Why consumers buy snake oil

Steven Novella from Neurologica reports on a behavioural economics analysis of why people buy snake oil (and modern supplements) even when its ineffectiveness is apparent. It boils down to: "What can I lose?" I've previously blogged on this in Snake oil for rusty snakes and quoted this delightful remark by author Terry Pratchett just after being diagnosed with early onset Alzheimers:

"Some of them wanted to sell me snake oil and I’m not necessarily going to dismiss all of these, as I have never found a rusty snake."

Here are some selected quotes from Novella's discussion of research by Werner Troesken:

"... people still wanted to buy patent medicines, even after their previous experience with such products resulted in failure.

... Troesken’s basic model – medicines do not work, consumers judge them solely on whether or not they work, and consumers correctly perceive that they do not.

... consumers felt that they had little to lose and the world to gain, leading to repeated experimentation with, and even high demand for, patent medicines."

Other factors for the continued popularity of snake oil, as pointed out by Novella, include the effect of false positives (false anecdotal "evidence") and the placebo effect. Of particular interest is that the very success of science based medicine leads to people living longer and their age related ailments creating a larger market for snake oil.

Novella makes the point that, based on the above, it cannot be expected that market forces will result in better and more effective health products, or even keep entirely worthless or even harmful health products from the marketplace.