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On the Ehrlich-Simon bet: Both were unskilled and Simon was lucky

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  • Lawn, Philip
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    Abstract

    In 1980, biologist Paul Ehrlich and economist Julian Simon entered into a bet over whether the real prices of five resources would increase or fall between 1980 and 1990. Because the real prices of the five resources declined, Simon won the bet. But Simon won, not because he was more skilled than Ehrlich, nor because he correctly predicted the changing absolute scarcity of the five relevant resources. Simon won because he was lucky. Resource prices reflect the relative scarcity of different resource types, not their absolute scarcity. Given the basis upon which Ehrlich and Simon entered the bet, both men revealed their lack of understanding of the relationship between absolute resource scarcity and resource prices. In the end, Simon was lucky because factors other than a rise in absolute scarcity had the greatest impact on resource prices between 1980 and 1990.

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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 69 (2010)
    Issue (Month): 11 (September)
    Pages: 2045-2046

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    Handle: RePEc:eee:ecolec:v:69:y:2010:i:11:p:2045-2046

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    Web page: http://www.elsevier.com/locate/ecolecon

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    Keywords: Ehrlich-Simon bet Resource prices Absolute and relative scarcity Sustainability Limits to growth;

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    1. Norgaard, Richard B., 1990. "Economic indicators of resource scarcity: A critical essay," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 19-25, July.
    2. Daly, Herman E., 1992. "Allocation, distribution, and scale: towards an economics that is efficient, just, and sustainable," Ecological Economics, Elsevier, vol. 6(3), pages 185-193, December.
    3. Katherine A. Kiel & Victor Matheson & Kevin Golembiewski, 2009. "Luck or Skill? An Examination of the Ehrlich - Simon Bet," Working Papers 0908, College of the Holy Cross, Department of Economics.
    4. Slade, Margaret E., 1982. "Trends in natural-resource commodity prices: An analysis of the time domain," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 122-137, June.
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    Cited by:
    1. Stan Becker, 2013. "Has the World Really Survived the Population Bomb? (Commentary on “How the World Survived the Population Bomb: Lessons From 50 Years of Extraordinary Demographic History”)," Demography, Springer, vol. 50(6), pages 2173-2181, December.

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