The IKEA Effect

Abstract

How people perceive the value or valuation of a product is different. The way in which this valuation is rarely objective, with who made the product, how it was made or who previously owned it being the key factors influencing people’s perceived value of the product. The IKEA effect, a bias through which people believe their creations, although mostly amateurish and poorly-done, are more valuable than similar ones created by others, even experts. The study investigated the IKEA effect, and conducted an experiment through which it explored the effect of labor on love among older participants. The study also highlighted the reasons behind people’s higher valuation of their self-assembled products in comparison to similar pre-assembled ones as well as the conditions necessary for the IKEA effect to manifest.

Introduction

Having their customers do part or most of the work and feeling great about it as well as perceiving they have attained greater value for their money has been touted as the Holy Grail for businesses and companies today. However, this insight is not entirely novel as it dates back to the 1950s. The introduction of instant cake mixes in the 1950s by the US food company General Mills, although initially intended to minimize labor and effort and thereby simplify the American housewife’s life, was met with market resistance. The reason for this was the thought that the instant mixes made everything (cooking) too easy, therefore leading to the undervaluing of skill and labor. Following the resistance, Betty Croker changed their recipe, replacing powdered eggs in the cake mix with the requirement of their customers adding fresh eggs. The change was, subsequently, increasingly adopted by customers, and while there are many possible reasons for this, the infusion of the task with labor seems to have been the crucial contributor (Shapiro, 2004). Close to 70 years later, the insight (getting consumers to value products more by making them more laborious) has become an established marketing tactic. Currently, multiple companies allow customers to design, create and assemble their own products, including coffee mugs, boxes, T-shirts, and so on. A company like Build-a-Bear, for example, provides people with the opportunity and ability to create their own teddy bears, while charging them a premium although the assembly costs are foisted onto them. Whereas a common viewpoint of the impact that labor has on valuation is that having consumers assume the production costs will result in their reduced willingness to pay the full cost of the product after subtracting their labor costs/value, the above-mentioned examples suggest that when they imbue products with their own labor, people’s efforts could increase their valuation of the products. With respect to this, Norton, Mochon and Ariely (2012) assert that while some labor could be enjoyable and some allow for product customization (with both possibly increasing valuation), and suggest that labor alone could be enough to bring about (induce) greater liking for the fruits of an individual’s labor. They add that people who construct even the most standardized bureaus, which is an arduous and solitary task, could tend to overvalue their creations, most of which are usually poorly constructed. Norton, Mochon and Ariely (2012) called this the IKEA effect, naming it after the Swedish manufacturer IKEA which is a global furniture giant renowned for products whose buyers have to self-assemble.

Aim and Objectives of the Research

The main aim of this research project is to investigate the IKEA effect in relation to how people have an increased valuation for products they self-assembled in comparison with similar products that were pre-assembled. The research project will also seek to achieve the following objectives:

1. Examine how labor leads to love
2. To explore the conditions necessary for the IKEA effect to manifest

Hypotheses

HO: When people assemble products by themselves, their valuation of the products increases.

H1: When people assemble a product by themselves, their valuation of it does not increase.

Literature Review

People rarely value goods and products objectively, with factors such as who made a product or object (Newman and Bloom, 2011), how the object was made (Fuchs, Schreier and Van Osselaer, 2015) or who previously owned it (Newman, Diesendruck and Bloom, 2011) significantly influencing people’s perceived value of products. Constructing products by themselves also leads to people placing a higher value on these products, compared to similar products that they did not construct. This valuation bias has been termed the IKEA effect by Norton, Mochon and Ariely (2012).

Whereas the IKEA effect seems common in situations where product customization is critical, it also spills over to utilitarian products, such as furniture, that do not require any or increased creative customization (Norton, Mochon and Ariely, 2012). The authors go on to suggest that the bias extends such that individuals continue to (over)value their own, usually poorly-crafted, products even more than the well-crafted ones by experts. The IKEA effect has been found to generalize to a wide variety of creation scenarios including online customization of products (Franke, Schreier and Kaiser, 2010) and food production (Dohle, Rall and Siegrist, 2014; Troye and Supphellen, 2012).

Blustein (2008) suggests that labor is a central aspect to the well-being of individuals, with Hsee, Yang and Wang (2010) and Keinan and Kivetz (2011) adding that productivity (and/or the feeling of it) forms an important part of many people’s goals. The phenomenon of labor and love has been used to explain why people who labor on certain things might come to overvalue them. Extensive research with regard to the justification of effort, with most findings demonstrating that the more people put effort into an activity, the more they tend to value it (Axsom, 1989; Axsom and Cooper, 1985; Festinger, 1957; Labroo and Kim, 2009). This link has also been found to apply to non-humans too. For example, starlings and rats prefer food sources whose acquisition requires effort (Aiken, 1957; Kacelnik and Marsh, 2002; Lawrence and Festinger, 1962). Therefore, the fact of labor leading to love is demonstrated as a basic process, and effort and value are seen to increase proportionately.

