Every hungry mouth comes a pair of hands and a brain capable of thought, planning, and innovation.
Marian L. Tupy, Gale L. Pooley —
It is 1980, and you are getting married. Your parents decide to celebrate your nuptials by inviting 100 guests to a wedding reception. The reception cost them $100 per person or $10,000 in total. Fast forward to 2018. Now it is you who is throwing a wedding reception for your child. The guest list has increased by 72 percent (some of the old folk are no longer around, but the cousins have exploded in number). That means that you are now catering to 172 people. The price per guest remained the same (suspend your disbelief and ignore inflation for now), and you expect to get a bill for $17,200. Instead, the bill comes to $4,816, which is less than half of what your parents paid for you. How is that possible, you ask the caterer? The caterer responds that for every one percent increase in attendance, the bill fell by one percent. And so, while the number of guests rose by 72 percent, your bill declined by 72 percent. Surely, things like that don’t happen in real life, or do they?
In fact, that’s exactly what has happened to the affordability of 50 basic commodities between 1980 and 2018. Over those 38 years, the world’s population rose from 4.458 billion to 7.631 billion or 71.2 percent. Over the same time period, basic commodities, including energy, food, materials, and metals became 71.6 percent more affordable on average. For every one percent increase in population, in other words, resources became slightly more than one percent more abundant. Put differently, the time it took to earn enough money to buy one unit in that basket of 50 commodities in 1980 bought 3.62 units in 2018. The compounded growth rate of abundance came to 3.44 percent per annum. That means that the affordability of our basket of commodities doubled every 20.49 years. This relationship between population growth and resource abundance is deeply counterintuitive, yet it is no less true. The facts surprised us, and they will surprise you too.
Generations of people throughout the world have been taught to believe that there is an inverse relationship between population growth and availability of resources, which is to say that as population grows, resources become more “scarce.” That was, historically speaking, true. In the animal world, a sudden increase in the availability of resources, such as grass after unusually plentiful rain, leads to an animal population explosion. The population explosion then leads to the exhaustion of resources. Finally, the exhaustion of resources leads to population collapse. If you take the Theory of Evolution seriously—and we do—you’ll appreciate that human beings evolved from much humbler beginnings and were, as such, much more exposed to vicissitudes of fortune.
Over time, however, humans have developed sophisticated forms of cooperation that increase their wealth and chances of survival. Consider, for example, trade and exchange. As the British writer Matt Ridley observed in his 2010 book The Rational Optimist: How Prosperity Evolves, “There is strikingly little use of barter in any other animal species. There is sharing within families, and there is food‐for‐sex exchange in many animals including insects and apes, but there are no cases in which one animal gives an unrelated animal one thing in exchange for a different thing.” Trade is particularly important during famines. A country struck by drought, for example, can purchase food from abroad. This is not an option available to other animals.
But the most important difference between people and nonhuman animals is our superior intelligence and the use of that intelligence to invent and to innovate. “In a way, everything is technology,” noted one of the world’s greatest economic historians Fernand Braudel (1902–1985) in his book Civilization and Capitalism. “Not only man’s most strenuous endeavors but also his patient and monotonous efforts to make a mark on the external world; not only the rapid changes… but also the slow improvements in processes and tools, and those innumerable actions which may have no immediate innovative significance but which are the fruit of accumulated knowledge.”
And so, over many millennia of trial and error, we have accumulated a store of knowledge that has allowed us to reach escape velocity—from scarcity to abundance—somewhere toward the end of the 18th century. The Four Horsemen of the Apocalypse (war, famine, pestilence, and death) have not completely disappeared—that would be a miracle, not progress. But the world is incomparably richer than it was just two centuries ago. If you don’t believe us, ponder for a moment the 768 types of breakfast cereal that you can buy at Walmart for just a few minutes of labor on a minimum wage.
We measure abundance in Time Prices. A Time Price is the length of time that a person is required to work in order to earn enough money to buy something. It is the money price divided by hourly income. Money prices are expressed in dollars and cents, while Time Prices are expressed in hours and minutes. For example, if a barrel of oil costs $75 and you earn $15 an hour, the Time Price will come to five hours. If oil falls to $60 a barrel and your income increases to $20 an hour, the Time Price will decrease to three hours. The money price falls by 20 percent, but because your hourly income rose by 33 percent, the Time Price will fall by 40 percent.
Time Prices make much more sense than money prices for at least three reasons. First, Time Prices avoid the contention and subjectivity of commonly-used inflation adjustments. Second, since innovation shows up in both lower prices and higher incomes (more productive people are better-paid people), Time Prices more fully capture the effects of innovation. Third, Time Prices are independent of currency fluctuations. Instead of gauging the standards of living in India and the United States by comparing the purchasing power parity adjusted prices of a gallon of milk in Indian rupees and American dollars, Time Prices provide a universal and standardized way (hours and minutes) to measure changes in well-being.
