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

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.