagan had ended the energy crisis.


  2. David Middleton Says:

    Chris B says:
    January 27, 2012 at 7:04 am

    David Middleton says:
    January 25, 2012 at 8:24 am
    Chris B says:
    January 25, 2012 at 7:01 am
    “Almost all of our problems are due to political interference with market forces.”

    Chris B says:
    Not that i’m in favour of more government, but hasn’t the increase in government closely followed, or led (causal/correlation issues notwithstanding), the growth in GDP, kcals per capita, volume of metals and oil extracted, etc.?

    The author hasn’t shown his political statement to be true. Moreover, he contradicts himself with this statement: “Africa just lacks the economic and political infrastructure to realize its own potential.”

    David Middleton says:
    The increase in “rule of law” governance helps to enable growth. Western capitalist democracies are all “rule of law” governments (even the Obama administration is somewhat restrained by “rule of law”).

    Most undeveloped and developing nations tend to have governments that are less restrained by “rule of law.”

    Chris B says:
    So, I hear you saying that anti-trust laws, for example, are not a good thing, because they are “political interference with market forces” even though they are a part of the “Rule of Law”.

    And African nations following “Sharia Law” with no “political interference with market forces” are destined to prosper.

    Sorry, but I think the explanation for western prosperity lies more in the theories of Max Weber than the effect of “Rule of Law”.

    Rule of law

    1. The government and its officials and agents are accountable under the law.
    2. The laws are clear, publicized, stable, and fair, and protect fundamental rights, including the security of persons and property.
    3. The process by which the laws are enacted, administered, and enforced is accessible, fair, and efficient.
    4. Access to justice is provided by competent, independent, and ethical adjudicators, attorneys or representatives, and judicial officers who are of sufficient number, have adequate resources, and reflect the makeup of the communities they serve.

    The Obama administration’s “dynamic regulatory environment” and unlawful permitorium clearly run afoul of #2 and possibly #1 and #3.

    Despite the serial malfeasance of the current occupiers of the Executive Branch, the United States clearly has a “rule of law” government. However, the enforcement of antitrust laws has often deviated from rule of law. Antitrust laws are anything but “clear, publicized, stable, and fair”…

    Antitrust as Anti-Free Market Antitrust laws allow the federal government to regulate and curtail basic business activities, including pricing, production, product lines, and mergers, usually in the name of preventing monopolies and fostering competition. The irony is that the laws in fact impose arbitrary government limitations on competition, keep prices for consumers high, and weaken American industries. Massachusetts Institute of Technology economist Lester Thurow wrote in his 1980 book The Zero-Sum Society that “the time has come to recognize that the antitrust approach has been a failure. The costs it imposes far exceed any benefits it brings.”


    Antitrust laws are always enforced arbitrarily and sometimes capriciously, violating the due process of law and relying on ex post facto rulings.

    A fundamental principle of Anglo-American law is that crimes must be clearly defined. But with antitrust the definitions are vague and constantly changing, depending on the whims of regulators and policymakers. Businesses rarely know in advance which practices may constitute price discrimination or “predatory” pricing or may “substantially lessen competition” in the eyes of the antitrust enforcers. As Alan Greenspan once observed, antitrust

    is a world in which competition is lauded as the basic axiom and guiding principle, yet “too much” competition is condemned as “cutthroat.” . . . It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict–after the fact.

    Consequently, businesses do not compete and serve consumers as vigorously as they otherwise would, for fear of running afoul of new and creative interpretations of what constitutes an illegal business practice. There can never be a precise definition of “competition,” for competition, as a dynamic process, constantly leads to the discovery of new techniques for competing. The criteria the government has used in the past to try to define competition–size of firms, prices that are “too high” or “too low,” closeness of substitute products, and the like–are all meaningless and arbitrary.



  3. Reisen Says:

    The UN revised its population peak: It is now 8 billion by 2040. Due to falling birthrates and an ageing population, it will never double again. Any claims that the population is still growing or will reach 10+ billion are wrong. The UN’s low variant projection doesn’t even near that mark.

    Gotta love Malthusians. And I thought Nature used to be a good Science magazine.

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