MarketingThere are some anecdotes just so good that almost every story about a particular economic principle begins the same. So too this article begins with cake mix.In the 1950, the story goes, US food company General Mills wanted ideas on how to sell more of its Betty Crocker brand of instant cake mixes. It put psychologist Ernest Dichter – the “father of motivational research” – on the case.Dichter ran focus groups. Change the recipe, he then advised the company. Replace powdered eggs in the cake mix with the requirement to add fresh eggs. All-instant cake mix makes baking too easy. It undervalues the labour and skill of the cake maker. Give the baker more ownership in the final result.And the rest is history.It’s likely this story is extremely overegged. Inconvenient facts include another company, Duncan Hines having a cake mix recipe using fresh eggs (developed by food chemist Arlee Andre) as early as 1951. And in 1935, the company P. Duff and Sons was granted a patent for a cake mix using fresh eggs.“The housewife and the purchasing public in general seem to prefer fresh eggs,” the patent reads, “and hence the use of dried or powdered eggs is somewhat of a handicap from a psychological standpoint.”Even the book sometimes credited as the source of the Dichter anecdote, Something from the Oven: Reinventing Dinner in 1950s America, by Laura Shapiro, says that “if adding eggs persuaded some women to overcome their aversion to cake mixes, it was at least partly because fresh eggs made for better cakes”.Nonetheless it is the story of Dichter making a profound psychological insight into consumer behaviour that has passed into legend.Almost seven decades later, the idea of making things more laborious to get consumers to value them more is an established marketing tactic.We now know it as the “Ikea effect”.
The Ikea effect: how we value the fruits of our labour over instant gratification
Testing the IKEA effectThe Ikea effect – “that labour alone can be sufficient to induce greater liking for the fruits of one’s labour” – was named in a 2011 paper in the Journal of Consumer Psychology by Michael Norton, Daniel Mochon and Dan Ariely. They chose the name because products from the Swedish manufacturer typically require some assembly.Their paper also begins with the cake-mix story. It concedes there might have been other reasons General Mills increased its sales – an alternate view is that the icing on the cake was, in fact, the icing on the cake – but the authors were still enthused by the idea that “infusing the task with labour” was a crucial ingredient.To empirically confirm this phenomenon, and its limits, they conducted experiments that involved assembling Ikea boxes, folding origami and building with Lego. The results showed participants valued items they assembled themselves more than items assembled by someone else.The following graph shows the results from one of the experiments, in which participants were asked to fold origami cranes or frogs and then bid to buy the creations. The bidding phase also included origami made by expert folders. They tended to see their own creations as much more valuable than those made by other participants, and almost equal in value to the expert origami. The experiments also showed the effect had limits.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.The following graph shows the results of the experiment in which some participants built an Ikea box, while others were allowed to complete only half the steps required to build the box.
Those who got to complete their box valued it much more, shown by their willingness to pay to keep it. “Most importantly,” the paper notes, “this increase in valuation was not limited to only participants who considered themselves DIYers.”