The Cashebo Effect is a way to measure the relative placebo effects of brand names.
For example, it is often possible to buy either cheap or expensive versions of products. The Cashebo Effect measures whether people rate the more expensive product higher just because it's more expensive. The Cashebo
Effect is calculated as follows:
For two versions of a product, one made by PoshDosh Inc. and the other by CheapasChips Corp., you conduct four tests.
Test 1: Users are told they are using the PoshDosh version. They are.
Test 2: Users are told they are using the CheapasCheaps version. They are.
Test 3: Users are told they are using the PoshDosh version. But they're using the CheapasChips one.
Test 4: Users are told they are using the CheapasChips version. But they're using the PoshDosh one.
Appropriate data is gathered (e.g. quality of hi-fi, tastiness of toast).
The Cashebo Effect for the PoshDosh version is:
Cashebo Effect = Average score in Tests 1 and 3 - Average in Tests 2 and 4
The Cashebo Ratio for the CheapasChips version is the opposite.
Products which people rate highly just because of the brand name would score highly on the Cashebo Ratio. A score close to 0 means the brand name does not sway people's perceptions either way relative to the other brand.
(For some products the difference might be due to other causes, e.g. marketing gumpf: "PoshDosh cables infra-magnetically transmutate the electricity going into your stereo, giving you a crisper, clearer, minty-fresh sound.")
We can also calculate a Real Difference showing the real difference in performance:
Real Difference = Average score in Tests 1 and 4 - Average in Tests 2 and 3
People seeking objectively better products will choose products with high Real Differences and not fork out extra cash for products with high Cashebo Effect alone.
(On the other hand, some people might actively choose products with high Cashebo Effects because they want to gain the admiration of others: "Wow, is that a PoshDosh stereo?")
Because of the cost of doing the trials, the Cashebo Effect would probably be calculated for four types of products:
1: Expensive products e.g. hi-fis
2: Products where there's a big price difference between brands e.g. some hi-fi cables can cost over $1000 more than others
3. Brands which are suspected of talking cobblers about their products e.g. Magnoferrific Cat Health Bracelets
4. Products which matter greatly to people e.g. toast - where anything that can help us get closer to complete and toastal satisfaction is a good thing.
To some extent this already happens on an ad hoc basis (e.g. the Bad Science columns in The Guardian) but having a website where people can access this information for whatever type of product they are interested in, and a standardised testing method to measure the Cashebo Effect, would be a great step forward.