Do Higher Prices Make You Healthier?

Predictably Irrational

I’ve been reading the book Predictably Irra­tional by Dan Ariely, and it’s got me thinking.

Ariely is a college professor at Duke Univer­sity who studies behavior – specif­i­cally, irra­tional behavior. He asks questions like, “why don’t we trust politi­cians?” and “Do nurses prefer to use proce­dures that are easier for them or less painful for the patient?” He studies how zero effects our buying habits and why we overvalue what we have.

But the thing I’ve been thinking about the most is his chapter, “The Power of Price”.

The Power of Price

The Power of Price revolves around Ariely’s discovery that more expensive medicine actually heals better than less expensive. This is shocking because he’s shown that identical pills heal differ­ently based on their price.

So the $5 dollar Tylenol is more effective than the penny Tylenol even though the pills are the same. At first he thought it was the label that influ­enced us, but after further study he discov­ered that lowering the price but keeping the labels the same caused the effec­tive­ness of the medicine to go down.

It’s called the placebo effect. Our brains work so well that when we’re presented with something we think is helpful, it usually will be helpful. Our brain creates the desired effect because we think it should.

And if you think this isn’t true about you, think again. Regard­less of your back­ground, placebos change how you feel after taking medicine.

It’s why snake oil salesmen were effective. It’s why chicken soup can heal a cold. It’s why certain surgeries, when tested (which they rarely are), turn out be little more than expensive, painful placebos.

A Problem For Marketers

This poses an espe­cially tricky dilemma for marketers. If a pill is 90% effective, but only as a placebo, is it morally wrong to tell people it has medicine in it that will help them?

A good example of this problem is the Airborne tablets that were popular several years ago. In the mid 2000s, Airborne because a huge success when a 2nd grade teacher developed a tablet that promised to boost your immune system and help fight the germs you collect when surrounds by large groups of people.

The tablet was an overnight success and people all across the country sung its praises.

Until, of course, studies were done on Airborne. In a $23.3 million dollar lawsuit, Airborne was punished for being a placebo that couldn’t boost your immune system or fight germs. It was just a fizzy tablet that tastes good.

It was just a placebo.

Unfor­tu­nately, it was an effective one and after the news came out the Airborne effect ended for most people. The pill (which is still for sale) lost most of its momentum and I haven’t heard of anyone using it in a couple of years.

But it was effective. It worked because people thought it would work. If a pretty package and fizzy water can convince millions of people to stay healthy, is that something we should ignore? Is what he did morally wrong?

It’s hard difficult question to answer.

In Your Wallet

So now you have a choice between a cheap, penny headache medicine or a more expensive one. You know they both contain Tylenol, the ingre­dient that helps with headaches. You’ve heard they are equally effective, and yet if you buy the more expensive brand you’ll likely have better headache relief.

Which do you choose? It’s a question I can’t answer, but one we all need to be thinking about.

What placebos have been ruined for you by science?

8 Responses to “Do Higher Prices Make You Healthier?”

  1. josa March 27, 2012 at 8:30 AM #

    and on that note… i believe it’s time to raise my prices ;-)
    very good intel mi friend. and usually i choose to stick with the least expensive when it comes to meds… cokes, though, that’s a different story… i like to stick with name brands ;-)
    love ya mang!

    • Alex March 27, 2012 at 11:29 AM #

      Yeah, I usually get the cheaper stuff as well. Off-brans usually (not always) was just as good as the name brand anyone when it comes to meds.

  2. Mike Luna March 27, 2012 at 10:40 AM #

    First of all, I don’t believe in science. Science is the real placebo!

    Secondly, products should do what they say they do and without the need for the placebo effect. It’s unfair to the consumer for a company to make claims that aren’t true outside of my own delu­sional brain.

    For a placebo to work, somebody’s got to lie to you (or you’ve got to lie to yourself). There’s just no good way to do that that won’t lead to more of those snake oil salesmen that you mentioned above.

    • Alex March 27, 2012 at 11:31 AM #

      While I agree with you, the trouble comes when there is an illness or disease that we can’t discover a cure for. A good example is surgery. Very few surgeries are tested to see if they are actually effective or just placebos. When these tests are done, it’s been discov­ered that some are simply placebos and that those who don’t get the surgery have the same chance of being cured as those who do. However, those who don’t get the surgery (or don’t think they do) are signif­i­cantly less likely to be cured.

      The question becomes, should be start testing these surgeries to see if they are placebos, or should we continue to do them since we know they seem to work (even if it’s just because our brain thinks it works).

    • Alex March 27, 2012 at 11:32 AM #

      PS — I don’t have a good answer myself. Like you, I’d lean towards taking placebos off the market. However, it does bring up some troubling questions.

      • Mike Luna March 27, 2012 at 3:35 PM #

        There’s no easy answer here. There’s no doubt about that.

        It’s easy to say that a surgery that is phys­i­cally unnec­es­sary is exploita­tive. Surgery is never cheap and there are other compli­ca­tions that can come out of it, so how is it fair or ethical to talk a patient into doing something that may not help them?

        At the same time, I don’t have a terminal illness and neither does anyone close to me. I can’t put myself in the shoes of someone who’s dealing with death like that. Who am I to tell them not to do every­thing in their power to prolong their lives or the lives of their loved ones?

        It’s a very tricky issue for sure.

  3. ixnayonthetimmay March 28, 2012 at 1:58 AM #

    Very thought-provoking topic.

    I do believe the placebo effect is real, and not just in medicine. It goes back to the old idea that a car “drives better” when it has been washed; a cosmetic change seems to effect one’s percep­tion of the driving expe­ri­ence. I can also relate person­ally. When I was doing web design, I wasn’t taken as seriously unless I charged fairly high rates for the work I did. It seems people assumed if I didn’t ask for more money, I was less capable of deliv­ering quality work, even if my portfolio was identical.

    I think the placebo effect is enhanced when coupled with another logical fallacy; deferring to authority. Regard­less of the efficacy of a procedure, if the doctor recom­mends it, one is more likely to think it has merit. And if the procedure costs $10,000, well by God it better have done something!

    This could all explain the ever-increasing costs of health­care. Couple this Power of Price argument with the ‘hidden-cost’ pitfalls of insurance paying for care and it serves as a perfect storm for even higher medical costs.

  4. Brenda Scott October 25, 2012 at 10:58 PM #

    funny thing about this placebo effect… it’s more likely a mind setting..but I hope phar­ma­cist don’t set this, that if the medicine is more expensive it is more effective…poor to those people who can’t afford to buy..

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