There are many personal finance blogs on the web. Many of my readers likely follow more than just Weakonomics. Many of those other blogs could (and should) be considered better than mine, but I like mine the best.
It’s because I don’t appreciate all the work that went into creating those other blogs. I know how much time and effort I put into Weakonomics, and so I’ve attached some emotion this big blob of blue bits I call a blog. This emotion that came from my labor has caused me to unfairly value my blog over the blogs of other personal finance writers. If you were to offer me $10,000 for this blog I would turn your down, because I feel like it’s worth more. If you were to value my blog based on generally accepted media valuation models, it would in fact be worth MUCH less than $10,000. There are personal finance blogs out there worth $10,000 and more, but I don’t like them as much as Weakonomics, and I don’t value them.
Dan Ariely, of Predictably Irrational fame, calls this “The Ikea Effect.” Millions of years ago (the 1950s) a product was created known as the instant cake mix. Housewives were not interested in the product when first released, however when the product was revamped to require the addition of an egg it became quite popular (and remains popular today). Housewives saw the original version as too easy to make, it made them feel like the work they put in wasn’t valued. By requiring the maker of the cake to add an egg though, housewives started to like it more.
This phenomenon is better illustrated in a recent study in which participants were asked to make origami and then bid on their creations alongside other origami. In a consistent manner the producer of a specific piece of origami valued their own work higher than that of other origami, even if it was created by an expert.
Ariely, and his cohorts Daniel Mochon and Michael Norton, call this “The Ikea Effect” because of the store that requires you to put together everything from their store. Ikea is a fascinating store, and although I’ve never put together furniture that I’ve become attached to, there are a few pieces of artwork I value because I created it, and I do have this little blog of mine.
The Ikea effect has more far reaching implications than amatuer Japanese art and crappy blogs. It’s why your manager likes his idea better than yours, why we continue to pump billions into Iraq and Afghanistan, and why you think your house is worth the price you paid in 2005, not its depreciated value today.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
