When the Price is Right . . . (That Means High)

I heard on the news that a placebo pill is more effective in relieving pain if the patient believes it costs more. And I was instantly (well, fairly soon) reminded of the report that the same wine tastes better to people if it’s supposed to be more expensive than the same wine at a cheaper price.

Googling this, I found an explanation for both phenomena – the same explanation, I believe. The Last Psychiatrist, in his blog, analyzed the report and quoted the Introduction, thus:

A basic assumption in economics is that the experienced pleasantness (EP) from consuming a good depends only on its intrinsic properties and on the state of the individual...

In opposition to this view, a sizable number of marketing actions attempt to influence EP by changing properties of commodities, such as prices, that are unrelated to their intrinsic qualities or to the consumer’s state.

The placebo pill report is in the Journal of the American Medical Association. Eighty-two volunteers were given a light electric shock before and after they received what they thought was a pain pill. Half of them were told the pill cost $2.50 a dose, the other half were told it was a 10 cents pill. And then 85% of those taking the ‘expensive pill’ reported pain relief, compared with only 61% doing so after the ‘cheap pill’.

Of course, pain relief, like the taste of wine, is a subjective process, i.e. the interaction between a sensory experience and the expectation of that experience. And knowledge of the price of the sensory experience can obviously influence the result. The Last Psychiatrist has a lot more to say on this subject as it relates to pleasure as an expectation, but I believe the same explanation can be applied to relief of pain, or displeasure. Simply put, price is linked to perceived value in both cases. ( Is this why some people think generics aren’t as good as the original brand?)

It looks as if the ‘marketing manipulations’ were pretty successful in both our examples. Perhaps the marketing departments of big pharma aren’t too unhappy about pricing drugs a little higher than strictly necessary if they’re involved in subjective measures of effectiveness?