Putting Money Where One’s Mouth is

In a comment addressed to Prabhudesai, Engr. Ravi wrote, “Food has already become the first limit that we have hit, so be careful about what you bet your money on.”

Advising care in placing bets is excellent advice which ought to be followed. Talk is cheap. Placing bets is not. So I suggest a bet.

I am willing to bet money that food will continue to become less scarce. I bet that in 10 years, a basket of food items which costs $1,000 today, will cost less than (inflation adjusted) $1,000. If it costs more, I will pay the difference to the person(s) on the other side of the bet; if it costs less, I am owed the difference from the person(s) on the other side. For example, if the basket costs $900, then I’m owed $100; if the basket costs $1200, then I pay $200.

I will let the person(s) on the other side of the bet choose five items from a list of 10 items I will provide. The list will be generic items such as wheat, sugar, rice, cooking oil — stuff that is traded internationally in commodity markets.

Note, the $1,000 quoted above is just an example. The person on the other side gets to choose that amount too. The higher the amount they choose shows that they have greater confidence in their claim. One can bet $100 or even $1 if one chooses.

Let me know in the comments if you are willing to put your money where your mouth is.

For an example of this kind of bet, see the Julian Simon, Paul Ehrlich bet. (Methinks that Engr. Ravi  is upholding the Ehrlich doomsayer tradition.) For a more contemporary example, see Bryan Caplan’s Complete Bet Wiki.

4 thoughts on “Putting Money Where One’s Mouth is

  1. Engr. Ravi Friday July 16, 2021 / 8:50 am

    I will not make Ehrlich’s mistake by agreeing to a bet in dollar terms.

    Dollars can be created and destroyed by fiat, and US government and its central bank, the Fed, exert strenuous efforts to ensure that the price of food and fuel in dollar terms lies in a narrow band, the so called ‘inflation control mandate’ of the Fed.

    In the international commodities market too, the US Treasury endeavors to keep the price of an oil barrel roughly constant in dollar terms, to retain the status of the dollar as the petro-dollar. To the extent that these efforts are successful, i.e. the oil:dollar ratio is held constant, the grain:dollar ratio will also remain so, as grain:oil (grain produced per hectare per barrel of oil used) has reached a steady state.

    So, due to the enormous negative-feedback exerted by the US-govt/Fed/US-Treasury/China, tracking the grain:dollar ratio would be mostly tracking random noise.

    Atanu wrote: “I am willing to bet money that food will continue to become less scarce”.

    The right way to measure whether food has become less scarce or not is to instead track the total quantity of food produced per capita per year. For simplicity, I would prefer tracking just rice and wheat, the 2 major cereal grains intended for human consumption (maize/corn mostly being for animal feed).

    My bet is that the total amount of rice + wheat per capita produced globally in 2031 will be less than what it is for 2021. To account for any unexpectedly good or bad years, we can take the average of the 3 years 2019-2021 for 2021, and likewise for 2031, 2029-2031.

    What I’m essentially betting on is that the trend of stagnating-to-declining food production will continue, while the population continues to grow due to population growth momentum over the next decade (basically Malthus’ nightmare scenario, which we have dodged so long with fossil fuels, finally coming to pass). This is a bet that the current trend of increasing malnutrition will continue. I know that this is a very dismal bet to make, but I believe that this is the dismal direction in which the food situation is headed, for the next decade.

    Terms of the bet: loser gives the winner 100 kg of long grain rice, who then donates it to the food charity of his choice.

    What do you say?

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  2. Engr. Ravi Friday July 16, 2021 / 9:29 am

    Atanu wrote: I am willing to bet money that food will continue to become less scarce. I bet that in 10 years, a basket of food items which costs $1,000 today, will cost less than (inflation adjusted) $1,000. If it costs more, I will pay the difference.

    There is a circular dodge in the terms of your bet: inflation itself is measured using a basket of commodities (mostly food), therefore $1000 of inflation adjusted dollars will, by definition, always purchase the same amount of food, modulo random noise due to any non-food items in the commodities-basket used for calibration.

    Like

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