The IKEA effect is also known as the endowment effect. This refers to the phenomenon where people place a higher value on things they have built or created themselves, even if those things are objectively of lower quality.
This effect is named after the Swedish furniture giant, IKEA, because it is often observed when people assemble furniture from flat-pack kits. While the furniture itself may not be particularly impressive, the effort and time spent putting it together can lead to a feeling of ownership and increased perceived value.
Examples of the IKEA Effect:
- DIY projects: A person who spends hours building a birdhouse may value it more than a professionally crafted one, even if the latter is more aesthetically pleasing.
- Art projects: A child who creates a painting in art class may be very proud of their work, even if it is not technically impressive.
- Cooking: A person who spends time preparing a meal may enjoy it more than a meal that was ordered from a restaurant, even if the restaurant meal is more elaborate.
Practical Insights:
- Businesses can utilize the IKEA effect by encouraging customers to participate in the creation or customization of their products. This can increase customer satisfaction and loyalty.
- Individuals can benefit from understanding the IKEA effect by appreciating the value of their own creations and efforts. This can foster a sense of accomplishment and self-worth.
