Bloomberg | Energy & Natural Resources
“KoBold Metals, the startup using artificial intelligence to hunt for battery metals, has discovered several prospective lithium deposits, marking a shift from its initial focus on cobalt.
The San Francisco Bay Area-based company, which is backed by a roster of high-profile investors, has discovered deposits of lithium in South Korea, Australia, Namibia, Quebec and Nevada, Chief Executive Officer Kurt House said in an interview.”
From Bloomberg.
Blog Post | Energy & Natural Resources
The Simon Abundance Index (SAI) quantifies and measures the relationship between resources and population. The SAI converts the relative abundance of 50 basic commodities and the global population into a single value. The index started in 1980 with a base value of 100. In 2023, the SAI stood at 609.4, indicating that resources have become 509.4 percent more abundant over the past 43 years. All 50 commodities were more abundant in 2023 than in 1980.
Figure 1: The Simon Abundance Index: 1980–2023 (1980 = 100)
The SAI is based on the ideas of University of Maryland economist and Cato Institute senior fellow Julian Simon, who pioneered research on and analysis of the relationship between population growth and resource abundance. If resources are finite, Simon’s opponents argued, then an increase in population should lead to higher prices and scarcity. Yet Simon discovered through exhaustive research over many years that the opposite was true. As the global population increased, virtually all resources became more abundant. How is that possible?
Simon recognized that raw materials without the knowledge of how to use them have no economic value. It is knowledge that transforms raw materials into resources, and new knowledge is potentially limitless. Simon also understood that it is only human beings who discover and create knowledge. Therefore, resources can grow infinitely and indefinitely. In fact, human beings are the ultimate resource.
Visualizing the Change
Resource abundance can be measured at both the personal level and the population level. We can use a pizza analogy to understand how that works. Personal-level abundance measures the size of an individual pizza slice. Population-level abundance measures the size of the entire pizza pie. The pizza pie can get larger in two ways: the slices can get larger, or the number of slices can increase. Both can happen at the same time.
Growth in resource abundance can be illustrated by comparing two box charts. Create the first chart, representing the population on the horizontal axis and personal resource abundance on the vertical axis. Draw a yellow square to represent the start year of 1980. Index both population and personal resource abundance to a value of one. Then draw a second chart for the end year of 2023. Use blue to distinguish this second chart. Scale it horizontally for the growth in population and vertically for the growth in personal resource abundance from 1980. Finally, overlay the yellow start-year chart on the blue end-year chart to see the difference in resource abundance between 1980 and 2023.
Figure 2: Visualization of the Relationship between Global Population Growth and Personal Resource Abundance of the 50 Basic Commodities (1980–2023)
Between 1980 and 2023, the average time price of the 50 basic commodities fell by 70.4 percent. For the time required to earn the money to buy one unit of this commodity basket in 1980, you would get 3.38 units in 2023. Consequently, the height of the vertical personal resource abundance axis in the blue box has risen to 3.38. Moreover, during this 43-year period, the world’s population grew by 3.6 billion, from 4.4 billion to over 8 billion, indicating an 80.2 percent increase. As such, the width of the blue box on the horizontal axis has expanded to 1.802. The size of the blue box, therefore, has grown to 3.38 by 1.802, or 6.094 (see the middle box in Figure 2).
As the box on the right shows, personal resource abundance grew by 238 percent; the population grew by 80.2 percent. The yellow start box has a size of 1.0, while the blue end box has a size of 6.094. That represents a 509.4 percent increase in population-level resource abundance. Population-level resource abundance grew at a compound annual rate of 4.3 percent over this 43-year period. Also note that every 1-percentage-point increase in population corresponded to a 6.35-percentage-point increase in population-level resource abundance (509.4 ÷ 80.2 = 6.35).
Individual Commodity Changes: 1980–2023
As noted, the average time price of the 50 basic commodities fell by 70.4 percent between 1980 and 2023. As such, the 50 commodities became 238.1 percent more abundant (on average). Lamb grew most abundant (675.1 percent), while the abundance of coal grew the least (30.7 percent).
Figure 3: Individual Commodities, Percentage Change in Time Price and Percentage Change in Abundance: 1980–2023
Individual Commodity Changes: 2022–2023
The SAI increased from a value of 520.1 in 2022 to 609.4 in 2023, indicating a 17.1 percent increase. Over those 12 months, 37 of the 50 commodities in the data set increased in abundance, while 13 decreased in abundance. Abundance ranged from a 220.8 percent increase for natural gas in Europe to a 38.9 percent decrease for oranges.
Figure 4: Individual Commodities, Percentage Change in Abundance: 2022–2023
Conclusion
After a sharp downturn between 2021 and 2022, which was caused by the COVID-19 pandemic, government lockdowns and accompanying monetary expansion, and the Russian invasion of Ukraine, the SAI is making a strong recovery. As noted, since 1980 resource abundance has been increasing at a much faster rate than population. We call that relationship superabundance. We explore this topic in our book Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet.
