Resource Abundance

Applying the Framework at the Population Level

The framework for resource abundance can be applied at both the personal and population levels. While the personal level focuses on individual experiences of resource abundance, the population level examines how resources change across entire societies or the globe.

Key Equation

Population Resource Abundance = Personal Resource Abundance × Population

• Think of it as a pie:
• The size of the pie represents total resources.
• Each slice represents an individual’s share.
• Growth occurs either by increasing individual slices or by adding more slices (i.e., more people).

Growing the Pie

• If population increases but the time price remains the same or decreases, it means the overall abundance is growing.
• Historical data suggests that abundance is increasing faster than population growth.

Malthusian Theory vs. Reality

• Thomas Malthus hypothesized that food supply grows linearly while population grows exponentially, leading to resource scarcity and collapse.
• However, empirical data suggests that population growth has coincided with decreasing resource prices and increasing abundance, thanks to innovation and efficiency improvements.

Personal vs. Population Abundance

• Example: Hershey Bars
• 1900: 1 bar per person
• 2022: 6.62 bars per person
• Population in 1900: 68 million
• Population in 2022: 336 million
• Result: Over 3,000% increase in Hershey bar abundance.

Compound Annual Growth Rate (CAGR)

• Hershey bar abundance grew at about 3% annually.
• If it continues at this rate, abundance will double every ~25 years.
• The elasticity measure shows that for every 1% population growth, Hershey bar abundance increased by 8%.

Other Examples of Resource Abundance

• Bicycles
• 1910: 1 bike per person
• Today: 17 bikes per person
• Population growth: 1.75 billion to 8 billion
• Bicycles have become 80 times more abundant.
• CAGR: 4% (abundance doubles every 18 years).
• Air Conditioning
• 1952: 1 unit per person
• Today: 43 units per person
• Population growth: Doubled
• Result: 9,000% increase in abundance.

Time Price as a Better Metric

• Measuring in time rather than money provides a clearer picture of resource abundance.
• Example: Food prices in India, China, and the U.S.
• In 1960, it took:
  • U.S.: 1 hour to earn enough for food.
  • India/China: 8 hours.
• Today, it’s about 1.5 hours in India and 18 minutes in China.

Time Inequality vs. Income Inequality

• Everyone has the same 24 hours each day.
• Over time, global time inequality is decreasing, meaning more people have time to pursue creation rather than mere consumption.

Building an Index

• To compare different commodities, an index is created:
• Step 1: Convert money prices to time prices.
• Step 2: Set a base year index (e.g., 1980 = 100).
• Step 3: Compare changes over time.
• Example: Crude oil’s time price fell significantly from 1980 to 1990, indicating greater abundance.

Averaging Percentage Changes

• Geometric averages are used instead of arithmetic averages for accuracy.
• Example: If wheat falls by 50% and corn rises by 50%, the correct calculation yields a 25% decrease in prices overall.

Simon Abundance Index

• Named after economist Julian Simon, the index measures global abundance based on 50 commodities from 1980 to present.
• Findings:
• Time prices fell by 75.2%.
• Population grew by 75.8%.
• Result: Abundance increased by 600%.

The Role of Knowledge

• Resource abundance is driven by knowledge, not just physical materials.
• As population grows, so does the potential for new knowledge and innovation.

The Impact of AI on Abundance

• AI accelerates knowledge discovery and enhances productivity.
• Rather than replacing humans, AI serves as a tool for greater efficiency and innovation.

Conclusion

• Resource abundance increases when population growth is coupled with knowledge expansion.
• Measuring in time prices offers a better understanding of real affordability.
• As time inequality narrows, opportunities for creation increase globally.