The IKEA Effect: When labor leads to love
Updated: Apr 8, 2021
By Shrusti Singh
Don't we all love our job that we put our labor and love into, even when we despise it the most? Don't we all love the fruits of our labor? Ever been on cloud nine, after the mere assembly of an IKEA table?
We all have been in situations where we unconsciously place superfluous value on products we partially created. We know this phenomenon as the IKEA Effect - “that labor alone can be sufficient to induce greater liking for the fruits of one’s labor”, it was named in a 2011 paper in the Journal of Consumer Psychology by Michael Norton, Daniel Mochon, and Dan Ariely. The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. To put it in simple terms - when you work hard for something, you fall in love with it. The term was coined after the Swedish Manufacturer and furniture retailer, IKEA, which sells furniture that requires assembly. Such a cognitive bias, at times, can subtly influence a consumer's willingness to pay and their spending pattern.
We all tend to justify our labor and time investment. The knowledge of a certain type of cognitive dissonance known as 'Effort Justification' helps explain this bias and the IKEA effect. Effort justification describes how, when we do something difficult or put our efforts into it, we tend to justify or believe that there was a good reason behind all those efforts.
The IKEA effect has been evident and used long before it was coined in 2011. In the 1950s, the West witnessed a trend of simplifying the life of the American Housewife by minimizing labor. A part of this trend was the introduction of 'Instant Cake Mixes'. Initially, when these mixes were introduced in the market, there was a little resistance to their use, because the consumers felt that these mixes made cooking too easy. The cake makers felt that it undervalued their labor and skills. To remedy the situation, the product designers changed the recipe to require adding a fresh egg. This gave the cake maker more ownership of the results, leading to wider acceptance of the revolutionary instant cake mixes.This effect is now being used by marketers, as an effective marketing tactic, making things more laborious to get consumers to value their products more. It has led to firms and marketers viewing consumers as "co-creators of value" rather than just the "recipients of value", thereby involving them in product creation.
Testing the IKEA Effect
To empirically confirm this phenomenon and its magnitude, the authors of the paper conducted a few experiments. These experiments involved assembling IKEA boxes, folding origami, and building and dismantling Lego structures.
The very first experiment they conducted was to establish the IKEA Effect and how one's labor into a project leads to greater valuation for the same and the increase in liking for the utilitarian product.
This experiment consisted of 2 groups - one treatment group and one control group (treatment groups are subjected to treatments or interventions believed to have an effect on the outcome of interest while the control group is not. The control group is the standard to which comparisons are made).
The control group was given a pre-assembled IKEA storage box while the treatment group was asked to assemble the IKEA storage box. At the end of this step, both groups were asked to make a bid on the assigned boxes. They were asked to rate the liking and utility for their boxes on a 7 and 9-point Likert-scale (A Likert scale is a psychometric scale commonly involved in research that employs questionnaires).
The groups saw the IKEA storage boxes as more utilitarian than hedonic.
The builders (from the treatment group) bid significantly more for their boxes (M= $0.78, SD= 0.63) than the non-builders (M= $0.48, SD= 0.40), t(50) = 2.12, pb.05
Similarly, the subjective liking for their boxes was more in the treatment group than the non-builders.
Those who had assembled their own box were willing to pay a whopping 63% premium for their labor.
The IKEA effect was hence exemplified through this experiment.To further prove the magnitude of the IKEA effect in a generalized setting, the authors switched the product category from the utilitarian IKEA storage boxes to Origami cranes and frogs (a hedonic product).
This experiment consisted of 2 control groups and 1 treatment group.
The treatment group was asked to make either an origami frog or a crane and bid on their creations after the project. The first control group was presented with the origami made by the treatment group and had to bid on their creations. The second control group was presented with origami creations of experts and we're asked to bid for the same. All three groups were also asked to rate their liking of the creations on a 9-point Likert scale.
The builders (as expected) valued their creations 5 times more than the non-builders’ willingness to pay.
The first control group saw the amateurish creations of the treatment group as worthless crumpled paper.
Whereas, the builders that put their labor and love into their creations valued them so highly that they were willing to pay as much for their own creations as the control group 2 was willing to pay for the expert origami.
The non-builders bid for the treatment group's origami was significantly lower than both the bids for expert origami and builders' bid for their own origami.
