The IKEA Effect and Post Covid-19

• Last Thursday at work while having lunch—yam chips and sauce—with great relish using my fingers, I was oblivious that my activity arrested the attention of my colleagues who were also having lunch. Then Tolu’s voice interrupted, “David, where did you buy your food that’s making you lick your fingers like this?” Most of us usually order take-out, even the married ones too due to the nature of work in Lagos. “Don’t mind me,” I said, “the food is so delicious. I made it this morning.” “Oh, I see! It’s because you cooked it yourself that’s why it’s delicious to you.” “I don’t think so, it’s really delicious. Don’t worry tomorrow you will taste my cooking.” I retorted with an air of finality, and they all burst into laughter.
• I was completely unconscious that I just displayed a behaviour termed by economists as the IKEA effect. I came across this term on Saturday while reading Sarah Thooft’s article on How will restaurants adapt to the future. I was so curious to know more about this concept. What I learned is so instructive with practical application in our daily affairs; and I have decided to share this knowledge with those who do not know about it.

Definition and origin

“The IKEA effect was identified and named by Michael I. Norton of Harvard Business School, Daniel Mochon of Yale, and Dan Ariely of Duke, who published the results of three studies in 2011. They described the IKEA effect as “labor alone can be sufficient to induce greater liking for the fruits of one’s labor: even constructing a standardized bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations.””

Therefore, IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. The name is derived (the behaviour itself is as old as man) from a Swedish manufacturer and furniture retailer, IKEA which sells many furniture that requires assembly. Customers were found to fall in love with the products they help create. That is, loving the fruit of their labour. In the words of Dan Ariely, “The effort we expend on a task increases our love for them and blinds us from the perspective of others.” This aptly captures my drama eating what I cooked.

Graphical Illustration

In figure 1, the IKEA Effect Curve, IEC, rises from left to right indicating an increase in value estimation as an individual invests more effort/labor in the creation of a thing. On the contrary, Gibbs and Drolet 2003, warned companies not to challenge consumers too much, lest they be unable to complete a task and then end up dissatisfied. I derived Figure 2 to illustrate their warning. Point a is the frustration point where marginal effort reduces value. If at this point the job can not be completed, abandonment will set in with less and less effort being added on the effort-axis. This consequently forms the Inward Bending IKEA Effect Curve, IBIEC.

Some Areas of Application

1. Personal Life

As humans and creatures of habit we sometimes display this principle unknowingly but can easily notice it in the behaviour of others. When I graduated from the university I gave out my apartment for almost double the price I paid for it because I customized it to my taste. I must admit I almost gave up as many prospective buyers undervalued my masterpiece. The IKEA effect gives us the feeling of confidence to display competence in our accomplishments.

2. Mother-Child Relationship

God in the Book of Isaiah 49:15 asked, “Can a mother forget the baby at her breast and have no compassion on the child she bore?” The love a mother has for her child is always greater than the love she has for her husband. Why is it so? The nine months incubation period in the womb and the pain of labour created a great bond. She was not part of the creation of the husband that’s why she can reduce her love for him in favour of her child. Because parents will hardly trade their children for anything, Dan Ariely concluded that, “Kids have the greatest IKEA effect.”

3. Business

IKEA, the Swedish company has successfully used this principle more than any other to increase its sales and customer loyalty to the brand. The opportunities this strategy offers to businesses is yet untapped in developing countries like Nigeria. According to Tervooren, “Whenever you can, let your customers customize the products and services you offer to fit their needs. Make them feel like their own creativity and effort went into getting what they need from you. They will pay more for it.” The Inward Bending IKEA Effect Curve in Figure 2 should guide businesses in the application of this principle by knowing the limit of involving customers in product design, development, and testing.

4. Politics and Governance

When a new political party wins election and forms its government, one thing they don’t fail to do is to throw away the baby with the bathwater of anything that has to do with the previous government. Good projects, programs, and policies are always abandoned to the detriment of the growth of the country and welfare of the citizens. This is easy for the political class because they were not co-creators and therefore do not value anything from the other party.

5. Teamwork

The IKEA effect should be helpful to employers and managers for hiring the best fit and for motivation. If you lower the bar in the hiring process to favour someone, know that that person will undermine the goal of the team and not give his best. Aronson and Mills in 1959 conducted a research by requiring female participants to undergo “no initiation”, “mild initiation”, and “severe initiation” before entering a discussion group. The women’s later appraisal of the group’s value was proportional to the effort that had been demanded of them before being allowed into the group.

Conclusion

Post Covid-19 and the IKEA Effect

A lot of things have been said about the new normal in all spheres of life. The quantum of changes that the pandemic brought is unprecedented. I see this as a phenomenon: there must be pain to bring in the new. One of the new normals is the Work From Home, WFH that’s here to stay. Since the IKEA Effect is psychological, it means not only customers will be susceptible to it, employees too. The best outcome is only possible by teamwork. There should be a limit to the implementation of the WFH in the light of this.

The future we talked about during the global lockdown is now here as economies reopen to new opportunities. Businesses are saddled with the regeneration of the global economy by fixing market frictions exposed/created by the pandemic. Businesses should use the IKEA effect and get everyone involved because everyone will come out for a new start.

Let’s ride!