Showing posts with label irrationalism. Show all posts
Showing posts with label irrationalism. Show all posts

Friday, November 10, 2017

Richard Feynman on Why Questions

[Transcript] Richard Feynman on Why Questions
61 Post author: Grognor 08 January 2012 07:01PM
 
I thought this video was a really good question dissolving by Richard Feynman. But it's in 240p! Nobody likes watching 240p videos. So I transcribed it. (Edit: That was in jest. The real reasons are because I thought I could get more exposure this way, and because a lot of people appreciate transcripts. Also, Paul Graham speculates that the written word is universally superior than the spoken word for the purpose of ideas.) I was going to post it as a rationality quote, but the transcript was sufficiently long that I think it warrants a discussion post instead.

Here you go:
Interviewer: If you get hold of two magnets, and you push them, you can feel this pushing between them. Turn them around the other way, and they slam together. Now, what is it, the feeling between those two magnets?
Feynman: What do you mean, "What's the feeling between the two magnets?"
Interviewer: There's something there, isn't there? The sensation is that there's something there when you push these two magnets together.
Feynman: Listen to my question. What is the meaning when you say that there's a feeling? Of course you feel it. Now what do you want to know?
Interviewer: What I want to know is what's going on between these two bits of metal?
Feynman: They repel each other.
Interviewer: What does that mean, or why are they doing that, or how are they doing that? I think that's a perfectly reasonable question.
Feynman: Of course, it's an excellent question. But the problem, you see, when you ask why something happens, how does a person answer why something happens? For example, Aunt Minnie is in the hospital. Why? Because she went out, slipped on the ice, and broke her hip. That satisfies people. It satisfies, but it wouldn't satisfy someone who came from another planet and who knew nothing about why when you break your hip do you go to the hospital. How do you get to the hospital when the hip is broken? Well, because her husband, seeing that her hip was broken, called the hospital up and sent somebody to get her. All that is understood by people. And when you explain a why, you have to be in some framework that you allow something to be true. Otherwise, you're perpetually asking why. Why did the husband call up the hospital? Because the husband is interested in his wife's welfare. Not always, some husbands aren't interested in their wives' welfare when they're drunk, and they're angry.
And you begin to get a very interesting understanding of the world and all its complications. If you try to follow anything up, you go deeper and deeper in various directions. For example, if you go, "Why did she slip on the ice?" Well, ice is slippery. Everybody knows that, no problem. But you ask why is ice slippery? That's kinda curious. Ice is extremely slippery. It's very interesting. You say, how does it work? You could either say, "I'm satisfied that you've answered me. Ice is slippery; that explains it," or you could go on and say, "Why is ice slippery?" and then you're involved with something, because there aren't many things as slippery as ice. It's very hard to get greasy stuff, but that's sort of wet and slimy. But a solid that's so slippery? Because it is, in the case of ice, when you stand on it (they say) momentarily the pressure melts the ice a little bit so you get a sort of instantaneous water surface on which you're slipping. Why on ice and not on other things? Because water expands when it freezes, so the pressure tries to undo the expansion and melts it. It's capable of melting, but other substances get cracked when they're freezing, and when you push them they're satisfied to be solid.
Why does water expand when it freezes and other substances don't? I'm not answering your question, but I'm telling you how difficult the why question is. You have to know what it is that you're permitted to understand and allow to be understood and known, and what it is you're not. You'll notice, in this example, that the more I ask why, the deeper a thing is, the more interesting it gets. We could even go further and say, "Why did she fall down when she slipped?" It has to do with gravity, involves all the planets and everything else. Nevermind! It goes on and on. And when you're asked, for example, why two magnets repel, there are many different levels. It depends on whether you're a student of physics, or an ordinary person who doesn't know anything. If you're somebody who doesn't know anything at all about it, all I can say is the magnetic force makes them repel, and that you're feeling that force.
You say, "That's very strange, because I don't feel kind of force like that in other circumstances." When you turn them the other way, they attract. There's a very analogous force, electrical force, which is the same kind of a question, that's also very weird. But you're not at all disturbed by the fact that when you put your hand on a chair, it pushes you back. But we found out by looking at it that that's the same force, as a matter of fact (an electrical force, not magnetic exactly, in that case). But it's the same electric repulsions that are involved in keeping your finger away from the chair because it's electrical forces in minor and microscopic details. There's other forces involved, connected to electrical forces. It turns out that the magnetic and electrical force with which I wish to explain this repulsion in the first place is what ultimately is the deeper thing that we have to start with to explain many other things that everybody would just accept. You know you can't put your hand through the chair; that's taken for granted. But that you can't put your hand through the chair, when looked at more closely, why, involves the same repulsive forces that appear in magnets. The situation you then have to explain is why, in magnets, it goes over a bigger distance than ordinarily. There it has to do with the fact that in iron all the electrons are spinning in the same direction, they all get lined up, and they magnify the effect of the force 'til it's large enough, at a distance, that you can feel it. But it's a force which is present all the time and very common and is a basic force of almost - I mean, I could go a little further back if I went more technical - but on an early level I've just got to tell you that's going to be one of the things you'll just have to take as an element of the world: the existence of magnetic repulsion, or electrical attraction, magnetic attraction.
I can't explain that attraction in terms of anything else that's familiar to you. For example, if we said the magnets attract like if rubber bands, I would be cheating you. Because they're not connected by rubber bands. I'd soon be in trouble. And secondly, if you were curious enough, you'd ask me why rubber bands tend to pull back together again, and I would end up explaining that in terms of electrical forces, which are the very things that I'm trying to use the rubber bands to explain. So I have cheated very badly, you see. So I am not going to be able to give you an answer to why magnets attract each other except to tell you that they do. And to tell you that that's one of the elements in the world - there are electrical forces, magnetic forces, gravitational forces, and others, and those are some of the parts. If you were a student, I could go further. I could tell you that the magnetic forces are related to the electrical forces very intimately, that the relationship between the gravity forces and electrical forces remains unknown, and so on. But I really can't do a good job, any job, of explaining magnetic force in terms of something else you're more familiar with, because I don't understand it in terms of anything else that you're more familiar with.

Saturday, July 29, 2017

Seeding the S-Curve? The Role of Early Adopters in Diffusion

Seeding the S-Curve? The Role of Early Adopters in Diffusion. Christian Catalini & Catherine Tucker. MIT Working Paper, August 2016, http://www.imapsource.org/doi/abs/10.4071/2016DPC-TA11

In October 2014, all 4,494 undergraduates at the Massachusetts Institute of Technology were given access to Bitcoin, a decentralized digital currency. As a unique feature of the experiment, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit. Our results suggest that when natural early adopters are delayed relative to their peers, they are more likely to reject the technology. We present further evidence that this appears to be driven by identity, in that the effect occurs in situations where natural early adopters' delay relative to others is most visible, and in settings where the natural early adopters would have been somewhat unique in their tech-savvy status. We then show not only that natural early adopters are more likely to reject the technology if they are delayed, but that this rejection generates spillovers on adoption by their peers who are not natural early adopters. This suggests that small changes in the initial availability of a technology have a lasting effect on its potential: Seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive.

