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The IKEA effect: how we value the fruits of our labour over instant gratification

The “IKEA effect”

The “IKEA effect”

If you make things more laborious, the consumers will value them more.

In the 1950s, a US food company wanted to sell more of its brand of instant cake mixes. They were advised to replace powdered eggs with fresh eggs because the all-instant cake mix makes baking too easy. It undervalues the labor and skill of the cake maker.

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The IKEA effect: how we value the fruits of our labour over instant gratification

The IKEA effect: how we value the fruits of our labour over instant gratification

https://theconversation.com/the-ikea-effect-how-we-value-the-fruits-of-our-labour-over-instant-gratification-113647

theconversation.com

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Key Ideas

The “IKEA effect”

If you make things more laborious, the consumers will value them more.

In the 1950s, a US food company wanted to sell more of its brand of instant cake mixes. They were advised to replace powdered eggs with fresh eggs because the all-instant cake mix makes baking too easy. It undervalues the labor and skill of the cake maker.

Testing the IKEA effect

Labor alone can be sufficient to induce a greater liking for your own work. A study confirmed the phenomenon. Experiments involved assembling IKEA boxes, folding origami, and building with Lego.

  • The results showed participants valued items they assembled themselves more, demonstrated by their willingness to pay to keep it.
  • However, when participants spent too much time building or deconstructing their creations, or failed to complete the task, their willingness to pay for the item declined.

Related concepts

Several other important economic behaviors that are connected to the IKEA effect are:

  • The endowment effect: Owning a product increases its perceived value.
  • Effort justification: An individual who makes a sacrifice to achieve a goal attribute greater value to the achievement.
  • Personal preference: The fact of being attached to a particular brand.

Convenience isn't everything

Food and grocery brands are using the IKEA effect to attract new "value-seeking" customers. The ideal for marketers is having customers do most of the work and feel great about it while perceiving they have gained "greater value for money".

Ready-to-create meal kits are a great example where they use prepackaged raw ingredients that you prepare and cook yourself.

SIMILAR ARTICLES & IDEAS:

The decoy effect
The decoy effect

It happens when consumers change their preference between two options when presented with a third option, or decoy.

The decoy is priced to make one of the other options much more attra...

How decoys work

When consumers are faced with many alternatives, they often experience choice overload that increases anxiety and hinders decision-making.

Consumers try to reduce this anxiety by selecting only a couple of criteria (say price and quantity) to determine the best value for money.

A decoy steers you in a particular direction while giving you the impression that you are making a rational, informed choice.

Decoy example in the market

Consider the price of drinks at a well-known juice bar: a small (350 ml) size costs $6.10; the medium (450 ml) $7.10; and the large (610 ml) $7.50. The medium is a slightly better value than the small, and the large better still. The medium is designed to be the decoy, steering you to see the biggest drink as the best value for money.

If you buy the biggest, was it because you made a sensible choice, or have you been manipulated to opt for bigger than intended?

The prevalent theory of dishonesty

From a legal perspective, dishonesty is the idea of cost-benefit analysis. When people think about being dishonest, they wonder what can be gained or what can be lost. If the cost of lying is too h...

The slippery slope

People often feel the need to rationalize their dishonesty. The danger is taking that first step.

The story of Joe Papp, an Olympic cyclist falls into this category. Papp consulted his physician, who wrote Papp a prescription for erythropoietin (EPO), a cancer treatment that increases the production of red blood cells. Papp injected himself, but also imported and distributed EPO to his team and to other teams. This essentially made him a drug dealer.

Morals or ethics tilt behaviors 

People that are required to put their signature at the top of a document instead of the bottom are more likely to provide truthful information.

They are confirming that the information they’re about to provide is true before they have a chance to falsify it.

Recessions come and go
Recessions come and go
  • A recession is "good" or "bad," depending on who it impacts and how badly it affects them.
  • In the last thirty years, a recession has come and gone somewhere in ...
Recessions are far from equal
  • Banks are better able to handle a financial crisis than a decade ago. The 2008 recession was about the housing market and shares, which affected higher income groups.
  • The present crisis seems to be hitting the lower-income groups, the vulnerable workers, young, and less skilled. It is similar to the late 70s, early 80s recession, which affected young and unskilled workers.
  • Another lesson from 2008 is that recessions don't always lead to significant numbers of job losses. Layoffs were concentrated among a small number of people, and they stayed unemployed for a long time.
  • In this recession, far more workers will be at risk if social-distancing rules remain in place over a long period.
GDP during a crisis
  • A drop in GDP was expected during the 2020 lockdown. Shops and businesses were closed, and the total value produced by goods and services decreased. In turn, this affected the staff of those businesses earning less money.
  • Furloughs. At its peak, about nine million people in the UK were paid a furlough - the government paid 80% of their salaries, and the employer could choose to top up the rest. Other countries have similar state-backed furlough schemes. These schemes will be coming to an end, and employers will have to decide if they have to lay off employees permanently.
  • The losses are not yet crystalising. People are taking mortgage and credit holidays. It means the losses are pushed further down the road. The financial sector bubble will burst, and we will see real turmoil again.

