It is difficult to comprehend the hysteria about overpopulation that once gripped America. In 1965, the New Republic, one of America's foremost journals of public affairs, wrote that "world population has passed food supply. The famine has started." The magazine was so convinced of the coming cataclysm that it proclaimed world hunger to be the "single most important fact in the final third of the 20th century." This period, in which large portions of America's intellectual and political elites took leave of their senses and predicted something like the literal end of civilization, is the subject of Paul Sabin's brief, but valuable, book "The Bet: Paul Ehrlich, Julian Simon, and Our Gamble Over Earth's Future."

Mr. Ehrlich, a biologist specializing in butterflies, became famous in the 1970s after publishing "The Population Bomb" (1968), in which he updated the 19th-century projections of Thomas Malthus—people were overbreeding, the supply of food and resources couldn't possibly keep up—and dialed the calamity to 11. Within a few short years, hundreds of millions of people would starve to death as civilization unraveled. Or so predicted Mr. Ehrlich. "The Population Bomb" was reprinted 22 times in the first three years alone, and its author would appear as Johnny Carson's guest on "The Tonight Show" at least 20 times, becoming a national figure and an influential player in Democratic politics. Mr. Ehrlich's ideas attracted a remarkable number of passionate adherents. They also attracted the scornful criticism of a little-known economist named Julian Simon.

When he began exploring demographics, Simon, too, had been concerned about overpopulation. But the more he studied the subject, the more he became convinced that Mr. Ehrlich's thesis was fundamentally flawed. Mr. Ehrlich believed that the laws of nature that governed insects also applied to humans, that natural constraints created cycles of population booms and busts. Simon believed that man's rational powers—and the economies man constructed—made those laws nearly obsolete.

So in 1980 Simon made Mr. Ehrlich a bet. If Mr. Ehrlich's predictions about overpopulation and the depletion of resources were correct, Simon said, then over the next decade the prices of commodities would rise as they became more scarce. Simon contended that, because markets spur innovation and create efficiencies, commodity prices would fall. He proposed that each party put up $1,000 to purchase a basket of five commodities. If the prices of these went down, Mr. Ehrlich would pay Simon the difference between the 1980 and 1990 prices. If the prices went up, Simon would pay. This meant that Mr. Ehrlich's exposure was limited while Simon's was theoretically infinite.

Simon even allowed Mr. Ehrlich to rig the terms of the bet in his favor: Mr. Ehrlich was allowed to select the five commodities that would be the yardstick. Consulting two colleagues, John Holdren and John Harte, Mr. Ehrlich chose chromium, copper, nickel, tin and tungsten, each of which his team supposed was especially likely to become scarce. As they settled on their terms, Mr. Sabin notes, Messrs. Ehrlich, Holdren and Harte "felt confident that they would prevail."