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WHEN PAUL EHRLICH’S obituary appeared a few weeks ago, it came and went without much notice. But during his lifetime, he was enormously influential.
By training, Ehrlich was a biologist, but he was most well known for his 1968 book, The Population Bomb. It opened with this dire prediction: “The battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death.”
In his writings and speeches over the years, he reiterated this point in terms that became even more extreme. In 1970, he argued that famine would kill 65 million Americans during the 1980s. And in 1971, he offered this prediction about the U.K.: “If I were a gambler, I would take even money that England will not exist in the year 2000.” It was destined to become “a small group of impoverished islands, inhabited by some 70 million hungry people.”
Why did Ehrlich hold these views? Earlier in his career, he had traveled to developing countries and concluded that their population growth was unsustainable. He argued that the world’s population needed to be cut in half and proposed a number of ideas to accomplish that. “The operation will demand many apparently brutal and heartless decisions,” he acknowledged.
Of course, none of Ehrlich’s predictions came close to being true, but that didn’t impact his popularity. He made more than 20 appearances on The Tonight Show—so many, in fact, that he was required to join the Screen Actors Guild. And despite Ehrlich’s impressively poor track record over nearly 60 years, The New York Times, in its obituary, still couldn’t criticize. Instead, the paper referred to his apocalyptic predictions as simply being “premature.”
What can we learn from this? I see five key lessons for individual investors.
The formula at the center of his research considered just three variables (population, affluence and technology). But when it comes to most things in the world, the ultimate outcome is dependent on many more variables than that. So someone like Ehrlich might have been accurate with one, or even more than one, of his observations. But at the same time, he was ignoring innumerable other factors, such as public policy decisions.
In 1980, economist Julian Simon challenged Ehrlich to a bet. Simon let Ehrlich pick a basket of commodities and wagered that each of them would be less expensive by 1990. For his part, Ehrlich was sure they’d all increase in price due to population pressure.
Ten years later, every one of the commodities in the basket turned out to be cheaper, despite the population having grown by 800 million people over the course of the bet. Ehrlich held up his end of the bet, sending Simon a check for $567 in 1990, but he had his wife sign it, and he never acknowledged that he might have been wrong. Indeed, he doubled down. In 2009, Ehrlich commented that, “perhaps the most serious flaw in The Bomb was that it was much too optimistic about the future.”
The bottom line: Prognosticators can be convincing and are often entertaining. As investors, our job is to listen with a critical ear.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam’s Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Nice reminder Adam.
Intersting article. As an aside, I know of a different Dr. Ehrlich, from an earlier time period. Indeed, he is one of my scientific heroes. Paul Ehrlich received the Nobel Prize for Medicine in the field of immunology in 1908.
Good analysis and conclusions. Marketing indeed. As a new retiree, I noticed the striking parallel to the current breathless proclamations about the “tax bomb” and even scarier “tax torpedo” zeroing in on our IRAs. When I ran the numbers, they’re not that scary. A few You Tube presentations are honest about this. Most are full of long winded sales pitches designed to get you to sign up for financial advisory services. No thanks.
Thanks, Adam. This is such a good lesson. Bad science is the shaky foundation of many highly successful marketing campaigns.
Healthy skepticism.
Good piece. Thanks.
In any predictive framework, your initial assumptions are everything — they drive the outcomes. Underestimate or ignore a variable at your peril.
Case in point: the business plan I put together for my bankers when founding my company had me as a multi-millionaire by year ten. The unconsidered variables, as it turned out, had other ideas 😉
Rats!