Monday, July 10, 2017

Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar

Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar. By Christopher T. M Clack, Staffan A. Qvist, Jay Apt,, Morgan Bazilian, Adam R. Brandt, Ken Caldeira, Steven J. Davis, Victor Diakov, Mark A. Handschy, Paul D. H. Hines, Paulina Jaramillo, Daniel M. Kammen, Jane C. S. Long, M. Granger Morgan, Adam Reed, Varun Sivaram, James Sweeney, George R. Tynan, David G. Victor, John P. Weyant, and Jay F. Whitacre. Proceedings of the National Academy of Sciences. http://www.pnas.org/content/early/2017/06/16/1610381114.full

Significance: Previous analyses have found that the most feasible route to a low-carbon energy future is one that adopts a diverse portfolio of technologies. In contrast, Jacobson et al. (2015) consider whether the future primary energy sources for the United States could be narrowed to almost exclusively wind, solar, and hydroelectric power and suggest that this can be done at “low-cost” in a way that supplies all power with a probability of loss of load “that exceeds electric-utility-industry standards for reliability”. We find that their analysis involves errors, inappropriate methods, and implausible assumptions. Their study does not provide credible evidence for rejecting the conclusions of previous analyses that point to the benefits of considering a broad portfolio of energy system options. A policy prescription that overpromises on the benefits of relying on a narrower portfolio of technologies options could be counterproductive, seriously impeding the move to a cost effective decarbonized energy system.

Abstract: A number of analyses, meta-analyses, and assessments, including those performed by the Intergovernmental Panel on Climate Change, the National Oceanic and Atmospheric Administration, the National Renewable Energy Laboratory, and the International Energy Agency, have concluded that deployment of a diverse portfolio of clean energy technologies makes a transition to a low-carbon-emission energy system both more feasible and less costly than other pathways. In contrast, Jacobson et al. [Jacobson MZ, Delucchi MA, Cameron MA, Frew BA (2015) Proc Natl Acad Sci USA 112(49):15060–15065] argue that it is feasible to provide “low-cost solutions to the grid reliability problem with 100% penetration of WWS [wind, water and solar power] across all energy sectors in the continental United States between 2050 and 2055”, with only electricity and hydrogen as energy carriers. In this paper, we evaluate that study and find significant shortcomings in the analysis. In particular, we point out that this work used invalid modeling tools, contained modeling errors, and made implausible and inadequately supported assumptions. Policy makers should treat with caution any visions of a rapid, reliable, and low-cost transition to entire energy systems that relies almost exclusively on wind, solar, and hydroelectric power.

Thursday, June 22, 2017

Implications of maternity leave choice for perceptions of working mothers

Should I stay or should I go? Implications of maternity leave choice for perceptions of working mothers. By Thekla Morgenroth & Madeline Heilman
Journal of Experimental Social Psychology, September 2017, Pages 53–56. http://www.sciencedirect.com/science/article/pii/S0022103116307788

Highlights

•    We investigate how women's decisions regarding maternity leave affects their evaluation.
•    Women who choose to take maternity leave are seen as less competent at work and less worthy of organizational rewards.
•    Women who choose not to take maternity leave are seen as worse parents and less desirable partners.
•    Perceptions of whether women prioritize family or work play an important role in these processes.

Abstract: Working mothers often find themselves in a difficult situation when trying to balance work and family responsibilities and to manage expectations about their work and parental effectiveness. Family-friendly policies such as maternity leave have been introduced to address this issue. But how are women who then make the decision to go or not go on maternity leave evaluated? We presented 296 employed participants with information about a woman who made the decision to take maternity leave or not, or about a control target for whom this decision was not relevant, and asked them to evaluate her both in the work and the family domain. We found that both decisions had negative consequences, albeit in different domains. While the woman taking maternity leave was evaluated more negatively in the work domain, the woman deciding against maternity leave was evaluated more negatively in the family domain. These evaluations were mediated by perceptions of work/family commitment priorities. We conclude that while it is important to introduce policies that enable parents to reconcile family and work demands, decisions about whether to take advantage of these policies can have unintended consequences – consequences that can complicate women's efforts to balance work and childcare responsibilities.

Women and African Americans are less influential when they express anger during group decision making

Women and African Americans are less influential when they express anger during group decision making. By Jessica Salerno, Liana Peter-Hagene & Alexander Jay
Group Processes & Intergroup Relations, http://journals.sagepub.com/doi/abs/10.1177/1368430217702967?journalCode=gpia

Abstract: Expressing anger can signal that someone is certain and competent, thereby increasing their social influence — but does this strategy work for everyone? After assessing gender- and race-based emotion stereotypes (Study 1), we assessed the effect of expressing anger on social influence during group decision making as a function of gender (Studies 2–3) and race (Study 3). Participants took part in a computerized mock jury decision-making task, during which they read scripted comments ostensibly from other jurors. A “holdout” juror always disagreed with the participant and four other confederate group members. We predicted that the contextual factor of who expressed emotion would trump what was expressed in determining whether anger is a useful persuasion strategy. People perceived all holdouts expressing anger as more emotional than holdouts who expressed identical arguments without anger. Yet holdouts who expressed anger (versus no anger) were less effective and influential when they were female (but not male, Study 2) or Black (but not White, Study 3) — despite having expressed identical arguments and anger. Although anger expression made participants perceive the holdouts as more emotional regardless of race and gender, being perceived as more emotional was selectively used to discredit women and African Americans. These diverging consequences of anger expression have implications for societally important group decisions, including life-and-death decisions made by juries.

Not taking responsibility: Equity trumps efficiency in allocation decisions

Not taking responsibility: Equity trumps efficiency in allocation decisions. By  Gordon-Hecker, Tom; Rosensaft-Eshel, Daniela; Pittarello, Andrea; Shalvi, Shaul; Bereby-Meyer, Yoella
Journal of Experimental Psychology: General, Vol 146(6), Jun 2017, 771-775. http://dx.doi.org/10.1037/xge0000273

Abstract: When allocating resources, equity and efficiency may conflict. When resources are scarce and cannot be distributed equally, one may choose to destroy resources and reduce societal welfare to maintain equity among its members. We examined whether people are averse to inequitable outcomes per se or to being responsible for deciding how inequity should be implemented. Three scenario-based experiments and one incentivized experiment revealed that participants are inequity responsibility averse: when asked to decide which of the 2 equally deserving individuals should receive a reward, they rather discarded the reward than choosing who will get it. This tendency diminished significantly when participants had the possibility to use a random device to allocate the reward. The finding suggests that it is more difficult to be responsible for the way inequity is implemented than to create inequity per se.

Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar

Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar. By Christopher T. M Clack, Staffan A. Qvist, Jay Apt,, Morgan Bazilian, Adam R. Brandt, Ken Caldeira, Steven J. Davis, Victor Diakov, Mark A. Handschy, Paul D. H. Hines, Paulina Jaramillo, Daniel M. Kammen, Jane C. S. Long, M. Granger Morgan, Adam Reed, Varun Sivaram, James Sweeney, George R. Tynan, David G. Victor, John P. Weyant, and Jay F. Whitacre. Proceedings of the National Academy of Sciences. http://www.pnas.org/content/early/2017/06/16/1610381114.full

Significance: Previous analyses have found that the most feasible route to a low-carbon energy future is one that adopts a diverse portfolio of technologies. In contrast, Jacobson et al. (2015) consider whether the future primary energy sources for the United States could be narrowed to almost exclusively wind, solar, and hydroelectric power and suggest that this can be done at “low-cost” in a way that supplies all power with a probability of loss of load “that exceeds electric-utility-industry standards for reliability”. We find that their analysis involves errors, inappropriate methods, and implausible assumptions. Their study does not provide credible evidence for rejecting the conclusions of previous analyses that point to the benefits of considering a broad portfolio of energy system options. A policy prescription that overpromises on the benefits of relying on a narrower portfolio of technologies options could be counterproductive, seriously impeding the move to a cost effective decarbonized energy system.

Abstract: A number of analyses, meta-analyses, and assessments, including those performed by the Intergovernmental Panel on Climate Change, the National Oceanic and Atmospheric Administration, the National Renewable Energy Laboratory, and the International Energy Agency, have concluded that deployment of a diverse portfolio of clean energy technologies makes a transition to a low-carbon-emission energy system both more feasible and less costly than other pathways. In contrast, Jacobson et al. [Jacobson MZ, Delucchi MA, Cameron MA, Frew BA (2015) Proc Natl Acad Sci USA 112(49):15060–15065] argue that it is feasible to provide “low-cost solutions to the grid reliability problem with 100% penetration of WWS [wind, water and solar power] across all energy sectors in the continental United States between 2050 and 2055”, with only electricity and hydrogen as energy carriers. In this paper, we evaluate that study and find significant shortcomings in the analysis. In particular, we point out that this work used invalid modeling tools, contained modeling errors, and made implausible and inadequately supported assumptions. Policy makers should treat with caution any visions of a rapid, reliable, and low-cost transition to entire energy systems that relies almost exclusively on wind, solar, and hydroelectric power.

Monday, June 12, 2017

Less than a third of the 65 Chinese highway & rail projects examined were “genuinely economically productive.”

China’s New Bridges: Rising High, but Buried in Debt. By Chris Buckley
TNYT, Jun 10 2017
China has built hundreds of dazzling new bridges, including the longest and highest, but many have fostered debt and corruption.https://www.nytimes.com/2017/06/10/world/asia/china-bridges-infrastructure.html

“The amount of high bridge construction in China is just insane,” said Eric Sakowski, an American bridge enthusiast who runs a website on the world’s highest bridges. “China’s opening, say, 50 high bridges a year, and the whole of the rest of the world combined might be opening 10.”

Of the world’s 100 highest bridges, 81 are in China, including some unfinished ones, according to Mr. Sakowski’s data. (The Chishi Bridge ranks 162nd.)

China also has the world’s longest bridge, the 102-mile Danyang-Kunshan Grand Bridge, a high-speed rail viaduct running parallel to the Yangtze River, and is nearing completion of the world’s longest sea bridge, a 14-mile cable-stay bridge skimming across the Pearl River Delta, part of a 22-mile bridge and tunnel crossing that connects Hong Kong and Macau with mainland China.

The country’s expressway growth has been compared to that of the United States in the 1950s, when the Interstate System of highways got underway, but China is building at a remarkable clip. In 2016 alone, China added 26,100 bridges on roads, including 363 “extra large” ones with an average length of about a mile, government figures show.

[...]

A study that Mr. Ansar helped write [https://academic.oup.com/oxrep/article/32/3/360/1745622/Does-infrastructure-investment-lead-to-economic] said fewer than a third of the 65 Chinese highway and rail projects he examined were “genuinely economically productive,” while the rest contributed more to debt than to transportation needs. [...]

In the country that built the Great Wall, major feats of infrastructure have long been a point of pride. China has produced engineering coups like the world’s highest railway, from Qinghai Province to Lhasa, Tibet; the world’s largest hydropower project, the Three Gorges Dam; and an 800-mile canal from the Yangtze River system to Beijing that is part of the world’s biggest water transfer project.
Leaders defend the infrastructure spree as crucial to China’s development.

“It’s very important to improve transport and other infrastructure so that impoverished regions can escape poverty and prosper,” President Xi Jinping said while visiting the spectacular, recently opened Aizhai Bridge in Hunan in 2013. “We must do more of this and keep supporting it.”

Indeed, the new roads and railways have proved popular, especially in wealthier areas with many businesses and heavy commuter traffic. And even empty infrastructure often has a way of eventually filling up, as early critics of the country’s high-speed rail and the Pudong skyscrapers in Shanghai have discovered.

Thursday, June 8, 2017

The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network

The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network. By Ferdinand Rauch, Shaun Larcom, Tim Willems
https://www.economics.ox.ac.uk/Department-of-Economics-Discussion-Paper-Series/the-benefits-of-forced-experimentation-striking-evidence-from-the-london-underground-network

Abstract: We estimate that a significant fraction of commuters on the London underground do not travel their optimal route. Consequently, a tube strike (which forced many commuters to experiment with new routes) taught commuters about the existence of superior journeys -- bringing about lasting changes in behaviour. This effect is stronger for commuters who live in areas where the tube map is more distorted, thereby pointing towards the importance of informational imperfections. We argue that the information produced by the strike improved network-efficiency. Search costs are unlikely to explain the suboptimal behaviour. Instead, individuals seem to under-experiment in normal times, as a result of which constraints can be welfare-improving.

