Shocks

That’s the question posed by researchers led by Ivo Vlaev (2009) who examined the relationship between pain and the cost of relieving it.

Pain is a consequence of life and important in the role of medical disease and treatments. Pain is also a sensation that has no objective lab test or measurement (outside of a subjective, self-report pain scale). And, as the authors note, “pain is a major public health issue, especially given the fact that the prevalence of clinically significant pain is approximately 20 percent in the general population.” Pain relief is a $60 billion industry.

It has traditionally been assumed that our judgments about a sensation such as pain are made relative to events we’ve recently experienced (such as receiving a painful shock in the recent past), rather than being bound on some sort of absolute scale of 1 to 10. People generally have been thought to have little idea of the value of relieving or avoiding a negative outcome such as pain. Instead, they pick a price randomly, based upon the question or situation posed to them.

The researchers wanted to test these hypotheses out, specifically whether and how much a person would be willing to pay to avoid a painful electrical shock. Impulse might say, “As much as I’ve got!” but the researchers found that not to be the case.

In the experiment designed by the researchers, they gave subjects an initial electrical shock, and then asked how much they would be willing to pay to avoid a series of 15 of those shocks. Thirty-four University of London students were used as subjects. Subjects were divided into two groups, one with a low income endowment for the experiment (40 pence) and one with a high income endowment (80 pence).

The researchers found evidence for adaptive encoding, that is, that people will vary the exchange rate between pain and money dramatically depending upon their immediate (and short-term) circumstances. In circumstances of greater pain, people in both conditions were willing to pay more for pain relief. But in circumstances of lesser pain, people’s demand and willingness to pay went down significantly. People who had greater income were willing to spend more than those with the low income.

The assessment of pain and demand for pain relief are “almost completely relative to the experience of pain in the recent past and the available cash in hand,” as the authors note. This was a small study conducted only on students, so its results, such as they are, are not readily generalizable to others.

However, this sort of finding alludes to consequences it may have for health markets, because it suggests there may not be a static price for things like pain relief, and it is not predictable based upon the past behavior of individuals.

You probably recognize this from direct experience. Come down with a terrible cold or the flu and you’ll wander into the pain relief section of your local pharmacy and start piling bottles into your arms. If the pain is great enough and you have the budget, you’ll pay to try and have it relieved (even though most of that relief may come in the form of a placebo response). If you have no budget, you may seek pain relief, but will be more particular in your purchase (or rely solely on home-made remedies).

Reference:

Vlaev et al. (2009). The price of pain and the value of suffering. Psychological Science, 20(3), 309-317.