The greatest danger to sound economic reasoning is that its conclusions are often counterintuitive.
Each year after the Nobel Prize announcements, laureates, who are among the greatest minds of their generation, gather and shape a broader intellectual conversation. At this year’s gathering, a Nobel laureate in physics posed a question to the economic laureates: “Can we grow without limit? What about finite resources?” He added, “At some point, must we also modify this growth system—which wants to consume more and more of the Earth’s resources?”
To answer this question, we need to go back to a bet made about humanity’s fate in 1980. Economist Julian Simon and biologist Paul Ehrlich made a wager about the future of humanity. At the heart of the bet was a simple question: Would population growth lead to resource scarcity and human decline, or to greater prosperity and innovation?
The terms of the bet were straightforward: Ehrlich would select a $1,000 basket of raw materials that he expected to become scarcer—and therefore more expensive—over time. He chose copper, chromium, nickel, tin, and tungsten. If the price of the goods rose above (an inflation-adjusted) $1,000, Simon was to pay Ehrlich the difference; if they fell, Ehrlich was to pay. The contract was signed on October 6, 1980, for a ten-year period. The outcome was decisive: by 1990, the real price of the basket had fallen by 36%, and Simon received a check from Ehrlich for $576.07.
The sides chosen in the bet reflect the different philosophies of the two men. Ehrlich, author of The Population Bomb, was deeply pessimistic. He predicted that hundreds of millions would starve to death and warned that population growth posed a serious threat to the survival of the human race. He even suggested coercive government measures to control family size, going so far as to recommend compulsory sterilization in India.
Simon, by contrast, took the economic view. He believed that “human imagination is the ultimate resource” and argued that as population grows, so too do innovation, productivity, and the capacity for substitution in markets. If one resource becomes scarce, people find substitutes—a lesson anyone who has taken Micro 101 will recognize through the substitution effect.
Ehrlich tried to portray Simon as simplistic, even claiming that in the ecology debate, “Simon is the absolute equivalent of the flat-earthers.” But in reality, Ehrlich’s own conception of “resources” was simplistic. When economists say that resources are scarce, they mean scarce relative to human wants, as Lionel Robbins defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” This does not mean that resources are fixed in relation to population.
In an economic sense, resources are constantly changing, and growth is not only about discovering new resources but also about using existing ones more effectively. Since the Industrial Revolution, markets have demonstrated humanity’s ability to escape the Malthusian trap. The evidence is clear: global population increased by 145% between 1960 and 2016, while incomes rose by 183%.
Despite losing the bet and the weight of evidence, Ehrlich’s intuition persists, even among our most celebrated thinkers. Ehrlich passed away on March 13, 2026, but his intuition is alive and well. This points to a deeper challenge for economics. As Friedrich Hayek argued in his 1933 lecture “The Trend of Economic Thinking,” the greatest danger to sound economic reasoning is that its conclusions are often counterintuitive.
Economists argue that price controls worsen shortages, that decentralized markets outperform central planning, and that policies like minimum wages can harm the very workers they aim to help—claims that frequently run against popular intuition.
This is how “scientism” works: ideas that look and sound scientific can displace what is actually true simply because they carry the appearance of credibility. We should not forget that the dangers of misinformation do not come only from conspiracy theorists, but also from the very community that ought to resist it: the scientific community. Take eugenics, for example. It did not originate with conspiracy theorist podcasters, but from the heart of the scientific establishment.
This is the problem of the “pretense of knowledge.” When dealing with experts in the social sciences, we should remember our “inevitable ignorance.” Consider socialism as another example. Albert Einstein wrote an essay titled “Why Socialism?” At the time, socialism was widely seen as scientific—not because of compelling evidence, but because it sounded scientific. Eugenics sounded scientific. Race theory sounded scientific. But sounding scientific does not make something science. Science is not a status; it is an ongoing conversation. Figures like Ehrlich, however, often sought to end that conversation—dismissing opponents as “flat-earthers” while advocating sweeping policies.
The Simon–Ehrlich bet, then, is not truly over. Winning an argument in theory does not mean winning in public opinion. As the saying goes: free traders win debates, but protectionists win elections.