Part of the series Department of Economics Discussion Paper Series (Ref: 755 )

JEL Reference: D83,L91,R41

Keywords: Experimentation, Learning, Optimization, Rationality, Search

Need for uniqueness motivates conspiracy beliefs

Imhoff, R., and Lamberty, P. K. (2017) Too special to be duped: Need for uniqueness motivates conspiracy beliefs. Eur. J. Soc. Psychol., doi: 10.1002/ejsp.2265
http://onlinelibrary.wiley.com/doi/10.1002/ejsp.2265/full

Abstract: Adding to the growing literature on the antecedents of conspiracy beliefs, this paper argues that a small part in motivating the endorsement of such seemingly irrational beliefs is the desire to stick out from the crowd, the need for uniqueness. Across three studies, we establish a modest but robust association between the self-attributed need for uniqueness and a general conspirational mindset (conspiracy mentality) as well as the endorsement of specific conspiracy beliefs. Following up on previous findings that people high in need for uniqueness resist majority and yield to minority influence, Study 3 experimentally shows that a fictitious conspiracy theory received more support by people high in conspiracy mentality when this theory was said to be supported by only a minority (vs. majority) of survey respondents. Together, these findings support the notion that conspiracy beliefs can be adopted as a means to attain a sense of uniqueness.

Monday, June 5, 2017

Healthy offspring from freeze-dried mouse spermatozoa held on the International Space Station for 9 months

Healthy offspring from freeze-dried mouse spermatozoa held on the International Space Station for 9 months
Proceedings of the National Academy of Sciences of the United States of America
http://www.pnas.org/content/early/2017/05/16/1701425114.full

Significance: Radiation on the International Space Station (ISS) is more than 100 times stronger than at the Earth’s surface, and at levels that can cause DNA damage in somatic cell nuclei. The damage to offspring caused by this irradiation in germ cells has not been examined, however. Here we preserved mouse spermatozoa on the ISS for 9 mo. Although sperm DNA was slightly damaged during space preservation, it could be repaired by the oocyte cytoplasm and did not impair the birth rate or normality of the offspring. Our results demonstrate that generating human or domestic animal offspring from space-preserved spermatozoa is a possibility, which should be useful when the “space age” arrives.

Abstract: If humans ever start to live permanently in space, assisted reproductive technology using preserved spermatozoa will be important for producing offspring; however, radiation on the International Space Station (ISS) is more than 100 times stronger than that on Earth, and irradiation causes DNA damage in cells and gametes. Here we examined the effect of space radiation on freeze-dried mouse spermatozoa held on the ISS for 9 mo at –95 °C, with launch and recovery at room temperature. DNA damage to the spermatozoa and male pronuclei was slightly increased, but the fertilization and birth rates were similar to those of controls. Next-generation sequencing showed only minor genomic differences between offspring derived from space-preserved spermatozoa and controls, and all offspring grew to adulthood and had normal fertility. Thus, we demonstrate that although space radiation can damage sperm DNA, it does not affect the production of viable offspring after at least 9 mo of storage on the ISS.

Sunday, June 4, 2017

From Existential to Social Understandings of Risk - Examining Gender Differences in Nonreligion

From Existential to Social Understandings of Risk - Examining Gender Differences in Nonreligion. By Penny Edgell, Jacqui Frost, Evan Stewart
http://journals.sagepub.com/doi/abs/10.1177/2329496516686619?ai=1gvoi&mi=3ricys&af=R

Abstract: Across many social contexts, women are found to be more religious than men. Risk preference theory proposes that women are less likely than men to accept the existential risks associated with nonbelief. Building on previous critiques of this theory, we argue that the idea of risk is relevant to understanding the relationship between gender and religiosity if risk is understood not as existential, but as social. The research on existential risk focuses on religious identification as solely a matter of belief; as part of the movement away from this cognitivist bias, we develop the concept of social risk to theorize the ways that social location and differential levels of power and privilege influence women’s nonreligious choices. We show that women’s nonreligious preferences in many ways mirror those of other marginalized groups, including nonwhites and the less educated. We argue that nonreligion is socially risky, that atheism is more socially risky than other forms of nonreligion, and that women and members of other marginalized groups avoid the most socially risky forms of nonreligion.

A Virtual Out-of-Body Experience Reduces Fear of Death

A Virtual Out-of-Body Experience Reduces Fear of Death. By Pierre Bourdin et al.
http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0169343
PLoS ONE, January 2017

Abstract: Immersive virtual reality can be used to visually substitute a person’s real body by a life-sized virtual body (VB) that is seen from first person perspective. Using real-time motion capture the VB can be programmed to move synchronously with the real body (visuomotor synchrony), and also virtual objects seen to strike the VB can be felt through corresponding vibrotactile stimulation on the actual body (visuotactile synchrony). This setup typically gives rise to a strong perceptual illusion of ownership over the VB. When the viewpoint is lifted up and out of the VB so that it is seen below this may result in an out-of-body experience (OBE). In a two-factor between-groups experiment with 16 female participants per group we tested how fear of death might be influenced by two different methods for producing an OBE. In an initial embodiment phase where both groups experienced the same multisensory stimuli there was a strong feeling of body ownership. Then the viewpoint was lifted up and behind the VB. In the experimental group once the viewpoint was out of the VB there was no further connection with it (no visuomotor or visuotactile synchrony). In a control condition, although the viewpoint was in the identical place as in the experimental group, visuomotor and visuotactile synchrony continued. While both groups reported high scores on a question about their OBE illusion, the experimental group had a greater feeling of disownership towards the VB below compared to the control group, in line with previous findings. Fear of death in the experimental group was found to be lower than in the control group. This is in line with previous reports that naturally occurring OBEs are often associated with enhanced belief in life after death.

Saturday, June 3, 2017

Insurance policy specifically for self-inflicted liver damage

China’s Zhongan sees scope for offbeat insurance.
https://www.ft.com/content/bee51a52-accd-11e6-9cb3-bb8207902122
Financial Times
Medical insurance often becomes invalid if the customer is drunk. But during the football World Cup in 2014, Shanghai-based Zhongan Insurance turned that rule upside down by offering Chinese football fans a policy specifically for self-inflicted liver damage.

It cost less than $1 and covered sports enthusiasts against alcohol poisoning for 30 days — paying out up to Rmb2,000 ($290) for hospital fees. It soon came to be known as “watching-football-drinking-too-much” insurance.

This has not been Zhongan’s only foray into more specialist areas of China’s insurancemarket. Another of its policies, called “high heat”, reimburses customers when the temperature hits 37°C. Another insures against flight delays — and, in many cases, pays out while the customer is still waiting in the departure lounge.

Zhongan has sold 5800m policies to 460m customers. This has quickly translated into profit.

