Placebo Effects in Music, Wine, Medicine and Finance

I recently came across a few articles that got my wheels turning about the placebo effect in our lives. The placebo effect is the measurable, observable, or felt improvement in health or behavior not attributable to a medication or invasive treatment that has been administered. Although its origins are in medical research, researchers have observed it in other domains as well.


Are you listening to the equipment or the music?

The best headphones go for more than $1000, and the best amplifiers and related devices are many times that. But can you really tell the difference in quality between a $50 headset and a $500 one? How much of the difference is explained purely by the price tag?

Source: Placebo-philes

Did you know that for wine, price and quality are negatively correlated?

If you know what the wine you’re tasting is, if you know where it comes from, if you know who made it, if you’ve met the winemaker, and in general, if you know how expensive it is — then that knowledge deeply affects — nearly always to the upside — the way in which you taste and appreciate the wine in question.

Source: How money can buy happiness, wine edition

Doctors want to ban Homeopathy in the UK

A 2010 House of Commons Science and Technology Committee report on homeopathy said that homeopathic remedies perform no better than placebos, and that the principles on which homeopathy is based are ‘scientifically implausible’. However, millions of people suffering from chronic pain swear by their daily intake of diluted sugar tablets.

Source: NHS

Doctors confuse what they believe with what they know

Researchers have found that partial meniscectomy, where surgeons trim and remove torn pieces of the meniscus, is pointless. Researchers in Finland who studied two sets of patients—one that received the surgery, and another that was led to believe that it had—observed no significant differences in improvement between the groups after one year.

Source: Fake Knee Surgery as Good as Real Procedure


Technical analysis could be the placebo at work

Researchers believe that both technical analysis and folk medicine have strong potentials for statistical bias: the placebo effect for folk medicine and data snooping for technical analysis. Survival bias ensures that only the winners tell the story about how good it works. While the losers go back to allopathic medication (in the case of medicine) or their jobs (in the case of trading.)

Source: Technical Analysis as Folk Medicine

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