IKEA Effect

Thanks to the IKEA effect, we are often willing to fork over extra money for experiences that require us to put in more work, such as assembling furniture ourselves rather than buying it pre-assembled. Sure, these experiences can be fun in their own right—but unfortunately, this can still lead us to overspend. The IKEA effect can also give us a skewed picture of how good a job we did on something that we worked hard on, making us overconfident even when the quality was lacking. 

Companies looking to increase their profits can exploit the IKEA effect by charging unnecessarily high prices for a product, even when the customer assumes the cost of putting it together themselves. Certain businesses, like IKEA and Build-a-Bear, have business models that are centered on having us pay for our own labor. We may overlook the fact that we’re getting a bad deal to have the satisfaction of assembling it.

Just as assembling a piece of IKEA furniture can increase our attachment to it, the effort put into personalizing or configuring a digital product or profile can make users more attached. For instance, if a user spends time setting up and personalizing their profile on a new platform or app, they're more likely to use it regularly and feel more connected to it.

Many AI systems, from chatbots to recommendation engines, allow for a degree of personalization. As users input their preferences or train an AI to better serve their needs, they become more invested. Take someone who spends time refining their smart home settings to get the AI to understand their daily routine. This consumer might become more attached to and satisfied with that system compared to an off-the-shelf solution.

The IKEA effect is very similar to another cognitive bias called the endowment effect, wherein people value items more highly if they belong to them—or even if they just feel a sense of ownership over them. For example, one study found just having a chocolate bar sitting nearby for 30 minutes caused people to value it more highly.¹ However, the IKEA effect is distinct from the endowment effect: it specifically requires that a person build or make something themselves. The IKEA effect can even disappear if the person is instructed to disassemble their creation after putting it together.²

So, why does this happen?

We have a psychological need to feel competent

It goes without saying that we like to feel like we know what we’re doing; that we are capable of handling the tasks that are given to us, and of dealing with obstacles as they come up. Nobody likes feeling foolish or incompetent. 

In fact, our perceived self-efficacy—that is, our beliefs about our own abilities to perform well and exert control over our lives—is an important component of our overall mental health. People who believe in their own self-efficacy are better at coping with challenges, recover more quickly from failures or setbacks, and are less vulnerable to stress and depression.³ They are also more intrinsically motivated, meaning that they are motivated to do things because they find them inherently enjoyable or interesting, rather than working solely for some external reward.⁴

When we do things like assemble a piece of furniture or bake a cake, it boosts our sense of self-efficacy. Not only does this feel good in the moment, it fulfills a deep psychological need. This is partially why we see items that we put together ourselves as so much more valuable than they actually are. 

Research has provided good evidence that this self-efficacy boost plays a role in the IKEA effect. In one experiment, researchers started out by giving participants four math problems to solve. One group got very easy problems (e.g. “How likely is it that a fair coin that is tossed once will come up heads?”), while the other received very difficult ones (e.g. “You have 4 coins. Three of the coins are normal, but one of them has heads on both sides. You pick a coin at random without looking. The coin you pick has heads on one side. What are the odds that if you flip the coin over, the other side will be tails?”). The goal of this part of the experiment was to manipulate people’s sense of competence: the group that got the hard problems was likely to feel stressed out and incapable, while the easy problem group didn’t have their confidence shaken at all. 

After the math problems, participants were shown a picture of a bookcase from IKEA and asked whether they would prefer to buy it pre-assembled or to build it themselves. The results showed that people who had had their sense of competence challenged were more likely to say they’d prefer to assemble the bookcase on their own.⁵

In other words, feeling like we’re incapable of something increases our desire to prove ourselves and appear competent, leading us to inflate the value of things we have made.

We want to feel like our effort was worth it

Another driver of the IKEA effect is related to cognitive dissonance, a very influential theory developed by the social psychologist Leon Festinger.⁶ The basic idea behind cognitive dissonance is that, when a person thinks or behaves in contradictory ways, it causes a feeling of intense psychological discomfort. When this discomfort comes up, the person will try to reduce it. This could mean changing their behavior—or it could mean altering their beliefs.