Determinants of financial outcomes and choices: the role of noncognitive abilities

Understanding the determinants of financial outcomes and choices: the role of noncognitive abilities, Gianpaolo Parise and Kim Peijnenburg
BIS Working Papers No 640. May 2017
http://www.bis.org/publ/work640.htm

We explore how financial distress and choices are affected by noncognitive abilities. Our measures stem from research in psychology and economics. In a representative panel of households, we find that people in the bottom decile of noncognitive abilities are five times more likely to experience financial distress compared to those in the top decile. Relatedly, individuals with lower noncognitive abilities make financial choices that increase their likelihood of distress: They are less likely to plan for retirement and save, and more likely to buy impulsively and to have unsecured debt. Causality is shown using childhood trauma as an instrument.

Do Globalization and Free Markets Drive Obesity among Children and Youth? An Empirical Analysis, 1990–2013

Do Globalization and Free Markets Drive Obesity among Children and Youth? An Empirical Analysis, 1990–2013
http://www.tandfonline.com/doi/abs/10.1080/03050629.2017.1311259?journalCode=gini20&

ABSTRACT: Scholars of public health identify globalization as a major cause of obesity. Free markets are blamed for spreading high calorie, nutrient-poor diets, and sedentary lifestyles across the globe. Global trade and investment agreements apparently curtail government action in the interest of public health. Globalization is also blamed for raising income inequality and social insecurities, which contribute to “obesogenic” environments. Contrary to recent empirical studies, this study demonstrates that globalization and several component parts, such as trade openness, FDI flows, and an index of economic freedom, reduce weight gain and obesity among children and youth, the most likely age cohort to be affected by the past three decades of globalization and attendant lifestyle changes. The results suggest strongly that local-level factors possibly matter much more than do global-level factors for explaining why some people remain thin and others put on weight. The proposition that globalization is homogenizing cultures across the globe in terms of diets and lifestyles is possibly exaggerated. The results support the proposition that globalized countries prioritize health because of the importance of labor productivity and human capital due to heightened market competition, ceteris paribus, even if rising incomes might drive high consumption.

KEYWORDS: Globalization, obesity, trade and FDI, economic freedom

Friday, June 2, 2017

Alemania reinventa la crisis energética. Por Holman W. Jenkins, Jr.


Alemania reinventa la crisis energética. Por Holman W. Jenkins, Jr.
http://online.wsj.com/news/articles/SB100014240527023044482045791857 20802195590
Wall Street Journal, Nov. 8, 2013 6:28 p.m. ET

ObamaCare no es el único tren en camino de descarrilar que tenemos  ahora. Como Mao apremiando a los campesinos para que fundieran sus cacharros, sartenes y útiles de labranza para convertir a China en un coloso  del acero de la noche a la mañana, Alemania repartía alegremente subsidios para alentar a los ciudadanos y granjeros a instalar  paneles solares y molinos de viento para luego vender la energía  resultante a las compañías eléctricas a precios inflados. El éxito  —Alemania obtiene un 25% de su energía de las renovables— ha  resultado ser un desastre.

Mientras los alemanes se apresuran a hacerse con su dinero fácil, la  producción de dióxido de carbono ha aumentado, no disminuido, porque las compañías, privadas de capital, han pasado a quemar carbón  americano barato para proveer de la necesaria energía cuando el  viento y el sol nos fallan.

Debido a que sol y viento son intermitentes y la red eléctrica está  pobremente preparada para acomodar estas fuentes, los apagones y las  reducciones de suministro amenazan en este invierno.

Como las facturas las pagan hogares y empresas, los precios de la  electricidad son el triple que en los EE UU. Un pánico apremiante es el del empleo, ya que industrias de gran aportación se dirigen a EE UU  para aprovechar la energía barata que ha producido la revolución de  las arenas bituminosas y los esquistos. El máximo responsable  energético de Europa habla ya francamente de la  "desindustrialización de Alemania".

En UK, donde la política pública ha sido casi tan generosa con las  renovables, "Está bien ser muy, muy verde, pero no si estás  interesado en la fabricación", según queja de un prominente CEO.

La gran virtud de la democracia es que no sigue con ciertos planes  hasta el precipicio, pero los mecanismos normales de ajuste están  agarrotados por el hecho de que el desastre energético de Europa  implica al entero espectro político.

Ed Miliband, líder del Partido Laborista de UK, ha fijado el tema de  las elecciones del próximo año cuando prometió recientemente  congelar los precios de la energía si se le elegía. Pero los  laboristas no van a abandonar los subsidios solares y eólicos que  crearon ellos mismos. Quieren dejarlos grabados en piedra, pasando  los costes a las empresas. En Alemania, la conservadora Angela  Merkel se adhirió completamente a las posiciones económicas sobre  energía de la oposición tras Fukushima, dejando a los electores  alarmados sobre los precios de la energía sin lugar al que tornar en  las elecciones de septiembre excepto a Angela Merkel, quien de forma  vaga mostró alguna moderación sobre la energiewende (revolución  energética) que lanzó y continúa liderando.

Un infrecuente destello de raciocinio ha partido en realidad del  probable socio de coalición de Angela Merkel, el SPD, autor de la  ley original sobre energías verdes, cuyo portavoz dice ahora:  "Necesitamos asegurar que la energía renovable es asequible. Y  necesitamos terminar con la idea de que podemos salirnos  simultáneamente de nucleares y el carbón. No va a funcionar."

Es tentador asumir que los políticos europeos eran feligreses de la  iglesia del calentamiento global. Pero más importante es su apego a  la ideología del agotamiento de recursos, que les convenció de haber  elegido un ganador en esta idea porque estaba garantizado que los  precios de los combustibles fósiles harían parecer baratos a los de  la energía verde.

"Cuanta más gente consuma petróleo y carbón, más subirá el precio,  pero cuanta más gente consuma energías renovables, más bajará su  precio", explicó el asesor energético de Angela Merkel.

He aquí una idea que parece ser impermeable a la experiencia y que  es parte del bagaje de todo político que pudiera ser elegido en  nuestro mundo. "Es absolutamente cierto que la demanda [de energías  fósiles] subirá mucho más rápido que el suministro. Ese es un  hecho", explicó el presidente Obama en 2011. Los EE UU "no pueden  permitirse apostar nuestra prosperidad a largo plazo a un recurso  que con el tiempo se agotará."

El Sr. Obama mencionó los fósiles no convencionales exactamente una  vez en su discurso — y solo para decir que también se agotarían.

Si todo esto fuera cierto, Europa no habría llegado a sus presentes  trabajos. Esta es la realidad: la revolución de los fósiles no  convencionales es menos revolucionaria de lo que parece. Ha sacudido  los errores comunes solo porque ha sucedido en las mismas narices de  los americanos, en áreas pobladas en que se asumía que los  "recursos" se habían extraído y transportado hace mucho.