This experiment offers some evidence that builders truly believe in the value of their creations.
The next experiment aimed to find out the role of completion in value assessment. In this experiment, the product category was further replaced by Lego Bionicle sets and the groups functioned in pairs of 2.
This experiment consisted of 3 treatment groups. The first treatment group was given a pre-assembled set. The second group was given a set to assemble themselves and the last group was asked to assemble and then dismantle their creations.
The people in all the groups were asked to bid on their own and their partner's creations.
One common result in all the three groups was that - participants were willing to pay more for their own sets (M= $0.54, SD= 0.69) than their partner's sets (M= $0.33, SD= 0.53).
The bids were the highest in the group where they were asked to build the sets. The participants' bids were considerably higher for their own creations than their bids for their partner's creations.
They found that the bids decreased when the groups were asked to unbuild their creations. This negative effect is considerably noticeable in the case when the participants were asked to bid on their unbuilt sets.
This experiment demonstrates the negative and demotivating effects of their labor being undone by others which creates a value-destroying effect leading to the IKEA effect being crushed.
The success of one's labor is essential for the IKEA effect to emerge, which demonstrates the fundamental human need for EFFECTANCE- an ability to successfully produce desired outcomes in one's environment. When people successfully complete a labor-intensive task, they start valuing their Fruits of Labor, in contrast to when they do not.
The last experiment that the authors conducted was to figure out the role of incompletion in the valuation of creations. The authors shifted the product category back to the IKEA storage boxes.
This experiment had two groups and each group was initially asked to rate themselves as a "DIY Person" on a 7-point Likert scale.
The first group was asked to fully assemble an IKEA box whereas the second group was stopped right before the second last step, preventing the completion of the storage box.
The participants were again asked to bid on their respective creations.
The participants who had finished the assembly of their storage box imbued their creations with higher value (M= $1.46, SD= 1.46) than those who could not complete it (M= $0.59, SD= 0.70), and placed a higher bid for the same.
The participants who had rated themselves higher as a DIY person on the Likert scale valued their creations slightly higher than the non-DIYers (although there was no evidence of a relation between condition and DIY rating)
This final experiment illustrates that goal competition is a necessary factor affecting the valuation of the products.
Non-completion of tasks and failure often leads us, humans, to ruminate over our failure and makes us feel bad. This negative effect decreases our self-confidence and causes regret. Vice-versa when one successfully completes their goal, the completion is bound to boost one's competency, leading to self-efficacy. Remember the joy, when you complete the assembly of your favorite long-awaited IKEA chair? or the successful completion of the cake that you were baking (using an instant cake mix) ?
We all surely love to appreciate and value our fruits of labor, when we have spent hours of labor into any work. After so many experiments we can ascertain that the IKEA effect can not solely arise on the idea of customization, but can also arise on the mere idea of self-labor. The product categories used in the above experiments do not permit customization, but on the other hand, they do not stop the participants from experiencing the IKEA effect as well. Our efforts, coupled with positive feelings of Effectance, are an important driver of increased willingness to pay, which makes us believe that effort and value increase in lockstep.
The need to feel justified in having put so much work in our projects and because our self-concepts spill over them, we end up over-valuing or creating improved opinions of our creations. The rosy picture that we all have of our DIY personality is a major factor affecting our decisions towards such products.The IKEA Effect is what draws us to Do-It-Yourself products, making us believe that the labor we put in, is worth the high cost that we pay. And rightly so, many companies capitalize on this very theory of the IKEA effect claiming to be cost-effective due to this bias. This way the firms and marketers get to have their cake and eat it as well. The customers do most of the work, feel happy about it, appreciate the product, and believe that they got a good deal. This deal seems too good to believe, without there being some good old economics behind it.
Shrusti is a first year student of economics at Hansraj College, University of Delhi.
Norton, M.I., Mochon, D. and Ariely, D. (2011). The “IKEA Effect”: When Labor Leads to Love. SSRN Electronic Journal. [online] Available at: https://www.hbs.edu/faculty/Publication%20Files/11-091.pdf.
Wikipedia. (2020). Effort justification. [online] Available at: https://en.wikipedia.org/wiki/Effort_justification#:~:text=Effort%20justification%20is%20an%20idea.