The Skeptical Liberal: The Simon-Ehrlich Wager

The Skeptical Liberal

How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values? -- J.M. Buchanan


The Simon-Ehrlich Wager

During the past academic year, one of my professorial assistants (Dave McClintick) did some background research for me on Julian Simon's understanding of Robert Malthus' work. The research was for the paper I'm currently working on her at PERC. In the process, he decided to do some independent research on the famous wager that Simon made with Paul Ehrlich (the neo-Malthusian and author of The Population Bomb and, more recently, One with Nineveh). In 1980, Simon and Ehrlich put their money behind their competing theories regarding natural resource scarcity. They wagered that the inflation-adjusted prices of five base metals would either increase (Ehrlich, of course, based on his Malthusian theory of increasing scarcity) or decrease (Simon, based on his theory about human ingenuity and unlimited resources in the long run). In 1990, Simon won the bet, but quickly reminded his supporters that his claim was simply that he was more likely to win than to lose in any 10-year time frame, and that the longer the time frame, the more likely he was to win.

Dave took up the implicit challenge in Simon's claims, and examined whether Simon would have won the wager over the 20th century, and also what the outcome would have been in each of its decades. He presented his results at the Undergraduate Research Forum hosted by the Michigan State University Honors College, where his poster presentation won a Merit Recognition award in the Social Science category. The results of his work will now be published in the September 2005 issue of PERC Reports, which can be found from the PERC website: I'll repost an announcement of the article in September when it becomes available.

Along with getting Dave's research into shape for publication this past week, I've been attending a few sessions of the PERC student seminar on Free Market Environmentalism and a KCI session on Grantsmanship, getting tenure material and grant applications for the fall into shape, attending a couple PERC parties, and enjoying the arrival of summer in Bozeman. The PERC student seminar brings in about 25 undergraduate students (usually seniors or new graduates) for a week of introduction to lectures and discussion with PERC fellows and others (P.J. Hill and Holly Fretwell ran it, with guest lectures by Terry Anderson, Dan Benjamin, Roger Meiners, Rick Stroup, Don Leal, Wally Thurman, Hank Fischer, and Nick Parker). My conversations with the students over the week were great: they were there because they are interested in the ways in which private property rights and other market-based solutions can be used to promote environmental conservation, and they had lots of questions. Last night at the pig roast that celebrated the end of the seminar, I sat in on a long discussion P.J. had with a small group of the students about ethics, self-interest, markets and the intrinsic value of nature.

The two parties were great times for extended conversations with the students and the KCI fellows, as suggested above. P.J.'s log home is located on the bank of a small river west of Bozeman. Beautiful setting for an evening of steaks, discussion, and even calf-roping (not a real calf!). Most of the students tried their hands at roping, but I avoided the embarassment of missing over and over! That party was on Saturday; Terry's pig roast took place last night (Wednesday) at his cabin in the Bridger's. He has a simple cabin on a lot of about 10 acres overlooking the Gallatin range from the Bridger's (you go up past the "M" to get there). The KCI fellows joined us for that event, and I spent a fair amount of time talking to several of them, including one fellow I hadn't talked to before who is working to conserve the Trevilian Station Civil War battlefield. Coincidentially, Trevilian Station was Custer's First Stand; we are about 3 hours from the Little Big Horn battlefield which celebrates his famous last battle this weekend.

I hope to post a few pictures from Terry's pig roast next week. I'm driving to Alberta tomorrow for a family wedding and a few days with the kids. Then it will be back here to Bozeman to finish my summer project on Malthus. In the meantime, here's a link to the famous Montana State "M" that I mentioned, and hope to hike up to next week!


At 8:54 AM, Anonymous David Carvin said...

Paul Erlich's column about Al Gore's Peace Prize in today's NYTimes makes the claim that in a generation, Florida will be underwater.
In the Julian Simon put-your-money- where-your-mouth-is spirit, I suggest a much more satisfying wager than cap and trade, one which could also solve the oncoming crisis in Social Security:

Private SSI accounts, in which those who believe that Florida will be submerged can deposit an unlimited amount of their income, taxes deferred. A like fund for those who believe that Florida will remain humid, but otherwise "dry".

Let the payout begin in 20 years.

You must be fully vested to made statements about Florida's relationship to sea-level.

I think that might sway Conservatives to see the upside of income redistribution.


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