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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.
“he never acknowledged that he might have been wrong”
Indirectly, he did. When Simon offered to re-up the bet for the next ten years, Ehrlich declined.
Wow, what a dumb take.
Consider the extremes we have seen just in the past decade:
Every one of these was the result of someone’s “extreme” forecast coming true.
There were also many more extreme forecasts that did not come true. If you want to try your luck at picking which one to bet your money on in hopes of being correct, and then holding fast while your conviction in it is tested and contrary extreme forecasts roll in, best of luck to you. I prefer Adam’s sensible advice.
Adam,
Another excellent post. Please keep them coming!
I saw him speak at Cal Poly in the late 60’s. There were two take aways that I remember. One was that if nothing changed, the population would become extinct in 10 years. The other was that we should go out to try to stop a freeway interchange being built close by. As a freshman in college majoring in Biology at the time, I was impressed by this PhD from Stanford. The takeaway from this encounter was that even very smart people can be wrong about their predictions. It was a lesson that helped me on my investment journey.
I am baffled by the inaccuracy here with regards to his starvation prediction. He was absolutely correct. 9-11 million people die annually from starvation. Meanwhile, we all worry and chat about the millions we have in our retirement accounts.
Inaccurate? Here’s an AI overview: “In his 1968 book The Population Bomb, Paul Ehrlich predicted that global population growth would outpace food production, leading to mass starvation in the 1970s. He famously claimed that “hundreds of millions of people” would starve to death, including tens of millions in the U.S., arguing that the battle to feed humanity was already lost.” Additionally, the website Statista demonstrates that worldwide starvation rates have dropped at least ten-fold since the 1960s. This is not to downgrade the plight of the millions who continue to be affected by starvation, but I’m baffled by your post extolling Ehrlich’s predictions.
Looking at the regions hit hardest by starvation, the major cause seems to be war, not production capacity or runaway population growth.
Adam thank you for another interesting article. Today when some prognosticator says oil at $150, I think pay attention, learn much more, before making any silly moves.
I think the scientific method is beautiful and powerful. But, we must remember that scientists are human. Feynman gave a graduation address at Caltech in 1974 discussing the importance of scientific integrity. We have all heard the old quote “When the evidence changes, I change my mind. What do you do sir?” I imagine if I were a great figure in the scientific world (and I certainly am not), it might not be so easy to admit my pet theory I had discovered 30 years ago has just been proven wrong by some young upstart. But integrity demands that I do.
Thank you Adam, another great article. I learned recently that Einstein had inserted a constant into his general theory of relativity in order to hold the size of the universe static. You see, it was the common wisdom then that the universe was not expanding because that would imply a beginning, and that would then beg the question how it all started, and no one wanted to go there because that led to a discussion of a creator. Einstein wanted no part of that. Well, a mathematician in the 1920s, in Russia, proved that the universe was expanding and Einstein made an effort to publicly humiliate him. When incontrovertible evidence showed the universe was in fact expanding, Einstein changed his thinking accordingly. My point is that Ehrlich couldn’t admit he was wrong, about anything it appears, and tremendous harm results from that kind of thinking. We all need to be mentally nimble and be willing to throw away a belief if evidence proves contrary.
One subject that might be worth a follow-up article is to do the same analysis on the coming US “Debt Bomb.” It seems that everybody knows about it and its dire consequences, yet what is the individual investor / retiree suppose to do now? If you watch Stanley Druckenmiller’s You Tube videos, slashing your wrists seems an alternative. Its a serious question in search of a serious answer.
Slightly off Adam’s topic perhaps, but since you bring up the debt problem and all the hand-wringing about it…
I watched a Fidelity webinar the other day that included a non-Fidelity guest speaker who is a fixed income investor, and he took a question about the US debt and whether it’s safe to invest in US Treasuries. He acknowledged the debt problem, but went on to say that other countries are having similar issues, so it isn’t as if there’s an alternative that will suck investors out of U.S. debt. To use his analogy, the U.S. remains by far the cleanest shirt in the laundry, and he would not advise avoiding U.S. bonds or otherwise getting too cute in changing how one invests because of these concerns.
Michael – by chance can you provide a link to a replay of that presentation? That sound interesting.
Living with uncertainty is perhaps the most difficult thing in any life. You can believe that God will take care of everything or believe the world is going to hell, rather than squirm uncomfortably and know that you really don’t know what’s going to happen next. I just got a difficult medical diagnosis and if I’m smart will practice my own counsel, living with what the Buddhists call “don’t know mind.” Thanks for this article.
Some recent studies I have read suggest that we may face a serious population decline. Typically as populations become more urbanized and both members of a couple are employed, fewer children are born. Also advances in public health, medicine and technology in general tends to reduce early deaths (from childhood until 65). This, plus poor planning in China, leads to older populations that are not growing very much. It is hard to have a “dynamic” economy with a bunch of relatively rich 60 year olds and 30 year olds can’t afford a house.
Excellent article! It’s also a reminder not to listen to political extremists… The world is not ending because of a conservative administration or a liberal one… Life moves on!
Thomas Malthus 2.0
I’m reminded of an oft-quoted phrase; “We do not see things as they are. We see things as we are.”— Rabbi Shemuel ben Nachmani, as quoted in the Talmudic tractate Berakhot (55b.). Introspection can be a tough ask for some, especially when they are selling.
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.
I don’t really get the tax torpedo guys – you’re retired, your income is $800K a year, yes, you’re going to pay tax. But would you rather have an income of $75K and pay no tax?
Loved the article. Think about these predictions over the last 25 years: ‘Amazon will go out of business’ (tech crash of 2000), ‘home prices will never recover’ (Great Recession of 2008-09), ‘nobody will ever go into an office anymore and all downtowns will die’ (Covid, 2020), and ‘AI will destroy all jobs’ (present day).
We all know how these turned out: Amazon is a $2.1 Trillion (trillion!) market-cap company today, home prices have skyrocketed to the point that young people cannot afford to buy a house, office areas are booming in most cities (barring a few), and for AI, well, we don’t know the impact yet, but I don’t think I’ll be fetching drinks for my robot overlord anytime soon.
These forecasts would be amusing if the impacts were not so serious: (1) hundreds of billions pulled from the stock market by retail investors at precisely the wrong time and (2) impact on mental health by all the negativity.
Life will be fine if you construct a well-diversified portfolio with plenty of cash, ignore forecasts and, most importantly, avoid purveyors of doomsday porn on TV and online.
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 😉
Mark – this brings to mind a quote from the famous British statistician and mathematician George E.P. Box. I’ve provided this quote in HD responses before, but it is relevant again. Considering your business plan as a model: “Essentially, all models are wrong, but some are useful“.
Rats!