De hecho, los depósitos de hidrocarburos que hay en el mundo son  verdaderamente vastos, incluyendo entre ellos cantidades inimaginables de hidratos de metano . El desafío es el tecnológico y económico de buscar el acceso a un determinado recurso  a un precio asequible — un desafío desde que se usaban trapos para  empaparlos en petróleo de manantiales naturales. Durante ciento  cincuenta años, el precio del barril de petróleo ha fluctuado entre  $10 y $100 (en dólares de 2011), un rango suficiente para encontrar  nuevas reservas cada vez que se quería requerían con objeto de  mantener a los hidrocarburos como fuente de energía de precio  competitivo.

La crisis energética europea es muy parecida a la nuestra de hace 40  años — autoinfligida. El sueño de Europa dejó de ser sostenible al  minuto de que los precios de la energía empezaran a caer en un  competidor comercial importante como los EE UU. LA gran pregunta ahora es cuán lejos irá la secudida política cuando toda la élite está implicada en un insatisfactorio experimento energético, que inevitablemente se ha visto envuelta en el desencanto del público con otro projecto fracasado de la élite, la Unión Europea.

Va a ser fascinante también la suerte de los shales europeos. En Europa, el gobierno, no los propietarios, controla y se beneficia de los recursos minerales, creando la política de suma zero en lo referente a recusos que han hecho al Oriente Medio un parangón de estabilidad y progreso. ¿Y el calentamiento global? Por suerte la respuesta es fácil. Los votantes europeos se van a acercar al punto en que están los americanos, dándose cuenta de que abjurar de la energía barata no hará nada por los niveles de CO2 (y aun menos por el clima) mientras otros no abjuren de la energía barata también.


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Germany Reinvents the Energy Crisis
A love affair with renewables brings high prices, potential  blackouts and worries about 'deindustrialization.'
By Holman W. Jenkins, Jr.
http://online.wsj.com/news/articles/SB100014240527023044482045791857 20802195590
Wall Street Journal, Nov. 8, 2013 6:28 p.m. ET

ObamaCare isn't the only policy train wreck in progress. Like Mao  urging peasants to melt down their pots, pans and farm tools to turn  China into a steel-producing superpower overnight, Germany dished  out subsidies to encourage homeowners and farmers to install solar  panels and windmills and sell energy back to the power company at  inflated prices. Success—Germany now gets 25% of its power from  renewables—has turned out to be a disaster.

As Germans rush to grab this easy money, carbon dioxide output has  risen, not fallen, because money-strapped utilities have switched to  burning cheap American coal to provide the necessary standby power  when wind and sun fail.

Because the sun and wind are intermittent and the power grid is  poorly arranged to accommodate them, brownouts and blackouts  threaten this winter.

Because the bills are paid by households and businesses, electricity  rates are triple those in the United States. An immediate panic is  jobs, as prized industries head to the U.S. for cheaper energy  unleashed by the shale revolution. Europe's top energy official now  speaks frankly of the "deindustrialization in Germany."

In Britain, where policy has been nearly as generous to renewables,  "It's fine being very, very green, but not if you're interested in  manufacturing," complains a prominent CEO.
Enlarge Image

Wind turbines stand behind a solar power park near Werder, Germany.  Getty Images

Democracy's great virtue is that it doesn't follow schemes off a  cliff, but the normal adjustment mechanisms are hampered by the fact  that Europe's energy disaster implicates the entire political  spectrum.

Ed Miliband, leader of Britain's Labour Party, set the theme for  next year's British election when he recently promised to freeze  energy prices if elected. But Labour isn't about to disown the solar  and wind subsidies it created. It wants to soldier on, shifting the  cost to business. In Germany, conservative Angela Merkel embraced  the opposition's energy economics wholesale after Fukushima, leaving  voters who are alarmed about energy prices no place to turn in  September's election except Angela Merkel, who vaguely indicated  some moderation of the energiewende (energy revolution) she launched  and continues to champion.

An unwonted glimmer of reason has actually come from Mrs. Merkel's  likely Social Democrat coalition partner, author of Germany's  original green energy law, whose spokesman now says: "We need to  ensure that renewable energy is affordable. And we need to put an  end to the idea that we can pull out of nuclear and coal  simultaneously. This won't work."

It's tempting to assume Europe's politicians were praying in the  church of global warming. But more important is their subscription  to resource-depletion ideology, which convinced them they'd picked a  political winner because rising fossil fuel prices were guaranteed  to make green energy look cheap in comparison.

"When more people consume oil and coal, the price will go up, but  when more people consume renewable energy, the price of it will go  down," explained Ms. Merkel's top energy adviser.

We have here an idea seemingly impervious to experience and part of  the mental baggage of every politician likely to get elected in our  world. "It is absolutely certain that [fossil energy] demand will go  up a lot faster than supply. It's just a fact," President Obama  explained in 2011. The U.S. "cannot afford to bet our long-term  prosperity on a resource that will eventually run out."

Mr. Obama mentioned shale exactly once in his speech—and only to say  shale would run out too.

If all this were true, Europe wouldn't be in its present fix. Here's  the real truth: The shale revolution is less revolutionary than it  seems. It has shocked settled misconceptions only because it  happened under the noses of Americans, in populated areas where the  casual assumption was that "resources" would long ago have been dug  out and carted away.

In fact, the world's store of fossil hydrocarbons is truly vast,  including almost unimaginable quantities of methane hydrates. The  challenge is the technological and economic one of getting access to  a given resource at an affordable price—a challenge ever since men  used rags to soak up oil from natural seeps. For 150 years, the  price of a barrel of oil has fluctuated between $10 and $100 (in  2011 dollars), a range that has been sufficient to call forth new  reserves and feedstocks whenever needed to maintain hydrocarbons as  a source of competitively priced energy.

Europe's energy crisis is a lot like ours of 40 years ago—self- inflicted. Europe's dream was untenable the minute energy prices  began falling in a major trade competitor like the United States.  The big question now is how far will the political upheaval go when  an entire elite is implicated in an unsatisfactory energy  experiment, which inevitably has become wrapped up in public  disappointment with another failed elite project, the European Union  itself.

Fascinating too will be the fate of Europe's shale. In Europe,  government, not landowners, controls and benefits from mineral  resources, creating the zero-sum resource politics that have made  the Mideast a paragon of stability and civil progress. What about  global warming? At least that answer is easier. European voters are  coming out where Americans have, realizing that foreswearing cheap  energy will do nothing for CO2 levels (and even less for climate) as  long as others aren't foreswearing cheap energy too.

