Posted by: erichosemann | October 1, 2009

The Nocebo Effect: Evidence Against The Possibility of Interpersonal Comparisons of Utility?

This is an interesting find: participants in clinical drug trials who take a placebo get the same side effects as those brought on by the real version. H/T Marginal Revolution.

This phenomenon, known as the nocebo effect, could be an interesting bit of evidence against the idea that interpersonal comparisons of utility are possible.

If you think you’re consuming a drug to fight erectile dysfunction, but it’s actually a sugar tablet–in other words, you consume something and expect a certain degree of utility from it, not having any idea what that something actually is–and you manifest side effects specific to that drug–in other words, you experience disutility from what that something actually isn’t–how can you be expected to fully comprehend a good’s utility to yourself, much less to another person?

Bear with me; I’m trying to imagine a couple of counter-arguments.

Okay–so the placebo consumer doesn’t know he’s taking a fake.  Why should we expect him to be able to gauge the utility of the placebo? Because he thinks it’s the real thing.  He’s already making a personal comparison of utility: “This little pill–okay, maybe it’s a placebo; this is a trial, after all–is gonna work better than not taking anything for my debility or taking some drug I’ve already tried.”

Things like the placebo effect are beyond economic ken; they involve the interface between consciousness and reality and have no relationship to positive, measurable things like supply and demand schedules; therefore you shouldn’t even use them in your argument. I am a total novice; I haven’t read much economic discussion of the placebo effect, but if you ask me, it seems like an novel manifestation of expected marginal utility!  Other than that, I don’t know.  I think at the very least, judging by this evidence, interpersonal comparisons of utility are highly unlikely.  If people can experience, or convince themselves they experience, bad things from what they believe is a good, then how can they be trusted to judge the degree of utility good things give other people?


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