More Expense = Less Pain

Yesterday, the Times reported the results of an intriguing new study, just published in the Journal of the American Medical Association (subscription required). The focus of the story: the placebo effect.

The existence of a placebo effect is well known, and the best work on this topic comes from Anup Malani, another economist (and a good friend) who currently teaches at the University of Chicago Law School. It is now well established that giving a patient a sugar pill (while telling them that it may be medication) can actually have therapeutic effects.

But this new study – by Dan Ariely and coauthors – shows that the placebo effect is itself subject to experimental manipulation. Their experiment is incredibly clever, and very convincing.

The subjects were given an initial series of electric shocks and asked to rate the pain they felt after each shock. The subjects were then allowed to take a placebo pill that they were told was similar to codeine. In fact, the pill had no direct medical benefit at all. While half of the patients were told that their (false) treatment cost $2.50 per pill, the other half were told that their pill had been discounted to $0.10 per pill. They were then given a second series of electric shocks, and once again, asked about how much it hurt.

While 85 percent of the patients taking the $2.50 pill reported that the second set of shocks were less painful, only 61 percent of those taking the (identical!) $0.10 pill reported the shocks to be less painful. So the more expensive the pill, it seems, the larger its perceived effect – even when the pill actually has no medical effect!

And yes, this study was co-authored by the same Dan Ariely who wrote the recently-published popular behavioral economics book, Predictably Irrational.

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  1. Lukesed says:

    It seems obvious that the placebo effect, being psychological, would be stronger if the patient believed that the drug they were given was stronger (as more expensive drugs often are). But quantifying this effect-effect seems a lot more impressive.

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  2. pcutt says:

    I wonder how the placebo effect will affected by the easy access to information on the internet. My understanding of the medical field is that all medications a doctor prescribes must be accurately named and labeled, that is, your pill bottle’s contents and label must match up and be true. I can see that since easy access to information makes it simple for a patient to find that he’s on a placebo, the medical profession’s practice of giving placebos may diminish.

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  3. Michael says:

    Didn’t we already discuss this phenomenon with those insanely high priced audio cables? I think they were made out of Kryptonite or something.

    It would be interesting to find out if people from non-capitalist societies have the same inclinations regarding price and performance?

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  4. Rodrigo Leme says:

    Interesting take on the price tag effect. We work with consulting in telecom expense management here in Brazil and once we received a RFP from a big construction company. We wrote the proposal, and sent it to them.

    A few days later, the IT guy calls and says that our price is “too low” in comparison to others. “So what”, we asked, and he said that he wasn’t sure we could do the job (the job we said in detail we would do when answering the RFP!) because we were “too cheap to be true”.

    I think this “placebo effect 2.0″ demonstrated in Ariely’s work is totally believable. Any product or service anything should be cheap enough to drive customers’ attention, but (wow!) expensive enough to avoid the “what’s the catch?” reaction.

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  5. David says:

    I wonder if a similar result could be duplicated with wine tasting. Or maybe spirits or coffee. Perform a taste test of the same wine, one priced at $8 a bottle and the other at $80.

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  6. tom says:

    The placebo effect is more than just psychological. It can cover other phenomena, such as a change in behavior that results from medical treatment. for example, if a patient is taking weight-loss pills, then that patient may start thinking more about his or her weight and start working out. The placebo effect is meant to account for real physical effects that can come purely from such behavioral changes.

    There has been a test for exactly what you’re talking about. See:,1,4840506.story?coll=la-news-science

    In that test, subjects tended to enjoy wines more if they were told they were more expensive

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  7. goatboy slim says:

    One aspect of the placebo effect that I’ve never seen discussed:it works in a negative way as well. I have read a drug study where the recipients of the placebo dropped out because they were suffering side effects, in about the same percentage as the recipients of the real med.I’ve read discussions of the type of people who are most susceptible to the placebo effect, but I wonder if the personalities are the same for both negative and positive responders? As to price influencing perception, that seems to be conventional wisdom in the field of marketing, where artists and crafters are always cautioned against pricing their work too low, as it creates a negative impression of an item’s worth.

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