By Elisa Czerwenka

What is wrong with placebos?

Today we had our first masterclass after the move, and we couldn’t have started with a better one: Rory Sutherland on Alchemy.

Now Marc has been raving about this class for weeks, yet I was still mindblown by Rory’s intelligence, wit and enthusiasm for human behaviour. 

One theme that he touched on particularly fascinated me: Placebos. Rory made the argument: What’s wrong with placebos?

Everything in life is a bit of a placebo. The value we place on things and experiences is far more significant than is often measurable in scientific terms. Yet scientists and economists often neglect this when they talk about marketing.

As the daughter of a medical doctor, I have heard lots about placebos before. And I have always associated quite negative feelings with it. Whenever I think of them, questions of ethics arise. Is it okay to give placebos, knowing that they “officially” don’t work?

My dad once told me about Pantoloc, a medication used for the treatment of stomach ulcers, acid reflux and other stomach issues. The company that produces this pill (Novartis) started creating a generic drug called Pantoprazole and brought it onto the Austrian market a hell of a lot cheaper than Pantoloc (the brand names might vary in the UK).

My dad spoke to one of the representatives of the brand who assured him that the pills not only had the same ingredients, they were made in the same factory, in the same machines and only at the packaging stage, the different label created a difference. Surely they would produce the same results. Yet the company chose to sell Pantoloc for a lot more than its generic drug.

It turns out; people loved the expensive drug so much more. They thought it worked better – and were, therefore, willing to pay a higher price. Just the change in the name and packaging, as well as being familiar with it made the drug work better.

While many would call this practice cheating, Rory suggested looking at it slightly differently. If it works better, based on peoples’ psychology (and that includes people who know about the placebo effect), why should the company not be allowed to charge more? If the drug works better, does it matter why?

I never saw it this way before.

The ethics of placebos depend highly on the circumstances. If a doctor prescribes a fairly useless multivitamin pill to a person who feels tired, and they start feeling a lasting boost of energy without any risks – what could be wrong with that? Deception, many would argue.  And I agree. The basis of trust between a doctor and a patient is invaluable. Knowing that placebo can be powerful, even when it’s not concealed, however, is essential. This way, doctors can help patients while maintaining transparency.

The placebo effect shows the power of the subconscious, even when the conscious knows what’s going on with it. Something we should always be aware of when selling things.

I am hugely grateful for the talk we received from Rory today, and if you haven’t already seen his talks or read his book, Alchemy, I highly recommend checking out his work.

@elisaczerwenka