The IKEA effect significantly impacts how we perceive the value of things we create. From overpaying for things requiring assembly to finding deeper satisfaction in our hobbies, the simple act of putting effort into our belongings can shape our decisions and feelings in unexpected ways.

Overpaying for the DIY experience

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, but unfortunately, they can still lead us to overspend. 

Interestingly, we even inflate the value of things when someone else does the work to create them. This phenomenon, called the effort heuristic, reflects how we judge the value of a product based on the effort that went into it rather than its inherent, objective value.¹⁸ For instance, you might pay a little extra for someone at the store to assemble your furniture for you or for something touted as “handmade,” believing it to be more valuable than the same pre-assembled piece. 

Overconfidence in self-made creations

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. In one of the original studies on the IKEA effect, participants believed their novice creations were just as valuable as the creations of experts—and expected others to agree.² As a result, we might overvalue things we made ourselves after seeing how much professionals charge for their handmade goods.

Stronger connections to our belongings

While the IKEA effect often shapes our buying behavior and leads to overspending, it encourages us to get involved in creating the things we own. The DIY process gives us a sense of pride in our belongings, which is valuable for our self-esteem as we often perceive our possessions as an extension of ourselves.¹⁹ Even the very act of accomplishing a challenging task, like struggling through a set of cryptic furniture assembly instructions, can make us feel accomplished and self-assured.

Enjoyment and pride in hobbies

The effect can also make our hobbies more rewarding. As we invest our time and effort into creating something, we perceive an increase in the valuation of these self-made products. This makes hobbies like knitting, woodworking, or crafting feel worthwhile—even though it’s often cheaper to go out and buy the finished product instead of making it ourselves. Buying the yarn to knit a sweater may cost more than a mass-produced sweater from a clothing store, but the IKEA effect makes the handmade sweater feel like it’s worth the additional expense and the time spent making it.

Like other cognitive biases, the IKEA effect is important in shaping business strategies and organizational behavior. Understanding how to properly leverage the effect and avoid its limitations is essential for making optimal decisions in organizational environments.

The IKEA effect as a business model

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 centered on having us pay for our labor. The same goes for any business that requires your personal effort, including salad bars, Korean BBQ restaurants, paint-your-own-pottery studios, and DIY craft stores. We may overlook the fact that we’re getting a bad deal to have the satisfaction of assembling the product ourselves.

Overvaluing custom solutions

Besides influencing consumer behavior, the IKEA effect can also show up in the workplace. Organizations often overvalue systems designed in-house and resist replacing them with new tools or solutions, even if these existing systems are inefficient. When companies do shop around for new systems, they often prioritize bespoke solutions that take more time and effort to develop, implement, and maintain—and cost a lot more—than existing off-the-shelf software products. The same thing can happen in government, where leaders overcommit to programs they’ve designed or built, even when new evidence suggests better alternatives.

Fostering employee engagement

Thankfully, the IKEA effect isn’t always bad news for organizations: it can also be a valuable driver of employee engagement. Involving employees in creating learning and development programs fosters a sense of ownership and makes them more invested in outcomes.²⁰ This might mean encouraging employees to identify their own skills gaps, setting personal goals, and choosing their own training opportunities. Simply incorporating a customization process into employee development is a great way to encourage a deeper commitment to professional growth—a win-win strategy for employees and employers alike.

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.²¹ For example, one study found just having a chocolate bar sitting nearby for 30 minutes caused people to value it more highly.1 Research suggests that this sense of psychological ownership is a key mechanism behind the IKEA effect.²²

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 given to us, and of dealing with obstacles as they arise. 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 better cope 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

Doing things like assembling a piece of furniture or baking a cake 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, meal kit subscription services like Blue Apron and Hello Fresh have been blowing up. This industry is expected to hit a value of $20 billion by 2027.¹² Products like these are convenient in a lot of ways. Still, they also don’t come cheap: most meals cost more than $10 USD per portion—the equivalent of a pre-made meal delivery—not to mention that preparing the cooking them can still take a fair amount of time and effort.¹³

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 customer 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 frogs 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 researchers Michael I. 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 Betty Crocker first introduced boxed cake mix in the 1950s, they didn’t perform well because housewives thought they made cooking too easy; they devalued the labor and skill of the cake maker and made the process less rewarding. Betty Crocker realized that their cake mix was missing one crucial ingredient: customer labor. People wanted to be involved in the experience of making a cake and would pay more for that sense of achievement. After manufacturers changed the formula so that the mixes required “more effort” by adding an egg, they gained popularity.²

Following in Betty Crocker's footsteps, Build-a-Bear gives people the chance to construct their own toys—and charges a premium for the privilege. Michael Norton and his colleagues were intrigued by business models like these that required labor from customers as a selling point, which strangely increased their willingness to pay for a product. They decided to call this phenomenon the “IKEA effect” in honor of the Swedish furniture company whose products frequently require assembly, then conducted a series of experiments to explore the magnitude of the effect in different contexts.²

The researchers conducted several studies where participants constructed three different products: origami, Lego sets, and—appropriately—IKEA boxes. As expected, they found that participants valued their self-assembled products more highly than pre-assembled products. The effect occurred even with the construction of boring, utilitarian products like boxes that did not allow for customization. In the origami study, participants even valued their origami creations as highly as the creations of origami experts, highlighting the magnitude at which people overvalue their own creations.

Interestingly, the researchers also found that successfully completing tasks was crucial to the IKEA effect: when people failed to complete the box-building project or destroyed their Lego creations, the effect dissipated. Based on this last finding, Norton et al. suggest that companies must be careful not to design products that are too difficult for people to assemble independently. Providing clear guidelines and possibly even placing constraints on customizable products is important for making them simple and satisfying to build.

We’ve explored how the IKEA effect shows up in physical products from furniture and children’s toys to meal kit services and DIY crafts, but its effects extend beyond tangible goods.

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 a personal connection to it. 

In fact, customers are often willing to pay a premium for products that engage them in the design process. Simply allowing users to adjust an app’s color theme or layout can improve customer satisfaction and increase their valuation of the product, so companies may be able to charge more for the same product simply by offering a few customization options. Have you ever taken the time to set up a project management tool or habit-tracking app? After putting in the effort to create custom dashboards and workflows, these tools become much more valuable to you.

However, companies have to be careful not to make their products too customizable, since the IKEA effect only works when users successfully complete the project at hand. Giving users control over every minute detail of an app’s design can be frustrating and overwhelming, ultimately hurting user satisfaction. Think of how IKEA furniture comes with pre-drilled holes, labeled screws, and step-by-step instructions to guide customers through the assembly process. This ensures a smooth, frustration-free experience (though some people might disagree). So, how do you know if you’re assigning your customers too much labor? Ask them. Gathering user feedback gives companies invaluable insight into which customization options are meaningful and which only add unnecessary complexity.

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.

AI programs could even supercharge the IKEA effect, as these tools make it easy to balance effort and reward for users. AI tools learn from users in real time, making adjustments based on the data they collect. For example, an AI-powered thermostat might notice that you always turn the temperature down before bed, so it might start lowering the temperature automatically in the evening. This functionality allows users to enjoy a completely personalized experience without doing too much work themselves, essentially putting in a low level of effort to enjoy a high level of perceived contribution. Seamlessly integrating AI into complex automation tools can help users feel involved without requiring that they hire expert help or read lengthy technical manuals.

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 Involving children in meal planning and getting them to take on simple tasks like mixing ingredients, washing vegetables, and cracking eggs is a great way to encourage their enjoyment of healthy meals.

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.