By Cass R. Sunstein
Cambridge, Mass.: National debates over environmental issues are sometimes derailed by two kinds of extremists: eco-doomsayers and techno-optimists. The two positions are best captured in the most dramatic bet in social science. It is useful to recall the tale, recently cataloged by Yale University historian Paul Sabin, because the legacy of the bet is with us today, above all in the domain of climate change.
Paul Ehrlich is a Stanford University biologist whose lifelong concern has been overpopulation. In the 1960s and 1970s, he issued dire warnings, most prominently in his 1968 best-seller, The Population Bomb. Ehrlich argued that population growth would place increasing strains on the planet’s natural resources, creating forms of scarcity that would produce widespread human suffering. Notwithstanding his personal ebullience, Ehrlich warned of “famines of unbelievable proportions” occurring by 1975 and of “hundreds of millions of people” starving to death in the 1970s and 1980s.
Ehrlich’s great adversary was Julian Simon, an economist at the University of Illinois. Shy and awkward, Simon suffered from depression for more than a decade. But with respect to humanity’s future, he was an optimist. Simon believed that because of free markets and technological ingenuity, population growth need not entail scarcity. Simon thought Ehrlich was essentially a fraud. He bristled at the ecologist’s growing fame.
In 1981, Simon proposed a bet. Ehrlich could name any five metals, and by the end of the decade, Simon wagered, their prices would decrease, thus disproving Ehrlich’s claim that population growth would produce an increase in scarcity.
Ehrlich eagerly accepted. Working with like-minded scientists, he selected chromium, copper, nickel, tin and tungsten. In the 1970s, the market prices of all five had increased significantly (at least in nominal terms). Ehrlich was confident that as a result of population growth, the trend would continue.
But Simon won the bet, and it wasn’t even close. By 1990, the prices of each metal had decreased by an average of 50 percent, even though the decade had seen the largest global population growth in history (with 800 million additional people). To all appearances, Simon had been vindicated.
After his victory, he became a conservative icon. Until his death in 1998, Simon produced a stream of work challenging environmentalists’ claims and making the case for optimism. Since 2001, the Competitive Enterprise Institute has given an annual Julian L. Simon Memorial Award to people whose work “debunks the alarmist predictions of eco-doomsayers like Paul Ehrlich.” Those who treat environmentalists as worthy of contempt, and ridicule their predictions, owe a great deal to Simon, even if they have never heard of him.
As Sabin explains, it turns out that Simon was a lucky winner. Not long ago, economists ran a series of simulations for every 10-year period from 1900 to 2008. They found that with respect to the prices of the five metals on which Ehrlich and Simon bet, Ehrlich would have won 63 percent of the time.
But this doesn’t mean that Ehrlich was right. Because of macroeconomic factors, commodity prices are volatile, and they are a poor proxy for the effects of population increases. Indeed, Simon’s winning prediction about the 1980s stemmed largely from macroeconomic shifts; prices dropped as a result of a recession in the closing years of the decade. On the big question that divided Ehrlich and Simon — the effects of population growth — their bet established next to nothing.
Since the 1990s, the polar positions of eco-doomsayers and techno-optimists laid out by Ehrlich and Simon have played a large role in political debates over climate change.
Ehrlich has insisted, and continues to insist, that the risks associated with climate change are grave (and have a lot to do with population growth). Not surprisingly, Simon dismissed those same risks. In 1996, Simon wrote, “Given the history of such environmental scares — all over human history — my guess is that global warming is likely to be simply another transient concern, barely worthy of consideration 10 years from now.” (It’s a good thing he didn’t bet on that one.)
In the coming year, the U.S. will make a series of important decisions with respect to greenhouse gases, involving the Keystone XL pipeline, emissions regulations for new and existing power plants, renewable fuels, fracking and the social cost of carbon (a monetary figure designed to capture the cost of a ton of carbon emissions).
These decisions raise diverse questions, and each of them must be investigated on its own merits. For such problems, the noisy, headline-grabbing dogmas of Paul Ehrlich and Julian Simon are a serious impediment to progress. The coming decisions will require careful exploration of costs and benefits, not abstract narratives about the supposed arc of history.
Sunstein, the Robert Walmsley University professor at Harvard Law School, is a Bloomberg View columnist. He is a former administrator of the White House Office of Information and Regulatory Affairs, the co-author of Nudge and author of Conspiracy Theories and Other Dangerous Ideas, forthcoming in March. He can be emailed at email@example.com.