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Purpose – A placebo effect is a (positive) change in health outcomes that is due to a (positive) change in beliefs about the value of a treatment. Placebo effects might be “behavioral,” in the sense that revised beliefs lead to behavioral changes or new actions that in turn yield changes in health outcomes. Placebo effects might also include a “physiological” component, which refers broadly to non-behavioral, brain-modulated mechanisms by which new beliefs cause changes in health outcomes. Nearly all formal economic models of human behavior are consistent with behavioral placebo effects, but strongly inconsistent with their physiological counterparts. The reason is that the latter effects can imply that expectations enter, rather than multiply, state-contingent preferences. It is therefore unfortunate that little evidence exists on physiological placebo effects. We report data from novel clinical experiments with caffeine that seek to provide such evidence.

Methods – Subjects visit the clinic on multiple occasions. On each visit they ingest either a placebo or caffeine pill. Subjects only know the probability with which the pill includes caffeine. We obtain physiological measurements prior to ingestion and at 30, 60, and 90min after ingestion. Importantly, we constrain subjects to remain seated and read pre-selected magazines during the interval between treatment and outcome measurement.

Findings – Our design provides particularly clean inference because it (i) eliminates the possibility of behavioral confounds; (ii) provides for measurements at the individual level; (iii) manipulates beliefs without deception; and (iv) uses salient rewards. We find evidence for the existence of physiological placebo effects mediated by expectations.

Implications – Our results are consistent with the possibility that the prefrontal cortex provides external, top-down control that modulates physiological outcomes, and make a case for the importance of research geared toward developing appropriate and tractable frameworks that accommodate non-linear relationships between expectations and preferences.

Neuroeconomics is the study of how the brain makes economic decisions. By its nature neuroeconomics studies the mechanisms of decision-making, assumed to be computational, in order to better understand the strategies people use and the choices that people make. The focus of this book is how neuroeconomics connects to health economics in a way that improves our understanding of health care and treatment decisions. This is natural for several reasons. First, the brain and the body are intimately connected to each other and the health of one depends on the other. Second, the health system is inherently about decisions. Decisions to stay healthy, decisions to diagnose illness, decisions to treat, decisions to invest in new treatments, decisions to insure, and decisions to pay. Finally, these decisions can be difficult, as the media's consistent attention to this area attests. In light of this, for this volume we chose to include chapters that review basic research on emotion or social preference that have direct relevance to decisions in health economics. We have also included chapters that refer more specifically to some aspect of people's health care or treatment decisions. In the following we indicate the chapters within each topic area. Although many chapters could arguably fit in multiple categories, we have listed each chapter only once and without particular order.

This chapter argues that corporate social responsibility (CSR) and even corporate sustainability and responsibility will be insufficient to generate the transformation needed for businesses, economies, and societies to deal with potentially existential sustainability, climate change, and inequality crises. A new socio-economic narrative needs to be created to underpin thinking about economies, societies, and nature. After briefly looking at CSR today, the paper discusses the power that the neoliberal narrative has in shaping understanding of the roles and purposes of businesses. It then argues for a new narrative emphasizing well-being, dignity, and sustainability, an economy in service to life, as an alternative, highlighting the powerful role that memes, core units of culture, play in shaping narratives.