Our research into Time Prices and resource abundance began when we looked at updating the famous wager between the late University of Maryland economist Julian Simon and the Stanford University biologist Paul Ehrlich. The wager was based on the inflation-adjusted prices of five metals: chromium, copper, nickel, tin, and tungsten, and lasted from October 1980 to October 1990. Ehrlich predicted that because of population growth, metals would become more expensive. Simon argued that because of population growth, metals would become cheaper.
Ehrlich thought like a biologist, who did not seem particularly interested in economics. “Since natural resources are finite, increasing consumption obviously must ‘inevitably lead to depletion and scarcity,’” he wrote. He continued:
Currently there are very large supplies of many mineral resources, including iron and coal. But when they become “depleted” or “scarce” will depend not simply on how much is in the ground but also on the rate at which they can be produced and the amount societies can afford to pay, in standard economic or environmental terms, for their extraction and use. For most resources, economic and environmental constraints will limit consumption while substantial quantities remain… For others, however, global “depletion”—that is, decline to a point where worldwide demand can no longer be met economically—is already on the horizon. Petroleum is a textbook example of such a resource.
Simon, on the other hand, thought like an economist who understood the powers of incentives and the price mechanism to overcome resource shortages. Instead of the quantity of resources, he looked at the prices of resources. He saw resource scarcity as a temporary challenge that can be solved through greater efficiency, increased supply, development of substitutes, and so on. The relationship between prices and innovation, he insisted, is dynamic. Relative scarcity leads to higher prices, higher prices create incentives for innovations, and innovations lead to abundance. Scarcity gets converted to abundance through the price system. The price system functions as long as the economy is based on property rights, the rule of law, and free exchange. In relatively free economies, therefore, resources do not get depleted in the way that Ehrlich feared they would. In fact, resources tend to become more abundant.
Simon, as is well known, won his bet with Ehrlich when the real (which is to say inflation-adjusted) price of the five metals fell by 36 percent between October 1980 and October 1990. Simon’s victory would have been even more impressive had he used, as we do, Time Prices. Those fell by 55 percent between 1980 and 1990. In fact, when we extended the Simon-Ehrlich wager over many decades and greatly expanded the number of commodities analyzed, we found a consistent trend toward greater availability of resources relative to the cost of human labor. It is, consequently, heartening that, in recent years, scholars have started to write about the age of abundance, a state of affairs in which “technology has the potential to significantly raise the basic standards of living for every man, woman, and child on the planet.”
Unfortunately, it will take much more than a single wager between two scholars—or, for that matter, this article—to rid the world of the old and very pernicious idea that population growth and resource depletion go hand in hand. But, we have to start somewhere. And so, as you listen to the purveyors of doom on the television and the radio, and read apocalyptic predictions of humanity’s future on Twitter and in the newspapers, bear in mind that with every hungry mouth comes a pair of hands and a brain capable of thought, planning, and innovation.
The Simon–Ehrlich wager and why predictions of resource scarcity keep getting it wrong.
Gale L. Pooley, Marian L. Tupy —
Summary: A famous bet between Julian Simon and Paul Ehrlich illustrates two ways of thinking about resources and human ingenuity. Ehrlich thought of resources as a fixed pie, while Simon believed that human beings would find ways to make resources more abundant. As Simon predicted, thanks to markets and human ingenuity, the resource prices that Simon and Ehrlich bet on fell over a decade.
One of the most important checks ever written in economics was for $576.07.
It arrived in the mailbox of Julian Simon, the University of Maryland economist and Cato Institute senior fellow, on an October morning in 1990. The envelope was plain. There was no return address. Inside was a check from Paul Ehrlich. Ehrlich, who died last week, was the Stanford biologist and author of the bestselling 1968 book The Population Bomb.
That small check settled one of the great arguments of the modern age.
Ehrlich had spent years warning that population growth would outrun the Earth’s resources, bring rising scarcity, and push humanity toward disaster. Simon believed the opposite. He argued that more people did not simply mean more mouths to feed. It also meant more minds to think, invent, and solve problems.
The dispute became so bitter that Simon proposed a bet.
“Pick any raw material,” he told Ehrlich, “and choose any future date. I’ll bet the price will go down.”
Ehrlich accepted. He and two colleagues selected five metals: copper, chromium, nickel, tin, and tungsten. They priced a basket of those commodities on Sept. 29, 1980, and agreed to compare the inflation-adjusted price 10 years later. If the real price rose, Simon would pay Ehrlich. If it fell, Ehrlich would pay Simon.
Ehrlich was certain that population growth would make resources scarcer and therefore more expensive. Simon was certain that human beings would find ways to make resources more abundant.
