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.


"This wouldn't be considered ethical, I'd imagine. You can't give a person a drug without their consent, and if they consented the experiment wouldn't work."

True true. I guess my placebo experiment will have to use lab rats. :)

I know nothing about medical ethics, but would it be possible to have people sign a form that gives consent to both a placebo and a low-risk drug? Then at that point the researchers could randomly assign who gets the placebo and who gets the drug (without the participants' knowledge)?

Michael Patkin

In ergonomics / human factors / human engineering the placebo effect was part of the explanation of the Hawthorne effect, well known in organisational psychology and management studies.

Apart from the productivity example it also seemed to
account for increased productivity when lighting levels were supposed to have been increased but the same strength lighting was replaced. This is described well by the late Alphonse Chapanis in his slim but excellent book on Research Methods in Human Engineering.

Of course there may be another explanation. The lighting was actually stronger because the new lights or fluorescent tubes didn't have the old
dust on them, or else (if tubes) they had been gradually losing their lighting intensity with time.

Michael Patkin


@ D.W. Funk
Thanks for the explanation and example!

D.W. Funk

To #26, Ross:

Not all experiments have to completely disclose what will happen to participants. Indeed, many experiences, such as some of the more famous examples from social psychology, mislead participants into believing one thing while testing for another.

However, the difficulty would be getting a review board to approve the experiment, necessary for conducting research in any reasonable setting, especially if you were going to seek university or governmental funding. Milgram's infamous experiments into obedience, involving a great deal of psychological stress, would probably never be approved today.

As for your research suggestion, I can recall a study that was done with alcohol. Subjects were given either vodka tonics or a placebo that tasted identical, and were aware that they could be taking a placebo. One subject said that she must be taking a placebo, since she always became flushed while drinking; when told that she was drinking alcohol, her face immediately became flushed.



I see this when recommending aspirin for tia or stroke. Patients don't trust the efficacy of aspirin because it's too cheap.


There's a nice discussion of similar phenomena in Brian Wansink's "Mindless Eating".

Sci Ed

Thanks for including this study. Seeing this documented is great. People truly believe that if you pay more, you get more. That is why expensive bottled tap water sells. People do believe that if it's free it can't be worth much.

As a related item, I have always been impressed by the hair product commercial that advertizes that it is the most expensive product on the market. Then the model says, "but I am worth it." She, and presumably the audience, turn around the focus of the price issue. The focus should of course be, is the product worth the price, but instead it becomes, am I worth the price.

Science Editor
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Hmmm, interesting. This was on a TV show a few years back, "Ed" I believe it was called.
The local doctor was selling a "miracle drug" for arthritis, and he was charging $50 a bottle. It turned out to be a placebo, and the patients took the doctor to court. The issue of price came up, with people claiming that he was criminal to charge $50 for sugar pills, and the doctor claimed that if he charged too little, or even nothing, for the pills, they wouldn't work.

This was a good 5 years ago. Is this information actually new?


"I wonder if there have been any studies on the effect of real medication on patients who think they are taking a placebo?"

This wouldn't be considered ethical, I'd imagine. You can't give a person a drug without their consent, and if they consented the experiment wouldn't work.

Dan Ariely

One other thing we tested was the effect of country of origin: some people were told that the medication was produced in China and the others were told that it was produced in the US. What we fund was that for Caucasians it didn't matter where it was produced, but that for people from an Asian origin the Chinese medication did slightly better.

One possibility is that there is general positive effect for Chinese medications and that it was more so for Chinese and less so for Caucasians.


There have been studies on perceptions of value based on price. Higher prices generate greater appreciation. Here is a link to a NG article:

There is even a study that shows that the type of bottle closure affects people's perception. Natural cork beats plastic beats screw cap even when it is the same wine.

My company also sells house brand products. Part of the market research is getting focus groups to evaluate the product. Separate tests at different price points is part of the research. I recently had lunch with one of our product developers and discussed a shampoo. At national brand prices the product rated lower. At half the price it rated lower. However there was an inflection point where it rated as good or better. People seem to want house brands to be cheaper than national brands but too cheap turns them off.



That's probably one of the reasons why water-bottling industry flourished in the past years. They were thriving based on the (mostly) wrong perception that if you paid $1 for a bottle of water, it must be cleaner and healthier than the tap water.


Then stop telling me "you get what you pay for"!


It seems one could easily extend this experiment to test generics vs. brand-name drugs, which are also chemically identical products marketed to the consumer differently. BigPharma has been arguing forever that generics, are not, in fact, the same as their brand-name versions - and maybe they're right (but for the wrong reason).

One wonders if the same results would be obtained in a less consumer-oriented, brand-driven culture, or if this effect is peculiar to patients in the U.S..


David & Michael,
Here's a link to a post (on the Epicurious blog) about the most recent research I know of on wine and price - it's just from this past January. It was the first thing that popped into my mind as I read this post...


On a slightly different note: I wonder if there have been any studies on the effect of real medication on patients who think they are taking a placebo?

* would the the real medication have less of an effect than normal? (I'm assuming probably, but by how much?)
* also what about affect on the frequency of side-effects?


What if sugar pills really are the miracle drug?

Doug Nelson

So Canadian drugs might not work as well as the identical but more expensive American drugs?


David, there was a test similar to what you were speaking about that I read about a while ago with spirits. Rather than the specific price, one bottle looked "more expensive" than the other and people associated that with better taste. I think it was in "Blink", by Malcolm Gladwell.


For all the apparent "power" of the placebo effect ... and its power is so strongly accepted now, that I've seen mass-media stories about whether or not doctors should prescribe plabecos ... we need to remember something.

In current practice, the "placebo effect" is merely a baseline for determining efficacy. Accepted and approved treatments are those which exceed "placebo effect"; i.e. more people are helped by them, than by placebo. The determination that there are treatments better than placebo, by definition shows that, statistically speaking, the "placebo effect" is actually LESS POWERFUL than these known alternatives.