For example, let’s say your friend is a smoker, but they also value their health. When your friend finds out smoking can cause lung cancer, this creates a contradiction: they don’t want to be unhealthy, but they also love to smoke. To resolve this dissonance, they could stop smoking—or, they could change their beliefs to accommodate smoking. For instance, they might fixate on the fact that their grandparents also smoked, and they lived to an old age, so smoking can’t really be that bad for you. This adjustment is totally unconscious; your friend isn’t aware that they’re doing it. Nonetheless, cognitive dissonance had led them to have a distorted view of reality.

A specific type of cognitive dissonance, known as “effort justification,” is important for understanding the IKEA effect. Effort justification describes how, when we do something difficult or taxing, we want to believe that there was a good reason for us to put in all that work. As a result, we tend to place more value or importance on the goal we are working towards.⁷

This is illustrated by an old study on effort justification, where university students were told that they were going to be participating in a group discussion about sex.⁷ Some of the participants had to complete an “embarrassment test,” to prove that they would be comfortable enough to participate in the conversation. For some, the “mild” group, this involved reading words related to sex out loud; for others, the “severe” group, the words were both related to scenes and were obscenities. (It was 1959; this was scandalous back in the day.) 

After the discussion was over, all the participants filled out a questionnaire about their reactions to the discussion. While there wasn’t much difference between the “mild” test group and the group that didn’t have to do an embarrassment test, the people in the “severe” group rated the discussion as being significantly more interesting and rated their group mates as being more intelligent. In other words, the more difficult it was to get through the initiation process, the more they wanted to justify all that effort. 

The same principle applies to the IKEA effect. We see ourselves as rational, reasonable people; we don’t want to feel like we’re the kind of sucker who would agree to waste our time and energy building their own coffee table when we could have just bought one pre-assembled. So we make an unconscious mental adjustment, and decide that our coffee table is more valuable than the others. This resolves our dissonance, by making us feel like effort was proportionate to the outcome. 

We like things that are associated with ourselves 

In general, people have a bias towards optimism: we have a positive outlook on the world, we are more likely to remember happy events than sad ones, and we focus more on positive information.⁸ This bias is especially true for our own self-concepts. Even when it’s not necessarily justified, we are confident in our own abilities, and we have a tendency to think of ourselves as exceptional.⁹

Research has shown that our optimism about ourselves also extends to things we own or even things we associate with ourselves. For example, people have a preference for letters of the alphabet that show up in their own name.¹⁰ The IKEA effect might happen in part because of this: our positive self-concepts spill over into the things we have made, leading us to see them as superior or more valuable.¹¹

You may have noticed that “do-it-yourself” products seem to have been on the rise recently. Meal kit delivery services, where subscribers receive a weekly box of pre-portioned ingredients so they can whip up home-cooked meals, are just one example. In the past few years, companies like Blue Apron and Hello Fresh have been blowing up, and this industry is expected to hit a value of $20 billion by 2027.¹² Products like these are convenient in a lot of ways, but they also don’t come cheap: most meals cost more than $10 USD per portion,¹³ not to mention that preparing the cooking them can still take a fair amount of time and effort.

The IKEA effect can draw us into products like these, making us feel like the work we put into something made it worth its high cost. On top of this, many companies that capitalize on the IKEA effect have reputations for being affordable or cost-effective, probably because of their DIY component. Through this bias, marketers get to have their cake and eat it too: customers do most of the work, feel happy about it, and come away with the perception that they got a good deal.¹⁴

Apart from our decisions about coffee tables and meal kits, the IKEA effect could potentially lead us to be overconfident in our own work.¹⁵ When we’ve put our blood, sweat, and tears into a project, factors like effort justification, the fear of feeling inept, and our rosy self-concepts can all blind us to issues or places where there’s room for improvement. This sets us up to perform worse than what we’re truly capable of.

Research before you buy

Options that come with some assembly required aren’t necessarily bad choices, and there is real value in these hands-on experiences: it can be fulfilling and satisfying to, say, cook a meal from scratch, or build your own bookshelf (even if it comes out a teensy bit crooked). That said, don’t pick the DIY options just because you feel like they are more cost-effective; that’s the IKEA effect leading you astray. Oftentimes these products aren’t as high-quality as other alternatives, so even though they may be less expensive upfront, they could end up costing you more in the long run if you need to replace them fairly sooner. 