Appendix A: Alternative Figure 1 with a Regression Line, Equation, R-Square, and Population
Appendix B: The Basic 50 Commodities Analysis: 1980–2023
Appendix C: Why Time Is Better Than Money for Measuring Resource Abundance
To better understand changes in our standard of living, we must move from thinking in quantities to thinking in prices. While the quantities of a resource are important, economists think in prices. This is because prices contain more information than quantities. Prices indicate if a product is becoming more or less abundant.
But prices can be distorted by inflation. Economists attempt to adjust for inflation by converting a current or nominal price into a real or constant price. This process can be subjective and contentious, however. To overcome such problems, we use time prices. What is most important to consider is how much time it takes to earn the money to buy a product. A time price is simply the nominal money price divided by the nominal hourly income. Money prices are expressed in dollars and cents, while time prices are expressed in hours and minutes. There are six reasons time is a better way than money to measure prices.
First, time prices contain more information than money prices do. Since innovation lowers prices and increases wages, time prices more fully capture the benefits of valuable new knowledge and the growth in human capital. To just look at prices without also looking at wages tells only half the story. Time prices make it easier to see the whole picture.
Second, time prices transcend the complications associated with converting nominal prices to real prices. Time prices avoid subjective and disputed adjustments such as the Consumer Price Index (CPI), the GDP Deflator or Implicit Price Deflator (IPD), the Personal Consumption Expenditures price index (PCE), and the Purchasing Power Parity (PPP). Time prices use the nominal price and the nominal hourly income at each point in time, so inflation adjustments are not necessary.
Third, time prices can be calculated on any product with any currency at any time and in any place. This means you can compare the time price of bread in France in 1850 to the time price of bread in New York in 2023. Analysts are also free to select from a variety of hourly income rates to use as the denominator when calculating time prices.
Fourth, time is an objective and universal constant. As the American economist George Gilder has noted, the International System of Units (SI) has established seven key metrics, of which six are bounded in one way or another by the passage of time. As the only irreversible element in the universe, with directionality imparted by thermodynamic entropy, time is the ultimate frame of reference for almost all measured values.
Fifth, time cannot be inflated or counterfeited. It is both fixed and continuous.
Sixth, we have perfect equality of time with exactly 24 hours in a day. As such, we should be comparing time inequality, not income inequality. When we measure differences in time inequality instead of income inequality, we get an even more positive view of the global standards of living.
These six reasons make using time prices superior to using money prices for measuring resource abundance. Time prices are elegant, intuitive, and simple. They are the true prices we pay for the things we buy.
The World Bank and the International Monetary Fund (IMF) track and report nominal prices on a wide variety of basic commodities. Analysts can use any hourly wage rate series as the denominator to calculate the time price. For the SAI, we created a proxy for global hourly income by using data from the World Bank and the Conference Board to calculate nominal GDP per hour worked.
With this data, we calculated the time prices for all 50 of the basic commodities for each year and then compared the change in time prices over time. If time prices are decreasing, personal resource abundance is increasing. For example, if a resource’s time price decreases by 50 percent, then for the same amount of time you get twice as much, or 100 percent more. The abundance of that resource has doubled. Or, to use the pizza analogy, an individual slice is twice as large. If the population increases by 25 percent over the same period, there will be 25 percent more slices. The pizza pie will thus be 150 percent larger [(2.0 x 1.25) – 1].
Reading the news can leave you depressed and misinformed. It’s partisan, shallow, and, above all, hopelessly negative. As Steven Pinker from Harvard University quipped, “The news is a nonrandom sample of the worst events happening on the planet on a given day.”
So, why does Human Progress feature so many news items? And why did I compile them in this giant list? Here are a few reasons:
Below is a nonrandom sample (n = ~1000) of positive news we collected this year, separated by topic area. Please scroll, skim, and click. Or—to be even more enlightened—read this blog post and then look through our collection of long-term trends and datasets.
“Lithium extended an almost monthlong run of declines, taking its drop this year to 75%, with expectations the rout in the electric-vehicle battery metal is far from over.”
From Bloomberg.
Blog Post | Energy & Natural Resources
Does population growth lead to greater resource scarcity, as argued by the English scholar Thomas Malthus and, more recently, by the Stanford University biologist Paul Ehrlich? Or does population growth coincide with—and even contribute to—greater resource abundance, as the University of Maryland economist and Cato Institute senior fellow Julian Simon has argued? The Simon Abundance Index (SAI) measures the relationship between population growth and the abundance of 50 basic commodities, including food, energy, materials, minerals, and metals.