By Sept. 29, 1990, the world’s population had increased by about 850 million people, a rise of 19 percent. If the doomsayers were right, that should have pushed prices sharply upward.
It did not.
Inflation over the decade was 57 percent. Yet the nominal price of the five-metal basket barely budged, rising from $1,000 to $1,004. In real terms, the basket’s price fell by about 36 percent. Ehrlich mailed Simon the difference: $576.07.
That check mattered because it exposed a mistake that still poisons public debate.
The mistake is to think that natural resources are fixed gifts of nature and that economic life is therefore a grim contest over a pile that can only shrink as population grows. That view sounds sober. It is, in fact, blind to the central truth of human progress.
Resources are not simply things lying in the ground. Resources are matter plus knowledge.
Oil was once a nuisance that seeped into farmland and polluted water. A barrel of oil in the Stone Age was worthless. A barrel of oil in an industrial civilization could heat homes, move trucks, power factories, and feed chemical industries.
Nature gives us atoms. Human beings give those atoms value.
That is why Simon understood something Ehrlich missed. The ultimate resource is not copper or farmland. It is the human mind. More precisely, it is the human mind set free to experiment, trade, specialize, and innovate.
Freedom matters here. People do not solve problems automatically. They solve them when they are allowed to respond to scarcity with invention and enterprise. High prices invite substitution. Competition rewards efficiency. Property rights encourage investment. Markets spread information no planner can gather. Free people learn to do more with less.
This is not a fairy tale in which every problem solves itself. Pollution is real. Bad policy is real. Governments can strangle innovation, distort prices, and lock societies into waste and stagnation. Progress, in other words, is not guaranteed.
But the lesson of the Simon-Ehrlich bet is that the burden of proof belongs to the prophets of permanent scarcity. Time and again, they have underestimated human creativity and overestimated the world’s physical limits.
That is as true today as it was in 1980.
We hear that energy is running out, that growth must stop, that the planet cannot support prosperity for billions, and that human wants must be cut down to fit a closed and exhausted world. This language changes with the decade, but the instinct behind it is old. It treats people as liabilities. It imagines the future as a rationing exercise.
Simon offered a better vision. Human beings are not just consumers of resources. They are producers of ideas. They are creators of substitutes, technologies, and entirely new forms of wealth. They do not merely divide a pie. They learn how to bake bigger pies from ingredients earlier generations did not know they had.
The real contest, then, is not between population and resources. It is between two ways of seeing humanity.
One view sees every additional person as another claimant on scarcity. The other sees every additional person as a possible problem-solver, inventor, entrepreneur, scientist, or worker whose efforts can make life better for everyone else.
The check for $576.07 settled the bet. But the larger wager remains open.
Don’t bet against human beings, especially when they are free.
America’s Commodity Appetite: Evidence of Dematerialization
America's economy has never ceased to crave materials, but it has grown better at extracting more value from less stuff.
Marian L. Tupy —
Summary: A new study examines how the United States has shifted its material consumption patterns since 1900, showing a trend of “relative dematerialization” beginning around 1970. While certain commodities have grown in demand, many others have seen absolute declines due to technological advancements and efficiency improvements. Innovation and globalization have allowed the US economy to extract more value from fewer resources, raising questions about the long-term sustainability of this trend in an increasingly digital and energy-intensive world.
A new study by Iddo K. Wernick from the Rockefeller University’s Program for the Human Environment titled “Is America Dematerializing? Trends and Tradeoffs in Historic Demand for One Hundred Commodities in the United States” offers a remarkable portrait of how much the United States has changed in terms of material consumption since 1900.
The study examines the usage trends of 100 commodities—including iron ore, chickens, gallium, and titanium—and shows that a nation that started the 20th century with a seemingly bottomless appetite for raw materials pivoted dramatically around 1970. This pivot, which paradoxically coincided with the first Earth Day, marked a moment when the American economy began a decades-long march toward what Wernick calls “relative dematerialization.” In essence, “dematerialization” refers to the gradual uncoupling of resource use from economic growth.
In Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet, Gale L. Pooley and I document a parallel phenomenon on the global stage, finding that resources become more abundant over time. Our key insight is that time prices—or the time required to earn the money to buy a specific good—have been falling for almost two centuries for almost all commodities. Although Wernick focuses on physical consumption patterns within the United States, his study corroborates a related idea: Increasing efficiencies allow Americans to produce or obtain more output from fewer inputs, which helps to keep price increases in check.
The Rockefeller paper breaks commodities into three groups based on their trends from 1970 to 2020. The first group consists of only eight commodities—including gallium, titanium, and chicken—for which demand grew faster than gross domestic product (GDP), showing that certain products vital to the modern economy (and the dinner table) can still outpace the broader economy. The use of the second group of 51 commodities, such as petroleum and nitrogen fertilizer, grew more slowly than overall GDP but increased in absolute terms. That relative decoupling translates to lower intensity of use: We consume more resources as our economy expands but less per dollar of economic output.
