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Spirit possession is the alleged habitation of a human being by outside spirits. This phenomenon appears in several different cultures, and is diverse in how it is manifested. These alleged spirits can be benevolent or malicious, and they may be welcomed, or require an exorcism. One form of alleged spirit possession is demonic possession.
There is no reliable, repeatable or testable evidence of spirit possession ever occurring.
Elective possession encompasses those who purposely set out to become "possessed" by a "spirit", such as for the purpose of channelling or in pursuit of lycanthropy or some other such irrational belief.
Another version of this is practiced in the religion of Vodou. In Vodou, religious leaders and practitioners seek to be possessed (or "ridden") by the loa in order to bond more closely with them. Moreover, it is felt within Vodou that a loa can better affect the world, and thus be more helpful, by having a body to temporarily reside in. For those from more rationalistic, less passionate religions, the possessions of Vodou can be quite frightening, but to practitioners it is a great gift to be possessed. (While labelled as demonic by most Christians, in practice it is not much different from the possession by the Holy Ghost that occurs at Pentecostal churches. In fact the two practices share the same African roots.)
As a means of gaining prestige and power
The anthropologist I.M. Lewis noted that women are more likely to be involved in spirit possession cults than men are, and postulated that such cults act as a means of compensation for their exclusion from other spheres within their respective cultures. 
In Uganda, a woman named Alice Auma was reportedly possessed by the spirit of a male Italian soldier named Lakwena, meaning messenger (this would be a very unusual name for an Italian to have). She had ultimately led a failed insurrection against governmental forces.
A belief in spirit possession appears among the Xesibe, a Xhosa speaking people from Transkei, South Africa. The majority of the supposedly possessed are married women. The condition of spirit possession among them is called inwatso. Those who develop the condition of inwatso are regarded as having a special calling to divine the future. They are first treated with sympathy, and then with respect as they allegedly develop their abilities to foretell the future.
The belief in spirit possession is part of the culture of the Sidama people of southwest Ethiopia. Anthropologists Irene and John Hamer postulated that it is a form of compensation for being deprived within Sidama society. The majority of the possessed are women whose spirits demand luxury goods to alleviate their condition, but men can be possessed as well. Possessed individuals of both sexes can become healers due to their condition. Hamer and Hamer suggest that this is a form of compensation among deprived men in the deeply competitive society of the Sidama, for if a man cannot gain prestige as an orator, warrior, or farmer, he may still gain prestige as a spirit healer. Women are sometimes accused of faking possession, but men never are.
As a culturally-specific means of protesting ill-treatment and bad behavior
In cultures that expect female submission, this is one of the few ways to get attention and to demand better treatment. And pretty much the only way you can tell your husband that he's an asshole right to his face.
The Digo people of Kenya refer to the spirits that supposedly possess them as shaitani. These shaitani typically demand luxury items to make the patient well again. Despite the fact that men sometimes accuse women of faking the possessions in order to get luxury items, attention, and sympathy, they do generally regard spirit possession as a genuine condition, and view victims of it as being ill through no fault of their own. However, men sometimes suspect women of actively colluding with spirits in order to be possessed.
Female workers in Malaysian factories have allegedly become possessed by spirits, and factory owners generally regard it as “mass hysteria” and an intrusion of irrational and archaic beliefs into a modern setting.
The anthropologist Aihwa Ong noted that spirit possession beliefs in Malaysia were typically held by older, married women, whereas the female factory workers are typically young and unmarried. She connects this to the rapid industrialization and modernization of Malaysia. Ong argued that spirit possession is a traditional way of rebelling against authority without punishment, and suggests that it is a means of protesting the untenable working conditions and sexual harassment that the women were compelled to endure.
The concept of spirit possession appears in Chuuk State, one of the four states of Federated States of Micronesia. Although Chuuk is an overwhelmingly Christian society, traditional beliefs in spirit possession by the dead still exist, usually held by women, and "events" are usually brought on by family conflicts. The supposed spirits, speaking through the women, typically admonish family members to treat each other better.
As the result of vitamin deficiencies
Anthropologists Alice B. Kehoe and Dody H. Giletti argued that the reason that women are more likely to be possessed is because they tend to have deficiencies in certain vitamins due to food taboos, pregnancy, and lactation, which can affect the nervous system. 
As mental illness
Spirit possession is not recognized as a psychiatric or medical diagnosis by the DSM-IV or the ICD-10. People alleged to be possessed by spirits sometimes exhibit symptoms similar to those associated with mental illnesses such as psychosis, hysteria, mania, Tourette's syndrome, epilepsy, schizophrenia, or dissociative identity disorder, including involuntary, uncensored behavior, and an extra-human, extra-social aspect to the individual's actions. In cases of dissociative identity disorder in which the alter personality is questioned as to its identity, 29% are reported to identify themselves as demons. Physicians regard this as a mental disease called demonomania or demonopathy, a monomania in which the patient believes that he or she is possessed by one or more demons.
- The Wikipedia article about spirit possession, which explores this topic in a more in depth way and has much anthropological information
- Lewis, I.M. 1966 Spirit Possession and Deprivation Cults. Man, New Series: 1 (3): 307-329.
- Allen, Tim 1991 Understanding Alice: Uganda's Holy Spirit Movement in Context. Africa: Journal of the International African Institute. 61 (3): 370-399
- O'Connell, M.C. 1982 Spirit Possession and Role Stress among the Xesibe of Eastern Transkei Ethnology, 21 (1): 21-37.
- Hamer, John and Irene Hamer, 1966. Spirit Possession and Its Socio-Psychological Implications among the Sidamo Of Southwest Ethiopia. Ethnology 5 (4): 392-408.
- Gomm, Roger 1975 Bargaining from Weakness: Spirit Possession on the South Kenya Coast Man, New Series: 10 (4):530-543
- Ong, Aihwa 1988 The Production of Possession: Spirits and the Multinational Corporation in Malaysia American Ethnologist 15 (1): 28-42.
- Hezel, Francis X. 1993 Spirit Possession in Chuuk: Socio-Cultural Interpretation. Micronesian Counselor 11
- 1981 Kehoe, Alice B., and Giletti, Dody H., Women's Preponderance in Possession Cults: The Calcium Deficiency Hypothesis Extended, American Anthropologist New Series,. 83(3):549-561
- How Exorcism Works
- J. Goodwin, S. Hill, R. Attias "Historical and folk techniques of exorcism: applications to the treatment of dissociative disorders",
- Journal of Personality Assessment (abstract)
- Michel Strickmann (2002), Chinese Magical Medicine, edited by Bernard Faure, Stanford University Press. p. 65.
- Microsoft Word - Haraldur Erlendsson 1.6.03 Multiple Personality