Why the IKEA Effect is About Much More Than Furniture

Legend has it that Betty Crocker had to revise one of her first all-in-the-box cake mixes because of poor sales. The recipe was a no brainer. Just add water, mix, and pour into a baking dish.

It appears though that sometimes we don’t want that much simplicity. To boost demand, the folks at Betty Crocker launched an “Add the Egg” campaign. Once home bakers had to add an ingredient, sales soared.

Pre-made Meals

Yesterday, the WSJ described a new way to cook a meal. You just need to buy a special $400 steam oven and order your dinners online. When the food arrives, you unwrap the box, scan the bar code, insert it in the oven (shown below). Then wait until the cooking’s complete. The Wall Street Journal columnist said it tasted pretty good.

As simple as the first Betty Crocker cake mix, these effortless meals might have the same problem. A group of behavioral economists called it the Ikea Effect.

The IKEA Effect

Through the IKEA Effect, “labor leads to love.”

In a 2011 paper, IKEA furniture, legos and folded origami were used to demonstrate the power of participation–even if it’s unpleasant. Researchers had two objectives.

They asked:

• how much self-assembly inflated value for the assembler.
• how much of the project had to be completed for value to increase.

IKEA

In the lab, one group assembled an IKEA box while another was given a fully-constructed box. All then had to bid on boxes and thereby convey their value. They also rated them on a “like” scale. Demonstrating an IKEA Effect, the builders bid more and liked the boxes more than the non-builders.

Origami

A second experiment tweaked the variables through some origami construction. The results showed a pronounced IKEA Effect. When participants could exhibit some originality, they also valued what they created.

Legos

The third permutation, this time with Legos, involved assembly and disassembly. Here, the participants bid much less when faced with something they had created and then taken apart.

So yes, self-assembly (over-) inflates value for the builder if the project remains completed. Possible reasons could include validated effort, an increased sense of competence, or an enhanced sense of ownership.

Our Bottom Line: Behavioral Economics

After psychologist Daniel Kahneman won the Nobel Economics Prize in 2002, we increasingly realized that economics is more than the rational interaction of supply and demand. As humans, we react to a complex world of incentives. Some examples at econlife included how nudges determine our taxi tips and temptation bundling sends us to the gym.

And now we have an IKEA Effect that could inspire consumer demand at home and labor satisfaction at work.

However…I would like to add that I would much rather research and write a blog than assemble furniture. For me, the opportunity cost of the IKEA Effect would render it inoperative. A good home cooked meal that requires no effort sounds wonderful!

My sources and more: You might want to start with the Betty Crocker story and then move onward to the IKEA study and this WSJ column. With a pretty good idea of the IKEA Effect, you could check out whether your friends and colleagues agree. I still have my doubts about its universality.