Guest Post: Chp. 11 The Power of Price and the Placebo Effect
This chapter takes a look at the placebo effect and our perception of the relationship between price and quality.
Placebo - comes from the Latin - for 'I shall please'
Roman elite would hire sham mourners to mourn at funerals.
Dr. Ariely gives many examples of the placebo effect from the medical field. In fact before recent times, almost all medications were placebos. Even today the practice remains as we see instances where a doctor will prescribe an antibiotic for a viral infection.
In the previous chapter we saw that expectations can affect how we perceive sensory phenomena (smells, taste). But these can also affect our subjective and objective experiences.
What role does price place with respect to the placebo effect?
Does an expensive medication, new technology or procedures make us feel better than the inexpensive medicine or traditional procedures?
Can it affect us physiologically?
Does the price of these procedures/technologies/medicines influence their efficacy?
The answer to all of the above is yes!
Placebos still work their magic. How?
There are two mechanisms -
1 - Belief - our confidence/faith that the drug/procedure/caregiver will help. The doctor/nurse paying attention, reassuring us, and their enthusiasm about the efficacy of treatment all help trigger our own internal healing mechanisms and lead to a positive outcome.
2 - Conditioning - the body builds up expectancy after repeated experiences and releases various chemicals in preparation.
It is easy to imagine that a $4k couch will be much more comfortable than a $400 couch. There is an implied difference in quality between the two couches because they perform the same function yet one is ten times as expensive as the other.
Can this implied difference actually influence our experience? Yes!
If we see the price of an item we will associate a better experience with the more expensive item. With some self - control we can steer away from expensive shoes/clothes/food.
What about medications (name brand vs. generic drugs)? Will we shy away from the name brand medication when our life and health is hanging in the balance?
From several social experiments Dr. Ariely and his colleagues showed that hype and paying full price are often more powerful than the product itself.
Will we get lower benefits every time we get a discount? Yes! The way to prevent this instinctual quality – price relationship is to stop and reflect and try disassociate quality with price.
If placebos make us feel better should we just accept them as part of a treatment? Evidence shows that if we give placebos to patients and reassure them they will feel better. If we tell the patient the drug is a placebo, then they will not get any benefit.
This raises moral, ethical and probably legal issues.
Airborne used to be marketed as an immune boosting, germ fighting tablet that could ward off the flu/cold if taken at the first signs of a cold. The inventor and manufacturer had to pay $30 million for misrepresenting the product claims. This product had great placebo effects for its users but in reality it is nothing more than a multivitamin.
The placebo effect is real.
It influences our subjective as well as objective experiences.
This is based on two mechanisms - 1. Belief and 2. Conditioning
Price - enhances the placebo effect and the benefit that subjects feel from a full price item vs. a discount item is significant
Lastly, we unconsciously associate quality with price.
