Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017

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The Bet

           Despite all the sophisticated tools for data gathering and analysis, projecting population into the future is still an art, rather than a science.  In his IHT column entitled "Off the Charts", Flloyd Norris wrote about "Two forecasts at odds on population."  This summer, the United Nations population division predicted that there are likely to be 10.9 billion people in the world by 2100, up from 6.9 billion in 2010 (and about 7.2 billion now).  As I have personally experienced in my own studies of population growth in the Philippines, the U.N. tends to be overly pessimistic about "population explosion." The recent forecast of world population by the U.N. is 1.8 billion more than its prediction four years earlier.  Fortunately, there are other sources of population projections.  Sanjeev Sanyal, the global strategist for Deutsche Bank, opines that the U.N. is underestimating how much fertility rates will decline, and says that the 2100 figure is likely to be 8 billion, from a peak of 8.9 billion in 2055.

          These disagreements on population projections (which can have major implications on so-called population management policies) remind me of a famous wager in 1980 between an ecologist and an economist.  In 1968, a book appeared that scared many Americans out of their wits.  It was entitled "The Population Bomb", by a biologist specializing in butterflies named Paul Ehrlich who became the modern Thomas Malthus by predicting that hundreds of millions of people would starve to death as civilization unraveled because the people were overbreeding and the supply of food and resources would not be able to keep up.  Fortunately, there was a little-known economist named Julian Simon who disagreed with him.  The public debate between the two of them resulted in a bet.  This is the subject of a recently published book called "The Bet" by Paul Sabin.

          In a review of "The Bet" that appeared in The Wall Street Journal (September 6-8, 2013), Jonathan Last  wondered how large portions of America's intellectual and political elites took leave of their senses and predicted something like the literal end of civilization after reading The Population Bomb, which was reprinted 22 times in the first three years alone.  Its author would appear as Johnny Carson's guest on "The Tonight Show" at least 20 times, becoming a national figure and influential player in Democratic politics.  Fortunately, economist Julian Simon was ready to diffuse the "population bomb."  Simon was convinced that Mr. Ehrlich's thesis was fundamentally flawed.  While Ehrlich believed that the laws of nature that governed insects also applied to humans, Simon was convinced that man's rational powers--and the economies man constructed--made these laws nearly obsolete.  As I have always reminded our own doomsayers, man's creative capacity is infinite.  It is his propensity to evil that poses a problem.

          There came the wager.  In 1980 (when I and other nonbelievers of the "population bomb" thesis were trying to counteract the population control propaganda of the U.S.-backed Marcos regime), Simon made Mr. Ehrlich a bet.  As Jonathan Last reported:  ""If Mr. Ehrlich's predictions about overpopulation and the depletion of resources were correct, Simon said, then over the next decade the prices of commodities would rise as they became less scarce.  Simon contended that, because markets spur innovation and create efficiencies, commodity prices would fall.  He proposed that each party put up $1,000 to purchase a basket of five commodities.  If the prices of these went down, Mr. Ehrlich would pay Simon the difference between the 1980 and 1990 prices.  If the prices went up, Simon would pay.  This meant that Mr. Ehrlich's exposure was limited while Simon's was theoretically infinite."

          The rest is history.  In October 1990, Mr. Ehrlich was obliged to issue a check for $576.07 to Simon.  Although world population had increased by 800 million during the term of the wager, the prices for the five metals in the basket (chromium, copper, nickel, tin and tungsten) had decreased by more than 50%.  The reason for the decline was a no-brainer:  as Simon had predicted, technological innovation and conservation spurred on by the market.  It is also a wonder to me how some of our intellectual and political elite can still be gripped by the hysteria of population explosion.  It seems we never learn from history.  For comments, my email address is