The IKEA Effect

Why do we value what we create?

Have you ever noticed how much more you cherish that bookshelf you spent hours assembling, even though it wobbles slightly? This phenomenon is known as the IKEA effect, a cognitive bias where people place higher value on things they’ve partly created themselves. Named after the Swedish furniture giant IKEA, this effect highlights our tendency to overvalue our own efforts.

Here’s the story behind the discovery of this effect and a few examples of how it manifests in different aspects of life.

Back in the 1950s, General Mills, a popular US food company, desperately wanted to increase its sales.
But they approached it from a different angle than the competition. Instead of investing more in advertising and promotion, they hired a well-known psychologist, Ernest Dichter.

Creative ideas breed creative solutions.

After conducting several focus groups, Dichter advised the company to replace powdered egg with the requirement to add a fresh one. Dichter’s motivation was not to make the cake recipe healthier but to give the baker a sense of ownership over the final product, creating an attachment to it.

The anecdote says that this simple trick increased sales significantly.

We all know that adding fresh eggs to a cake recipe can improve the flavor and texture. But Dichter’s insight revealed a profound psychological understanding of consumer behavior: creating a sense of ownership in a product creates a bond in your mind.
This discovery from the 1950s is now known as the IKEA effect and is well-founded in modern marketing.

The IKEA Effect

The IKEA effect in its full meaning is the tendency for people to place a disproportionately high value on objects they have partially assembled themselves, regardless of the quality of the end result. Infusing a task with labor is a magic ingredient to increase perceived value, and this concept has been confirmed in scientific papers over the years since Dichter’s discovery.

One of the first to harness this phenomenon was, unsurprisingly, Ingvar Kamprad, the founder of IKEA. Whether Kamprad was aware of Dichter’s insight is unknown, but his genius in anticipating consumer behavior is evident. In the 1950s, IKEA made a strategic move to sell flat-pack furniture that customers would assemble themselves.

And this simple trick sparked a retail revolution.

Over time, scientists - yes, they are also consumers - realised that the simple act of touching and interacting with a product helps us build a relationship with it. Several tests have shown that the effort involved in assembling furniture triggers neurological responses in the brain, creating emotional connections.

That intangible bond translates directly to very tangible dollars.

The IKEA Effect at workplace

The IKEA effect manifests in all aspects of life, including the professional environment. It is most tangible at the intersection of ownership, effort, and feeling valued at work. In the workplace, employees who are involved in decision-making and project execution often show higher levels of commitment and satisfaction.

Fostering a culture of ownership in project delivery, where everyone has the opportunity to invest in and take pride in their work, leads to deeper involvement and higher quality engagement. This, in turn, results in greater job satisfaction and a sense of accomplishment.

However, the IKEA effect can also have downsides. People might overvalue their contributions, leading to biased assessments of their work’s quality compared to objectively better alternatives.

What does this mean in real-life scenarios? If you see someone sticking with a suboptimal solution simply because of the effort invested, rather than adopting a more effective approach developed by someone else, yes- you’re right, that’s the IKEA effect speaking.

Balancing the IKEA Effect

Recognizing when effort is worthwhile and balancing individual investment with collaboration can help mitigate the potential downsides of the IKEA effect. Here are some practical tips:

• Assess Value: Before diving into a project, consider if the effort will result in a significant benefit. Is the learning experience valuable? Will the satisfaction outweigh the potential frustration?

• Encourage Collaboration: In a work environment, encourage collaborative efforts where everyone’s contributions are valued. This can balance individual investment with collective wisdom, ensuring the best outcomes.

• Be Open to Alternatives: Be open to adopting better solutions, even if they aren’t your own. Recognizing the value in others’ work can help mitigate the potential downsides of overvaluing personal efforts.

The IKEA effect reminds us that putting effort into something makes it more personal and valuable.

We can’t verify if General Mills’ discovery was truly at the foundation of the IKEA effect. Maybe it was simply a realisation that fresh eggs make for better cakes? Who knows.

Regardless, it makes for a good story, and stories don’t necessarily have to be true to inspire and prompt action - especially the ones we create ourselves.

They just need to resonate with what we already believe.