In modern medical terms, it means something the doctor gives you, or something the doctor does, that has no real medicinal value - none whatsoever.
But placebos can work. In fact, they often do make you feel better. CBS News Sunday Morning Correspondent Martha Teichner reports.
"The sense that somebody has that they're going to get better, the idea, the expectation that they have that they're going to get better is a very powerful determinant of recovery," says Dr. Walter Brown, a psychiatrist who has been studying the placebo effect for 20 years. "We don't really know all the mechanisms behind it."
Case in point: The results of the latest study in Europe about the effect of Viagra on women with sex disorders. Women on Viagra reported some improvement. But the women who took a placebo did just as well - in some cases, better.
How can that be?
"It always occurs," says Dr. Roy Fleischman, a Dallas rheumatologist. He is a lead investigator with Radiant Research, which conducts trial for drug companies. He sees the placebo effect all the time.
In the trials he has done, the lowest rate of the placebo effect has been around 8 percent. The highest he has seen: about 50 percent.
That means that as many as half the people on a pill with nothing in it show improvement. The average is 30 percent.
Also, researchers are convinced that the very sight of a doctor wearing a white coat can trigger the placebo effect, maybe just by reducing stress.
So what's the difference between that and magic perpetrated by a shaman 700 years ago or in a tribal situation?
"There is none," says Dr. Brown, the psychiatrist. "This is the modern equivalent of shaking rattles and blowing smoke and dressing up in a costume."
When doctors hung patients upside down to cure back problems in the ninth century, or applied leeches to skin or engaged in any number of other practices now considered quackery, if they didn't kill people, they might have gotten better. That's not because of the cure, but because of the placebo effect associated with the doctor's authority.
Comparing a new drug to a proven one (as well as comparing it to a placebo) is the way it's possible to tell whether it works. It is not enough if it shows the same improvement as the placebo. The experimental drug has to do a lot better before it's approved by the Food and Drug Administration.
At Radiant Research, Dr. Fleischman says, development programs on new drugs have been shut down three or four times over the past year, because the placebo effect so closely rivaled the effect of the new drug being tested.
"It may be bizarre," says Dr. Kevin Pauza, a spine specialist at the East Texas Medical Center in Tyler. "It's a strong power that we have to understand a little better."
Dr. Pauza is convinced that the placebo effect should be studied nd put to use in every doctor's daily practice. And that lands him right in the middle of the debate about how far is too far to test the placebo effect.
He is carrying out a study that uses placebo surgery the same way placebo pills are used in drug studies. The reason he is doing it: To find out whether his dramatic success with a new surgical procedure to ease back pain is because of the surgery or the placebo effect.
Before it's done, 40 study participants out of 100 will have received the sham procedure.
The question is whether fake surgery of any kind is ethical. The Hippocratic oath, that doctors swear by, hammers home these three words: "Do no harm."
Dr. Pauza says placebo surgery is justified because it is the only way to prove the value of the real surgical procedure.
"It's important for us to discern if it's the treatment that's getting them better or if it's that other effect," he explains, adding that he would draw the line at any procedure that would put a patient at increased risk of infection, pain or death.
The Texas back study is by no means the only current example involving placebo surgery. It's being used in a study of knee pain and the New England Journal of Medicine last year reported on controversial trials involving sham surgery in the treatment of Parkinson's disease.
Among medical conditions most likely to respond to the placebo effect, says Dr. Brown, are depression, anxiety, asthma, chronic pain, high blood pressure and migraine headaches. These are exactly the sort of problems millions of Americans are taking to alternative practitioners.
Dr. Brown believes most forms of alternative medicine, even acupuncture, are no more than the placebo effect in action. But, he says, if it works, do it as long as your condition isn't life threatening.
"Disease is what you may see on an X-ray," explains Dr. Brown. "But illness is what the patient feels, and placebos almost always will benefit illness. Sometimes, they may actually benefit disease. A very, very small minority of people who've gone to Lourdes have had miracle cures as accepted by the church. But everybody feels better who goes to Lourdes."
So would he call the effect of going to shrines a placebo effect? "I would," says Dr. Brown.
Does he believe in miracles? "Nope," he says.
Nobody really knows why it occurs or how long it lasts. But the placebo effect, you might say, is when nothing turns out to be something after all.