Does This Mean My Drug Co-pay Will Go Up?

March 6, 2008
Posted by Jay Livingston

Placebos work better if they cost more. That’s the finding reported in the New York Times and surprisingly few other papers.

Dan Ariely asked subjects to estimate the degree of pain relief they got from a pill. Some were told that the pill cost a dime, others that the pill cost $2.50. All the pills were placebos, and a majority of people in both groups reported “significant pain relief.” But that number was higher among those who got the expensive pill (85%) than among those who got the ten-cent version (61%).

Ariely is an economist – his new book Predictably Irrational is on the business best-seller lists – but his explanation is physiological: “Sick humans secrete substances you just can't buy over the counter.”

Maybe so. But what makes the brains of the $2.50 people secrete more of whatever that substance is? Anyone who has taken the intro social psych course should recognize this as our old friend Cognitive Dissonance. If we’re paying this much for it, it must be good. Otherwise, the cognition that we are paying dearly for the pill conflicts with the cognition that it’s not working.

We can’t very easily adjust our estimate of the cost. But pain is more subjective, so we reduce the dissonance by changing our estimate of pain relief. You get what you pay for, as my mother says. And even if you don’t, you’ll think you did.

In one of the classic experiments conducted by the early Dissonators (Aronson and Mills, 1959), women who wanted to join some group had to go through a sort of initiation. Those who had a tougher initiation (I think they had to read aloud some slightly off-color passage – this was the fifties, remember) rated the group as more worthwhile. Those who were admitted easily, on the other hand, didn’t think so highly of the group once they were in.

Or as Marx said, “I wouldn’t join any club that would have someone like me as a member.” (You knew which Marx it was going to be, didn’t you?)