Welcome back! We just covered the Endowment Effect, which explains why we value things more just because we own them. Today, we’re looking at a fascinating subset of that bias called the IKEA Effect.
Have you ever spent four hours struggling to assemble a bookshelf, ended up with a slightly wobbly finished product and two “extra” screws, but still felt like it was the most beautiful piece of furniture in your house? Or maybe you’ve tasted a meal you cooked yourself and thought it was “gourmet,” even though it was just average pasta?
That is the IKEA Effect: the tendency to place a disproportionately high value on products we partially created or assembled ourselves.
What Exactly Is the IKEA Effect?
The IKEA Effect is a cognitive bias where consumers value a product more if they have invested labor in its creation. Named after the Swedish furniture giant known for its flat-pack DIY products, this bias suggests that the effort we put into something makes us “fall in love” with the result. We don’t just see the object; we see a reflection of our own competence and hard work.
The “Egg Theory” and Instant Cake Mix
The psychological roots of this bias were actually discovered long before IKEA became a household name. In the 1950s, food companies introduced “instant” cake mixes that only required adding water. To their surprise, the mixes didn’t sell well.
The problem? It was too easy. Homemakers felt that since they didn’t have to do any work, they couldn’t take credit for the cake. When companies changed the recipe so that users had to add a fresh egg, sales skyrocketed. By adding that one small step of labor, the users felt they were “baking,” which made the final product more valuable to them.
Why Does This Happen?
There are two main reasons our brains “over-value” our own labor:
- Self-Efficacy: Humans have a fundamental need to feel competent and capable of affecting their environment. Successfully building a chair—even a simple one—provides a boost to our self-esteem.
- Justification of Effort: Our brains hate feeling like we wasted time. If we spent all day building something, we subconsciously “bump up” its value to justify the massive amount of effort we put in.
The Catch: It Must Be Finished
There is one major caveat to the IKEA Effect: the project must be successfully completed. If you spend hours on a project but fail to finish it, or if it falls apart immediately, you don’t value it more. In fact, you might actually end up liking it less because it now represents a failure of your competence.
Real-World Impacts
- The “Technic Alley” Beta Tester: Software companies often let users “build” their experience through customization or early beta feedback. This makes the users feel like “co-creators,” making them much more loyal to the product.
- Meal Kits: Services like HelloFresh or Blue Apron rely on the IKEA Effect. You do the chopping and cooking, which makes the meal taste better to you than a pre-packaged frozen dinner would.
- Business Leadership: A manager might be overly attached to a strategy simply because they spent months developing it, even if the data shows the strategy is failing.
- Customized Sneakers: Brands like Nike allow you to “design” your own shoes. Even if your design is objectively a bit “busy,” you’ll likely love them more than any off-the-shelf pair because they are your creation.
How to Stay Objective
The IKEA Effect can be a great tool for happiness, but it can lead to bad financial or professional decisions if you aren’t careful:
- The “Expert” Check: Ask yourself: “If I saw this exact item in a store, built by someone else, how much would I pay for it?” 2. Separate Effort from Quality: Just because you worked hard on a report or a project doesn’t mean it’s perfect. Try to evaluate the “finished product” through the eyes of an end-user who doesn’t know how much you sweated over it.
- Don’t “Fall in Love” with Your Prototypes: In business, be willing to scrap a “DIY” solution if a better, more professional one becomes available.
The Takeaway
Labor leads to love. While the IKEA Effect is a great way to find more joy in your daily life and hobbies, it’s important to remember that your effort doesn’t always equal market value. Build things, be proud of them, but stay humble enough to know when the “screws” are a little loose.