Sunday, April 17, 2016

The Great Recession Blame Game - Banks took the heat, but it was Washington that propped up subprime debt and then stymied recovery

The Great Recession Blame Game

Banks took the heat, but it was Washington that propped up subprime debt and then stymied recovery.

By Phil Gramm and Michael Solon
WSJ, April 15, 2016 6:09 p.m. ET

When the subprime crisis broke in the 2008 presidential election year, there was little chance for a serious discussion of its root causes. Candidate Barack Obama weaponized the crisis by blaming greedy bankers, unleashed when financial regulations were “simply dismantled.” He would go on to blame them for taking “huge, reckless risks in pursuit of quick profits and massive bonuses.”
That mistaken diagnosis was the justification for the Dodd-Frank Act and the stifling regulations that shackled the financial system, stunted the recovery and diminished the American dream.

In fact, when the crisis struck, banks were better capitalized and less leveraged than they had been in the previous 30 years. The FDIC’s reported capital-to-asset ratio for insured commercial banks in 2007 was 10.2%—76% higher than it was in 1978. Federal Reserve data on all insured financial institutions show the capital-to-asset ratio was 10.3% in 2007, almost double its 1984 level, and the biggest banks doubled their capitalization ratios. On Sept. 30, 2008, the month Lehman failed, the FDIC found that 98% of all FDIC institutions with 99% of all bank assets were “well capitalized,” and only 43 smaller institutions were undercapitalized.

In addition, U.S. banks were by far the best-capitalized banks in the world. While the collapse of 31 million subprime mortgages fractured financial capital, the banking system in the 30 years before 2007 would have fared even worse under such massive stress.

Virtually all of the undercapitalization, overleveraging and “reckless risks” flowed from government policies and institutions. Federal regulators followed international banking standards that treated most subprime-mortgage-backed securities as low-risk, with lower capital requirements that gave banks the incentive to hold them. Government quotas forced Fannie Mae and Freddie Mac to hold ever larger volumes of subprime mortgages, and politicians rolled the dice by letting them operate with a leverage ratio of 75 to one—compared with Lehman’s leverage ratio of 29 to one.

Regulators also eroded the safety of the financial system by pressuring banks to make subprime loans in order to increase homeownership. After eight years of vilification and government extortion of bank assets, often for carrying out government mandates, it is increasingly clear that banks were more scapegoats than villains in the subprime crisis.

Similarly, the charge that banks had been deregulated before the crisis is a myth. From 1980 to 2007 four major banking laws—the Competitive Equality Banking Act (1987), the Financial Institutions, Reform, Recovery and Enforcement Act (1989), the Federal Deposit Insurance Corporation Improvement Act (1991), and Sarbanes-Oxley (2002)—undeniably increased bank regulations and reporting requirements. The charge that financial regulation had been dismantled rests almost solely on the disputed effects of the 1999 Gramm-Leach-Bliley Act (GLBA).

Prior to GLBA, the decades-old Glass-Steagall Act prohibited deposit-taking, commercial banks from engaging in securities trading. GLBA, which was signed into law by President Bill Clinton, allowed highly regulated financial-services holding companies to compete in banking, insurance and the securities business. But each activity was still required to operate separately and remained subject to the regulations and capital requirements that existed before GLBA. A bank operating within a holding company was still subject to Glass-Steagall (which was not repealed by GLBA)—but Glass-Steagall never banned banks from holding mortgages or mortgage-backed securities in the first place.

GLBA loosened federal regulations only in the narrow sense that it promoted more competition across financial services and lowered prices. When he signed the law, President Clinton said that “removal of barriers to competition will enhance the stability of our financial system, diversify their product offerings and thus their sources of revenue.” The financial crisis proved his point. Financial institutions that had used GLBA provisions to diversify fared better than those that didn’t.

Mr. Clinton has always insisted that “there is not a single solitary example that [GLBA] had anything to do with the financial crisis,” a conclusion that has never been refuted. When asked by the New York Times in 2012, Sen. Elizabeth Warren agreed that the financial crisis would not have been avoided had GLBA never been adopted. And President Obama effectively exonerated GLBA from any culpability in the financial crisis when, with massive majorities in both Houses of Congress, he chose not to repeal GLBA. In fact, Dodd-Frank expanded GLBA by using its holding-company structure to impose new regulations on systemically important financial institutions.

Another myth of the financial crisis is that the bailout was required because some banks were too big to fail. Had the government’s massive injection of capital—the Troubled Asset Relief Program, or TARP—been only about bailing out too-big-to-fail financial institutions, at most a dozen institutions might have received aid. Instead, 954 financial institutions received assistance, with more than half the money going to small banks.

Many of the largest banks did not want or need aid—and Lehman’s collapse was not a case of a too-big-to-fail institution spreading the crisis. The entire financial sector was already poisoned by the same subprime assets that felled Lehman. The subprime bailout occurred because the U.S. financial sector was, and always should be, too important to be allowed to fail.

Consider that, according to the Congressional Budget Office, bailing out the depositors of insolvent S&Ls in the 1980s on net cost taxpayers $258 billion in real 2009 dollars. By contrast, of the $245 billion disbursed by TARP to banks, 67% was repaid within 14 months, 81% within two years and the final totals show that taxpayers earned $24 billion on the banking component of TARP. The rapid and complete payback of TARP funds by banks strongly suggests that the financial crisis was more a liquidity crisis than a solvency crisis.

What turned the subprime crisis and ensuing recession into the “Great Recession” was not a failure of policies that addressed the financial crisis. Instead, it was the failure of subsequent economic policies that impeded the recovery.

The subprime crisis was largely the product of government policy to promote housing ownership and regulators who chose to promote that social policy over their traditional mission of guaranteeing safety and soundness. But blaming the financial crisis on reckless bankers and deregulation made it possible for the Obama administration to seize effective control of the financial system and put government bureaucrats in the corporate boardrooms of many of the most significant U.S. banks and insurance companies.

Suffocating under Dodd-Frank’s “enhanced supervision,” banks now focus on passing stress tests, writing living wills, parking capital at the Federal Reserve, and knowing their regulators better than they know their customers. But their ability to help the U.S. economy turn dreams into businesses and jobs has suffered.

In postwar America, it took on average just 2 1/4 years to regain in each succeeding recovery all of the real per capita income that had been lost in the previous recession. At the current rate of the Obama recovery, it will take six more years, 14 years in all, for the average American just to earn back what he lost in the last recession. Mr. Obama’s policies in banking, health care, power generation, the Internet and so much else have Europeanized America and American exceptionalism has waned—sadly proving that collectivism does not work any better in America than it has ever worked anywhere else.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.