Weigh the product cost with the value of your time

The IKEA effect can lead us to believe we’re getting a great deal for our money because we inflate the value of the finished product that we’ve made ourselves. One way to counteract this is to consider how long it will take to actually put a product together. Ask yourself whether that item’s lower price really offsets all the time you’ll need to put it in order or to actually use it. Sure, the cost of a dinner made from a meal kit might be a few dollars less than eating out, but it might take an hour or so to fully prepare it. Does it still seem like a good deal? With every decision you need to make, consider whether you want to maximize convenience or minimize the upfront cost.

Get a second opinion

As mentioned above, the IKEA effect can distort our views of our own work, making it harder to see faults or missed opportunities. In one study, participants folded origami and then bid on their creations as well as others’. This bias led people to overestimate the value of their work so much that they believed their origami was only slightly less valuable than origami folded by an expert.²

A simple strategy to deal with this is to make a habit of asking others for feedback (and taking it seriously). Ideally, pick somebody who isn’t invested in you or in the outcome of your work so they can give you an impartial perspective.¹⁵

The IKEA effect was coined by Michael Norton, Daniel Mochon, and Dan Ariely. In the introduction to their 2012 paper “The IKEA effect: When labor leads to love,” they open by talking about a famous historical example of the IKEA effect: instant cake mixes. When these mixes were originally introduced in the 1950s, they didn’t perform well, because housewives thought they made cooking too easy; they devalued the labor of baking and made the process less rewarding. After manufacturers changed the formula, so that the mixes now required “more effort” by adding an egg, they gained popularity.²

If the IKEA effect increases our preference for things that we made ourselves, it makes sense that if you get somebody to help cook a meal, they’re more likely to enjoy eating it. Research suggests that parents could capitalize on this to nudge their kids to eat more veggies. In a study by Radtke et al. (2019), kids were more likely to like vegetables if their parents got them involved in cooking activities. Unsurprisingly, the kids who liked vegetables also ate more of them.^l6

In an online lecture series called “A Beginner’s Guide to Irrational Behavior,” Dan Ariely, one of the authors of the original IKEA effect paper, suggests that this bias is one of the reasons that parents get so singularly focused on their children. “When I go to the park and my kids are playing, I can’t imagine that everybody else is not interested in just sitting there, watching my kids,” he says in the video. Because parents have invested so much time and energy into raising their children, their evaluation of their kids is higher, and they expect other people to be similarly impressed. (Of course, this is not the only reason parents love their children—Ariely just means that this one cognitive bias might contribute to how parents dote on their kids.) 

What it is

The IKEA effect describes how we put more value on things that we’ve built ourselves.

Why it happens

Making things, even if it’s just assembling a dresser with a crazy Swedish name, satisfies our need to feel competent. Our improved opinions of our creations might also happen because we want to feel justified in having put in so much work, and because our positive self-concepts spill over into our projects. 

Example 1 – Kids’ diets

Parents can capitalize on the IKEA effect by getting their kids involved in cooking dinner. Research shows that kids who help prepare food tend to like vegetables more and eat more of them.

Example 2 – Doting parents

Dan Ariely, who worked on the original IKEA effect paper, suggests that this bias might contribute to the way parents see their own children as somehow “better” than other kids. They put a lot of effort into raising them, so their evaluations of them are more positive.

How to avoid it

To avoid getting a bad price because of the IKEA effect, research other options and consider whether a small difference in price is worth putting in your free time to build something. Also, in cases where the IKEA effect makes it hard to evaluate your own work, get a second opinion from someone else.

The Endowment Effect

The IKEA effect falls under the umbrella of the endowment effect, where we value items more highly if they belong to them—or even if we just feel a sense of ownership over them. Read this article to find out more situations where the endowment effect occurs and how we can avoid falling victim to this bias.

Dan Ariely

Dan Ariely is a psychologist and behavioral economist who helped contribute to the first paper proposing the IKEA effect. Read this article to find out how Ariely’s work has challenged some of the most basic assumptions of traditional economics and shone a light on the systematic irrationalities of human behavior.