A placebo, as used in research, is an inactive substance or procedure used as a control in an experiment. The placebo effect is the measurable, observable, or felt improvement in health not attributable to an actual treatment.
When a treatment is based on a known inactive substance like a sugar pill, distilled water, or saline solution rather than having real medical value, a patient may still improve merely because their expectation to do so is so strong. To eliminate the effect of positive thinking on clinical trials, researchers often run double-blind, placebo-controlled studies.
In-Depth Explanation of the Placebo Effect:
Fast Facts About the Placebo Effect
The word placebo literally means "I will please" in Latin. The first known double-blind placebo-controlled trial was done in 1907. The FDA doesn't require that a drug study include a placebo control group, however, the placebo-controlled trial has long been the standard. The NIH is funding several studies related to the placebo effect.
Placebo Effect, Robert Todd Carroll, The Skeptic's Dictionary, Skepdic.com
The Mysterious Placebo Effect, by Carol Hart, American Chemical Society
Modern Drug Discovery, July/August 1999
The Healing Power of Placebos, by Tamar Nordenberg, FDA Consumer magazine January-February 2000