The Placebo effect – why we receive what we expect

I recently stumbled upon a phenomenon called the Placebo effect while reading Dan Ariely’s book called Predictably Irrational. A placebo is an inert substance which is given to patients to mimic healing effects. For instance some patients who are given sugar pills instead of real pain killers report a reduction in pain even though the sugar pills have no healing effects.

In one experiment patients were given placebos which were claimed to be pain killers. They were then subjected to tiny electric shocks at increasing levels of intensity. Surprisingly the placebos worked as well as the real pain killers. Both groups endured almost the same pain thresholds. Another twist to the experiment was added. Some subjects were told that the “placebo” pills cost $20 and another group was told that the pills had been discounted and cost only 10 cents. Interestingly the group which took “expensive pills” endured more pain.

Placebos seem to work because they alter our expectations of reality. This might explain why “religious rituals” seem to work. It does not matter whether what we believe is real or not. All we have to do is believe in something and it will manifest in our lives.

We can use this power of placebos to improve our finances. We do this by strongly expecting to receive that which we desire. That means we need to desire something worthwhile and meaningful. Something for which we are we willingly to pay a high price. The hard work plus the high price we have to pay induces a placebo effect and we end up receiving that which we expect.