How the bias works and how to avoid it
What is it?
The IKEA effect describes our tendency to place excessively high value on the things that we (help to) create. This effect comes with its own apocryphal story. As the legend goes, at some point in the 1950s, US food company General Mills decided that it wanted to sell more of its Betty Crocker brand of instant cake mixes and approached Ernest Dichter — the “father of motivational research” — for help. Dichter advised the company to replace the powdered eggs in the cake mix recipe with a requirement for fresh eggs in order to give the baker more ownership of the final result. The rest is, as they say, history. (Although, in this case, it probably isn’t.)
The seminal study
In 2011, psychologists Michael Norton, Daniel Mochon, and Dan Ariely conducted several experiments that showed that people value the items they build themselves more than items built by others, and more than they are objectively worth. They called this “the IKEA effect”.
In one experiment, participants were taught how to make small origami frogs and cranes and, having completed their creations, were asked how much they would be prepared to pay for them. They were then distracted with a random task while another set of participants who had not built anything was asked how much they thought the first group’s creations were worth. Next, two research assistants who were experienced origami enthusiasts made several high-quality creations and another set of “non-builder” participants was asked to evaluate them.
The origami “builders” valued their own creations at, on average, $0.23. This was a great deal more than the average of $0.05 the non-builders assigned to their “amateurish creations”, and only slightly less than the average $0.27 price tag put on the experts’ creations. On the off-chance that the participants had realized they were overvaluing their own creations, the experimenters asked a new set of students to build some cranes, and then asked them how much they thought other people might think they were worth. The average guess was $0.19.
Further experiments established that this overinflated feeling of accomplishment was also shared by people who did not consider themselves to be “DIYers”. The IKEA effect did have its limits, though; when participants in the experiments built and then destroyed their creations, or failed to complete them, the effect dissipated.
How it works
Several reasons have been put forward to explain the existence of this bias. One concerns a well-studied concept called “effort justification”; simply put, when we put a lot of effort into something, we want to feel that it was worth it, that we haven’t just wasted our time and energy building a bookcase when we could have bought a perfectly good one pre-assembled.
So, in order to feel better about ourselves, we make an unconscious mental adjustment and decide that our bookcase is more valuable than others. Now the effort we’ve put in seems proportionate to the outcome. Needless to say, then, the more effort we put into something, the more we come to value it.
Crucially, however, for our labor to lead to love, it must be successful. This is because we have a deep psychological need to feel competent, to feel like we are capable of handling the tasks and obstacles that are thrown our way and exert some kind of control over our lives. Successfully creating something gives us a sense of pride and a desire to show it off to other people, and it makes us value it more.
Strictly speaking, this is not the same for everyone. While for an object we create to be imbued with value, the experience of creating it must be a positive one, research has shown that people from interdependent cultures like China are just as likely to value their creation if it doesn’t turn out perfectly. It’s the Western psyche that demands success for the experience to be a good one.
Finally, some psychologists think that we’re probably extending our positive self-image to the things that we make, which isn’t all that surprising when you think about it. When we make a product, we invest our time, attention, effort, tastes, and preferences into it. It becomes a symbol of our identity and we become psychologically tied to it, viewing it as superior or more valuable than comparable things made by other people, something that’s more likely to happen when we own the product.
How to avoid it
In recent years, companies have discovered that there’s good money to be had in selling “do-it-yourself” products; DIY furniture, PCs, meal kits, build kits, kit cars, and kitchens, you name it, you can probably find someone who will sell you the inputs you need to make it yourself.
And why not? There’s nothing wrong with enjoying the process of creation and reveling in the fruits of your labor. Just remember to consider how much your time is worth to you — many of us apparently don’t, and this means that our purchase decisions aren’t as good as they could be. Sure, the cost of a meal-kit dinner may be a few dollars less than eating out, but it’s also an hour of your time that you’ll never get back.
And be aware of your tendency to overrate your own work; that exotic tile work in your bathroom may, in your opinion, increase the value of your house, but potential buyers may not see it that way. Get a second opinion from someone who will tell you the truth, even if it hurts.