Thursday, March 6, 2008

Placebo Effect WIth a Financial Twist

I just read about a new study on one of my favorite blogs (Freakonomics), about the placebo effect with a financial twist.  Subjects were given electric shocks and asked to rate the pain.  The subjects were then given a sugar pill and asked to rate the pain after the shocks.  However,  unlike other studies, the subjects were separated into two groups, one group was told the pills were $2.50 and another group was told the pills were discounted to $0.10 a pill.  Not surprisingly the groups given the pills rated the pain lower than when they hadn't taken the pills even though the pill had no medical effect.  

However, there was a statistical difference between the two different price groups.  85 percent of subjects in the first group ($2.50 per pill) indicated that the pain lessened after taking the pill while 61 percent of the group in the second group ($0.10 per pill) said the pain lessened.    Perhaps pharmaceutical price their drugs with this in mind?