Main Findings
Global resource abundance fell by 3.55 percent in 2022, according to the sixth annual Simon Abundance Index. The base year of the index is 1980, and the base value of the index is 100. In 2022, the index stood at 520.1. In other words, the index rose by 420.1 percent over the last 42 years, implying a compound annual growth rate in global resource abundance of 4 percent and a doubling of global resource abundance every 17.65 years.
Figure 1: The Simon Abundance Index (1980–2022)
Analysis
The SAI is measured in time prices. To calculate a commodity’s time price, the nominal price of a commodity is divided by the average global nominal income per hour worked. Over the last 42 years, the average of the nominal prices of the Basic 50 commodities rose by 150 percent, while the average global nominal income per hour worked rose by 439.2 percent. That means that the time price of the Basic 50 commodities fell by a geometric average of 65.5 percent.
The personal resource abundance multiplier is calculated by dividing the average of the time prices of the Basic 50 commodities in 1980 by the average of the time prices of the Basic 50 commodities in 2022. The multiplier tells us how much more of a resource a person can get for the same hours of work between two points in time. Given that the average of the time prices of the Basic 50 commodities fell by 65.5 percent, the same number of hours of work that bought one unit in the basket of the Basic 50 commodities in 1980 bought 2.9 units in the same basket in 2022.
That means that personal resource abundance of the average inhabitant of the planet rose by 190 percent between 1980 and 2022. The compound annual growth rate in personal resource abundance amounted to 2.7 percent, implying that personal resource abundance doubled every 26 years.
While the average of the time prices of the Basic 50 commodities fell by 65.5 percent, the world’s population increased by 79.4 percent. So, for every 1 percent increase in the world’s population, the average of the time prices of the Basic 50 commodities fell by 0.825 percent (-65.5 percent ÷ 79.4 percent = -0.825).
Note that the personal resource abundance analysis looks at resource abundance from the perspective of an individual human being. The question that we aim to answer is: “How much more abundant have resources become for the average inhabitant of the planet?”
Population resource abundance analysis, in contrast, allows us to quantify the relationship between the overall (or global) resource abundance and the overall (or global) population growth. You can use a pizza analogy to consider the difference between the two levels of analysis. Personal resource abundance measures the size of a slice of pizza per person, while population resource abundance adds up all the slices to measure the size of the entire pizza pie.
Population resource abundance is calculated by multiplying the growth in personal resource abundance by the growth in global population ([1 + percentage change in personal resource abundance] x [1 + percentage change in population]). The resulting product of 5.201 (2.9 x 1.794) corresponds to the 520.1 value in the SAI 2023. Consequently, we can also say that population resource abundance increased at a compound annual growth rate of 4 percent, thus doubling every 17.65 years.
Figure 2: Visualization of the Relationship between Global Population Growth and Personal Resource Abundance of the 50 Basic Commodities (1980–2022)
Let us also say a few words about the resource abundance elasticity of population. In economics, elasticity measures one variable’s sensitivity to a change in another variable. If variable X changes by 10 percent, while variable Y, because of the change in X, changes by 5 percent, then the elasticity coefficient of X relative to Y is 2 (10 ÷ 5). A coefficient of 2 can be interpreted as a 2 percent change in X corresponding to a 1 percent change in Y.
We found that every 1 percent increase in population corresponded to an increase in personal resource abundance (the size of the slice of pizza) of 2.39 percent (190 ÷ 79.4). We also found that every 1 percent increase in population corresponded to an increase in population resource abundance (the size of the pizza pie) of 5.29 percent (420 ÷ 79.4).
Changes between 2021 and 2022
Over the last 12 months, the SAI declined from 539.3 to 520.1 or by 3.55 percent. While regrettable, last year’s decline was much smaller than the 22 percent drop in 2021, which was caused by the COVID-19 pandemic and pandemic-related policies. That said, note that the index increased by an average 4.46 percent per year between 1980 and 2022.
Figure 3: The Simon Abundance Index, Annual Percentage Change (1980–2022)
Going forward we expect the SAI to start growing again in 2023. Humanity has witnessed shocks like those caused by the pandemic and experienced accompanying reductions in resource abundance before. Mercifully, history suggests that growth in the abundance of resources can be restored. The SAI, for example, grew by 28.4 percent, 20.0 percent, and 19.3 percent in 1986, 1985, and 2009, respectively.
Figure 4: The Simon Abundance Index, Percentage Change in Time Prices of Individual Resources (2021–2022)
Conclusion
Despite the recent decline in SAI, resource abundance is still increasing at a faster rate than the population is growing. We call that relationship superabundance. We explore this topic in our book Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet.
Additional Information
Appendix A: Alternative Figure 1 with a Regression Line, Equation, and R-Square.
Appendix B: The Basic 50 Commodities Analysis (1980–2022)
Appendix C: The Basic 50 Commodities, Percentage Change in Personal Resource Abundance (1980–2022)
