The burning and pain you feel when you eat a chili pepper is caused by capsaicin, active ingredient in hot peppers. When ingested, capsaicin triggers pain receptors whose purpose is to alert the body to dangerous physical heat. In humans, this is triggered via the same mechanism that helps us drop a hot pan if we forget oven mitts: the temperature sensation receptor TRPV1.
The general theory is that eating chilies gives us the same sensation as if we were to actually eat too-hot bite of food, hence the burn. The TRPV1 receptor signaling may make us feel like perhaps our mouths are on actual fire, but scientists say there isn’t any tissue damage. It’s a brain hiccup: via those pain receptors, our brain is tricked into thinking our tongue is on fire.
So why do we eat them if it hurts? Scientific American thinks we like the burn, tolerating the pain for the pleasure of the whole.
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By the way, birds lack the receptor to feel the “capsaicin burn,” so they won’t feel any feel pain from eating even the spiciest of chilies.