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Default options

Deciding is too much effort so we’re likely to just stick with the default or safer option if it’s already been chosen for us. 

When we get offered too many choices, the same...

Best decision making happens in the morning

This is when serotonin is at it’s natural high, which helps to calm our brain. Thus, we feel less risk averse and so we can face risks and make harder choices.

The part our bodies play in decision-making

If we’re feeling hunger, thirst or sexual desire, that can actually spill over into the decision areas of our brains, making us feel more desire for big rewards when we make choices. 

This can lead us to make higher-risk choices and to want for more.

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Cognitive biases
Cognitive biases

...are common thinking errors that harm our rational decision-making.

We don't always see things as they are. We don't simply glean information through the senses and act on it; inste...

Optimism Bias

Is our tendency to overestimate the odds of our own success compared to other people's. 

Overly optimistic predictions can be dangerous, leading us to waste time and resources pursuing unrealistic goals. In the real world of business, things don't always work out for the best, and it serves us well to know when conditions are not on our side.

How to control the optimism bias
  • Be skeptical of your own rosy expectations for your work. 
  • Assume projects will be more difficult and more expensive than you initially think they will. 
  • Don't trust your good ideas to manifest through positive thinking - be ready to fight for them.
  • Trust the numbers. Numbers are firm but fair, and getting intimate with your business's cash flow can help you make more rational decisions.

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The invention of scotch tape
The invention of scotch tape

Richard Drew invented The Scotch transparent tape while working as a lab tech at the Minnesota Mining and Manufacturing Company, which was then manufacturing sandpaper.

  • Drew first in...
Using tape for everything

The Scotch tape was released at the start of the Great Depression when people had to mend and make do.

People used the transparent tape for everything. While many companies were going under, tape sales helped the company to grow.

Experimental work and the 15 percent rule
  • William McKnight, the executive who told Richard Drew to stop working on Scotch tape, became chairman of Scotch, then known as 3M's board. Drew helped McKnight understand that experimentation could lead to innovation.
  • McKnight developed a policy known as the 15 percent rule, which allows engineers to spend 15 percent of their work hours on experimental doodling.
  • After his tape successes, Drew led a Products Fabrication Laboratory for 3M, where he could freely develop new ideas.
  • He and his team filed 30 patents for inventions, from face masks to reflective sheeting for road signs. He also mentored young engineers to develop their ideas.
Best foods don’t have labels
Best foods don’t have labels

Because they are just one ingredient: avocado, lentils, blueberries, broccoli, almonds, etc.

There is no "best diet"

The “best” diet is a theme: an emphasis on vegetables, fruits, whole grains, beans, lentils, nuts, seeds, and plain water for thirst. 

That can be with or without seafood; with or without dairy; with or without eggs; with or without some meat; high or low in total fat.

The "Age" of vegetables
The best vegetables are likely to be fresh and locally sourced, but flash frozen is nearly as good (as freezing delays aging). Those “fresh” vegetables that spend a long time in storage or transit are probably the least nutritious.

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Biohacking - “do it yourself” biology

Biohacking is an open innovation and social movement that seeks to further enhance the ability of the human body. This includes humans trying to get cyborg like features, achieve hyper ...

Biohacking drugs

Common reasons for biohacking drugs are that there are not enough cures, that drug prices are too high, and that participating in biohacking is taking a stand against the establishment – primarily Big Pharma.

The dangers

Trying to discover drugs through biohacking compromises on quality scientific research.

The drugs usually skip key toxicity tests before being administered to patients and in doing so seriously jeopardises the safety of those involved. Without rigorous pre-clinical testing in the laboratory, it is very difficult to predict how that drug will fully interact with the complexity of the human body.

What Not To Do When Asking For Help
What Not To Do When Asking For Help
  • Instruct people.
  • Tell or imply that they should help our debt they don’t have a choice about it.
  • Using unnecessary prefaces makes people feel trapped.
  • Profusely apologi...
Reinforce A Request For Help
  • In-group: Assuring that you’re on the helper’s team and the team’s importance taps into our need to belong to and perpetuate supportive social circles. 
  • Positive identity: Creating or enhancing their recognition that they are uniquely placed to provide assistance and that they aren’t just “people who can help” but routinely helpful people. 
  • Effectiveness: People want to know the impact of the aid they will give. Knowing one’s actions have an effect is a fundamental human motivation. 
Research Results On Helpfulness
  • Studies indicate that people are willing to help more often than we expect.
  • Studies suggest that we underestimate how much effort those who do agree to help will put in.
  • Those who help others get to feel better with themselves than those who don’t.

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The illusory truth effect
The illusory truth effect

It's our tendency to believe false information to be correct after repeated exposure to it.

The illusory truth effect is the reason why advertising and propaganda works.

Why repetition reinforces a belief

The typical explanation is that our brains take shortcuts to save energy:

  • Statements presented in as easy-to-read color are judged as more likely to be true.
  • Aphorisms that rhyme (like “what sobriety conceals, alcohol reveals") seem more accurate than non-rhyming versions.

    Carl Sagan
    Carl Sagan

    “One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. ”

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