 

Tuesday, November 10, 2015

Yale's Little Robespierres - Students berate faculty who try to defend free speech

Yale's Little Robespierres. WSJ Editorial
http://www.wsj.com/articles/yales-little-robespierres-1447115476
Students berate faculty who try to defend free speech.WSJ, Nov. 9, 2015 7:31 p.m. ET

Someone at Yale University should have dressed up as Robespierre for Halloween, as its students seem to have lost their minds over what constitutes a culturally appropriate costume. Identity and grievance politics keeps hitting new lows on campus, and now even liberal professors are being consumed by the revolution.

On Oct. 28 Yale Dean Burgwell Howard and Yale’s Intercultural Affairs Committee blasted out an email advising students against “culturally unaware” Halloween costumes, with self-help questions such as: “If this costume is meant to be historical, does it further misinformation or historical and cultural inaccuracies?” Watch out for insensitivity toward “religious beliefs, Native American/Indigenous people, Socio-economic strata, Asians, Hispanic/Latino, Women, Muslims, etc.” In short, everyone.

Who knew Yale still employed anyone willing to doubt the costume wardens? But in response to the dean’s email, lecturer in early childhood education Erika Christakis mused to the student residential community she oversees with her husband, Nicholas, a Yale sociologist and physician: “I don’t wish to trivialize genuine concerns,” but she wondered if colleges had morphed into “places of censure and prohibition.”

And: “Nicholas says, if you don’t like a costume someone is wearing, look away, or tell them you are offended. Talk to each other. Free speech and the ability to tolerate offence are the hallmarks of a free and open society.”

Some 750 Yale students, faculty, alumni and others signed a letter saying Ms. Christakis’s “jarring” email served to “further degrade marginalized people,” as though someone with a Yale degree could be marginalized in America. Students culturally appropriated a Puritan shaming trial and encircled Mr. Christakis on a lawn, cursing and heckling him to quit. “I stand behind free speech,” he told the mob.

Hundreds of protesters also turned on Jonathan Holloway, Yale’s black dean, demanding to know why the school hadn’t addressed allegations that a black woman had been kept out of a fraternity party. Fragile scholars also melted down over a visiting speaker who made a joke about Yale’s fracas while talking at a conference sponsored by the school’s William F. Buckley, Jr. program focused on . . . the future of free speech.

The episode reminds us of when Yale alumnus Lee Bass in 1995 asked the university to return his $20 million donation. Mr. Bass had hoped to seed a curriculum in Western civilization, but Yale’s faculty ripped the idea as white imperialism, and he requested a refund. Two decades later the alternative to Western civilization is on display, and it seems to be censorship.

According to a student reporting for the Washington Post, Yale president Peter Salovey told minority students in response to the episode that “we failed you.” That’s true, though not how he means it. The failure is that elite colleges are turning out ostensible leaders who seem to have no idea why America’s Founders risked extreme discomfort—that is, death—for the right to speak freely.

Saturday, May 10, 2014

China moves to free-market pricing for pharmaceuticals, after price controls led to quality problems & shortages

China Scraps Price Caps on Low-Cost Drugs. By Laurie Burkitt
Move Comes After Some Manufacturers Cut Corners on Production
Wall Street Journal, May 8, 2014 1:15 a.m.
http://online.wsj.com/news/articles/SB10001424052702304655304579548933340544044

Beijing

China will scrap caps on retail prices for low-cost medicine and is moving toward free-market pricing for pharmaceuticals, after price controls led to drug quality problems and shortages in the country.

The move could be a welcome one for global pharmaceutical companies, which have been under scrutiny in China since last year for their sales and marketing practices.

The world's most populous country is the third-largest pharmaceutical market, behind the U.S. and Japan, according to data from consulting firm McKinsey & Co., but Beijing has used price caps and other measures to keep medical care affordable.

Price caps will be lifted for 280 medicines made by Western drug companies and 250 Chinese patent drugs, the National Development and Reform Commission, China's economic planning body, said Thursday. The move will affect prices on drugs such as antibiotics, painkillers and vitamins, it said.

The statement said local governments will have until July 1 to unveil details of the plan. In China, local authorities have broad oversight over how drugs are distributed to local hospitals.

Aiming to keep prices low, some manufacturers cut corners on production, exposing consumers to safety risks, said Helen Chen, a Shanghai-based partner and director of L.E.K. Consulting. Many also closed production, creating shortages of low-cost drugs such as thyroid medication.

"It means the [commission] recognizes that forcing prices down and focusing purely on price does sacrifice drug safety, quality and availability," said Ms. Chen.

Several drug makers, including GlaxoSmithKline PLC, didn't immediately respond to requests for comment. Spokeswomen for Sanofi and Pfizer Inc. said that because implementation of the new policy is unclear, it is too early to understand how it will affect their business in China.

The industry was dealt a blow last summer when Chinese authorities accused Glaxo of bribing doctors, hospitals and local officials to increase sales of their drugs. The U.K. company has said some of its employees may have violated Chinese law.

The central government, which began overhauling the country's health-care system in 2009, has until now largely favored pricing caps and has encouraged provincial governments to cut health-care costs and prices. Regulators phased out five years ago premium pricing for a list of "essential drugs" to be available in hospitals.

Chinese leaders want health care to be more accessible and affordable, but there have been unintended consequences in attempting to ensure the lowest prices on drugs. For instance, many pharmaceutical companies registered to sell the thyroid medication Tapazole have halted production in recent years after pricing restrictions squeezed out profits, experts say, creating a shortage. Chinese patients with hyperthyroidism struggled to find the drug and many suffered with increased anxiety, muscle weakness and sleep disorder, according to local media reports.

In 2012, some drug-capsule manufacturers were found to be using industrial gelatin to cut production costs. The industrial gelatin contained the chemical chromium, which can be carcinogenic with frequent exposure, according to the U.S. Centers for Disease Control and Prevention.

"Manufacturers have attempted to save costs, and doing that has meant using lower-quality ingredients," said Ms. Chen.

The pricing reversal won't necessarily alleviate pricing pressure for these drugs, experts say. To get drugs into hospitals, companies must compete in a tendering process at the provincial level, said Justin Wang, also a partner at L.E.K. "It's still unclear how the provinces will react to this new national list," Mr. Wang said.

If provinces don't change their current system, price will remain a key competitive factor for drug makers, said Franck Le Deu, a partner at McKinsey's China division.

"The bottom line is that there may be more safety and more pricing transparency, but the focus intensifies on creating more innovative drugs," Mr. Le Deu said.

  —Liyan Qi contributed to this article.