Finally, the use of the third group—41 commodities, including iron ore, cadmium, asbestos, and even water—experienced declines in both absolute consumption and intensity of use. According to Wernick, some of these, like asbestos, fell out of favor due to safety concerns, while others, like iron ore, lost ground because of new manufacturing technologies, such as electric arc furnaces, which made recycling more economical. Once indispensable commodities saw demand shrink, underlining the fact that most resources need not remain economically essential in the long run.
Wernick’s study also acknowledges the role of globalization in shifting the patterns of resource use: Certain energy-intensive or pollution-heavy production processes have migrated offshore, meaning the United States can appear more material-efficient while importing finished goods that embed resource usage from elsewhere. But that shift is neither absolute nor one way: The United States also exports large quantities of agricultural products, effectively shipping out “embodied” water, fertilizer, and cropland. These exchanges do not cancel each other out, but the global supply chain, which allows resources to flow to where they are most valued, benefits everyone.
Critics of this optimistic narrative often point to the “Jevons paradox,” whereby increased efficiency leads to cheaper commodities and triggers higher total consumption. The evolution of the American economy after 1970 certainly raises intriguing questions. Was relative dematerialization achieved at the cost of higher economic growth, which slowed around the first Earth Day? Is dematerialization a product of market-driven efficiencies or a result of government-imposed environmental laws and regulations?
Looking into the future, what will happen to American resource use as the United States becomes an information powerhouse? Although computing is electricity-intensive, it can create massive value with little use of physical commodities. And what if we are on the cusp of using incredibly dense fuels to generate that electricity, as the deals between tech companies and new nuclear companies might indicate?
The march of technological progress, combined with the deregulation and economic growth drives promised by the second Trump administration, may yet provide answers to those questions.
All told, Wernick’s findings confirm that, while the American economy has never ceased to crave materials—including metals, foods, and newly indispensable high-tech elements—it has grown better at extracting more value from less stuff. Our ingenuity is decoupling growth from sheer material input, though whether that trend can be sustained over the long run remains an open question.
Update on the Five Metals from the Simon–Ehrlich Bet
Since 1900, the average abundance of these five metals has increased 36.5 percent faster than the population.
Gale L. Pooley —
Summary: The Simon–Ehrlich wager famously demonstrated that population growth does not lead to resource scarcity but instead drives innovation and abundance. Since 1900, the production of five metals featured in the bet has risen dramatically. This bolsters Julian Simon’s argument that human ingenuity and technological progress enable us to produce more resources at lower costs, ensuring greater abundance even as populations grow.
Hannah Richie at OurWorldinData.org recently published an insightful article on the five metals featured in the Simon–Ehrlich wager. In 1990, Paul Ehrlich lost the 10-year bet and had to write a check to Julian Simon for $576.07. Simon had let Ehrlich pick the five metals in 1980 when the bet started. The payment reflected the inflation-adjusted decline of 36 percent in the average price of the five metals over the decade. This was despite an extraordinary global population increase during the 1980s of 850 million people (19 percent)—the largest growth in human history. Yet, even with this surge, resource prices dropped, reinforcing Simon’s argument that human population growth, coupled with ingenuity and the freedom to innovate, drives resource abundance rather than scarcity.
Richie highlights an important trend: The long-term abundance of these metals has increased significantly. Take a look at the staggering growth in their production since the early 1900s:
Between 1900 and 2000, the global population grew by 400 percent, from 1.6 billion to 8 billion. During the same period, the production of the five metals soared: Chromium increased by an astounding 78,082 percent, copper by 4,062 percent, nickel by 26,918 percent, tin by 226 percent, and tungsten by 4,829 percent. On average, production of these metals rose by 22,823 percent.
The relationship between population growth and resource production is captured by the production elasticity of the population. It is the ratio of the percentage change in production divided by the percentage change in population. On average, every 1 percent increase in population corresponded to a 57.06 percent increase in the production of these five metals.
In our book Superabundance, we compared the time prices of these five metals for blue-collar workers from 1900 to 2018 and have since updated the data to 2022.
The charts below detail the growth in abundance for each resource since 1900. Please note that vertical scales differ across the charts. The charts generally show the effects of 9/11, the financial crisis of 2008, and COVID-19 lockdown policies.
This table summarizes our findings.
From 1900 to 2022, the global population increased by 400 percent. Over the same period, the abundance of these five metals increased by an average of 546 percent, demonstrating that abundance has grown 36.5 percent faster than the population.
Some have suggested that Simon was just lucky. This is why looking at a much longer time period reveals underlying trends behind temporary fluctuations.
These data reinforce Simon’s prediction: The more people, the more we produce, and the lower the prices.