Norton, Mochon and Ariely (2012), however, suggest that the psychological process that results in labor leading to love is also premised on an additional factor that is equally important, and that is the extent to which the labor of an individual succeeds. They base the suggestion that the success of labor is important to the emergence of the IKEA effect on a wide body of knowledge that has repeatedly demonstrated human’s fundamental need to effect; this refers to their ability to produce the outcomes they seek in their environment, and one way through which this goal is accomplished is through influencing and controlling possessions and objects (Belk, 1988; Dittmar, 1992; Furby, 1991). Bandura (1977) and White (1959), in their separate studies on self-efficacy, proposed that successfully completing tasks enabled people to meet their goal of feeling competent and in control. Similarly, failing to complete a task has been suggested to have a corresponding negative psychological effect- ruminating on tasks they did not completed resulting in negative effect as well as regret (Savitsky, Medvee and Gilovich, 1997; Zeigarnik, 1985).

Therefore, Norton, Mochon and Ariely (2012), in summary, suggest that people only tend to value the fruits of their labor (for instance a product they have created) if they complete a task that is labor-intensive with success. Norton, Mochon and Ariely (2012) conducted various experiments through which they demonstrated the IKEA effect. The first experiment involved the consumers (participants) putting in some effort in the creation of IKEA boxes, folding of origami, and creation of LEGO sets. From this experiment, they found that consumers tended to value self-assembled utilitarian and hedonic products more highly than the ones that came pre-assembled. This demonstrates the basic effect (Norton, Mochon and Ariely, 2012).

Method

Research Design

The research design reflects the manner in which the researcher conducts the study as well as the process he follows in order to answer the study’s research question (Creswell and Poth, 2017). Researchers can use one or a combination of the following research designs; exploratory, descriptive or explanatory (Eastwood, Jalaludin and Kemp, 2014). In order to examine the effect of labor on love among older customers/participants, the researcher chose to use the descriptive survey research design. This research design was preferred given its enabling and facilitation of the determination and description of individuals’ attitudes, values, behaviors, characteristics, thoughts and insights regarding the study topic (Gray, 2019). It also improves the adequacy and accuracy of the interpretation of the study’s findings, thereby making it appropriate for the study, which is exploratory in nature.

Participants

The study used a total of 20 participants, all of whom were aged above 60 years. The participants were selected through the convenience sampling method (a non-probability sampling technique), which ensures that only those who met the criteria (60 years and above were selected). The recruitment was undertaken through social media, including email and social networking sites like Facebook. An invitation was sent to people on social media and those who responded were provided with further information regarding the research, such as date and location. Upon arrival at the lab, the participants were given information sheets that detailed the significance of the research.

Ethical Consideration

The participants were asked to complete a consent form before they could participate in the study. They were also assured of their privacy and the confidentiality of their details as well as their ability to withdraw from the study at any point.

Procedure

The participants were randomly assigned to either the pre-assembled or self-assembled group. Those in the self-assembled group were each given an unassembled IKEA TJENA storage box with instructions and asked to assemble it by themselves. For those in the pre-assembled group, they were given IKEA TJENA storage boxes that the researcher had already assembled. The two groups were allowed to engage with the boxes for as long as they liked before they were asked to make bids on their boxes in order to determine how much each was willing to pay for their (pre-assembled or self-assembled) boxes. At the end, the participants were provided with a debrief page.

Results and Discussion

The study involved 11 females (55%) and 9 males (45%), with 9 participants being between 61 and 65 years old, 4 being between 65 and 70 years, 3 being 71-75 years of age and the remaining 4 being between 76 and 80 years.

The recorded findings show that participants in the self-assembled group valued their boxed more highly than those in the pre-assembled group. Out of the 10 participants in the self-assembled group, only one valued her box at $2.50, while the rest valued theirs at between $3 and $7. Those in the pre-assembled group valued their boxes at just between $1 and $3.50.

These findings demonstrate that people who assemble products by themselves tend to attach a higher valuation to them. A look at the prices the participants were willing to pay also shows that customers were willing to pay a premium for products they assembled themselves, albeit amateurish and often poorly-constructed, compared to those that were pre-assembled for them regardless of the expertise level of those who assembled them. The findings are in line with those of Norton, Mochon and Ariely (2012) who found that people’s valuation of goods increased if they assembled them themselves, compared to those that were assembled by someone else. Although this increased valuation for self-assembled products usually arises from the opportunity to customize the products according to one’s preference, for which they are willing to pay a premium (Franke and Piller, 2004; Schreier, 2006), for standardized IKEA products e.g. boxes for which customization opportunities are minimal or unavailable, increased valuation can be attributed to the labor and not necessarily customization. As such, these findings demonstrate that labor alone is enough to result in higher valuation, even where other value sources such as customization lack (Norton, Mochon and Ariely, 2012).

The findings are also similar to those obtained by Marsh, Kanngeisser and Hood (2018), in their study of when and how labor leads to love, during which they found that children aged 5-6 years valued their own creations, and preferred items they had created to similar ones made by others. The IKEA effect is seen to be the same among children and adults (Buhren and Plebner, 2013). Overall, these findings demonstrate consumers’ belief that their the products they make themselves are better and rival even the expert-made ones, and that participants who successfully complete the tasks of an activity are more likely to value the fruits of the activity more highly.

Conclusion

Suggesting that labor and effort induce greater liking or valuation of products among people who are involved in their construction or assembling, the IKEA effect has since become a significant marketing tactic. A person’s perceived value of a product or activity increases proportionally with the amount of effort they put into it. For the IKEA effect to be felt, a successful completion of labor or tasks of an activity is a crucial factor since an unsuccessful labor results in rumination on incomplete tasks and negative effects such as regret. Therefore, marketers should consider using the IKEA effect as a marketing strategy to their advantage and to engage customers in co-creation and/or co-production.

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