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Choiceology: Season 7 Episode 1

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There is a real sense of satisfaction that comes with building something yourself. But can that lead to us overvaluing what we create?

Hardware stores and home improvement shows often promote do-it-yourself projects. And while it’s challenging to make your own projects look as good as the ones on TV or in glossy brochures, building something yourself can be a very rewarding experience. The trouble is, the DIY approach can sometimes cloud your perceptions of the value of your project.

In this episode of Choiceology with Katy Milkman, we look at how putting personal effort into something—be it a hand-knit scarf, a new deck, or even a small business—can lead people to overestimate the value of that effort.

Michael Ojo is a web developer and pilot influencer. He runs a popular YouTube channel called MojoGrip, where he shares his love of aviation. It’s also where he documented a project near and dear to him: the building of his first kit airplane, the Sling TSi. You’ll hear the story of Michael’s epic project. Everything from the steep learning curve, to the technical challenges, to the trials and tribulations of building a complicated piece of machinery in the midst of a pandemic. And then, the big question: Will it fly?

Next, Mike Norton joins Katy to discuss the science behind why people tend to place a higher value on their own projects, using research that, among other experiments, observed volunteers as they completed simple origami projects and then had them auctioned off against origami made by an expert. The results were surprising, and quite charming, as you’ll hear from our re-enactment of the experiment.

Michael I. Norton is the Harold M. Brierley Professor of Business Administration at the Harvard Business School and co-author of the book Happy Money: The Science of Smarter Spending.

Finally, Katy discusses the ways in which you can leverage this effect to boost happiness and satisfaction, while avoiding the pitfalls of overvaluing your own handiwork.

Choiceology with Katy Milkman is an original podcast from Charles Schwab.

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Click to show the transcript

WOMAN: There, I’m finished.

MAN: Just give me a second. I want to come up and have a look at it.

WOMAN: I finished it.

MAN: Oh, excellent, although it’s a little bit crooked.

WOMAN: I think it’s fine.

MAN: I don’t know. I mean, I still think we should hire that carpenter.

WOMAN: No, no. This is better. Look, I mean, I did it myself.

MAN: Yeah, but you scratched the top a little bit. You see up there?

WOMAN: You’ll never see that. I mean, once the books are on it.

KATY MILKMAN: There’s real satisfaction in completing a do-it-yourself project. You can learn some new skills, maybe save a bit of money, and you get bragging rights when it’s all finished. But this DIY approach can also lead to some irrational perceptions about the things you built, whether that’s a bookshelf, a house, or even an airplane.

I’m Dr. Katy Milkman, and this is Choiceology, an original podcast from Charles Schwab. It’s a show about the psychology and economics behind our decisions. We bring you true stories involving high stakes moments, and then we explore the latest research in behavioral science to help you make better judgements and avoid costly mistakes.

MICHAEL OJO: OK. My name is Michael Ojo. I guess you can call me a pilot influencer.

KATY: Michael Ojo has been an aviation enthusiast since he was a kid.

MICHAEL: I grew up in Lagos, Nigeria. And when we were kids, going to school was a chore. And by that I mean like usually we would walk to school. And it wasn’t because there wasn’t a car. It was usually because the roads were so bad that the cars weren’t able to drive on them. And oftentimes I would see airplanes flying, walking to school, and I used to envy the people in that thing, whatever that was.

KATY: Michael dreamed of taking to the skies. His first flight was a big one.

MICHAEL: The very first time that I actually stepped in an airplane was when I was 12 years old coming here to the United States, and I thought to myself like, “This thing is huge.” And I was so fascinated by the fact that this tiny object that I’ve been staring at all this time was actually this big.

KATY: Michael became passionate about everything to do with airplanes, but he didn’t think he’d ever get the chance to become a pilot himself.

MICHAEL: Growing up in the community that I grew up in, nobody flew. Nobody who looked like you flew. And whenever I would mention or even talked about the idea of flying or becoming a pilot, usually it’s shut down by the adults around me. And so for about 20 years there, it was just a desire that I kept locked up.

KATY: Fast forward to 2015, Michael is now in his mid-twenties. He and his fiancée decided to move from New York to LA, and that’s where he got inspired to really pursue his dream.

MICHAEL: Shortly after I got to Los Angeles, I read about a fifteen-year-old girl. She flew across the country. And I remember reading that article and just thinking to myself like, “Are you kidding me?” So for me, there was no excuse anymore.

KATY: He had made up his mind. If a teenager could do it, he could do it too. Michael was going to become a pilot. He started with a demonstration flight.

MICHAEL: It was the same week of my birthday. My girlfriend decided that we should go. And she’s like, “We should go take a demo flight.” I flew a Diamond DA40 on my demo flight, and I decided then and there that, “OK, I want to do this.”

KATY: He was excited about learning to fly, but getting his pilot’s license was no small feat.

MICHAEL: I was running a business, and what I would do is I would go fly in the morning. And then after I was done flying, I go straight to work, work all day, and then come back to the same thing either the next day or the day after. So it really took a toll and I totally underestimated it.

KATY: But after many long days and a lot of hard work and sacrifice, he finally had his license.

MICHAEL: But then I thought to myself, “OK, so what are you going to do with this certificate? I either have to build a lifestyle around this, or I want to own my own airplane one day.”

KATY: Shortly after he became a licensed private pilot, Michael and his wife took a test flight in a plane that really appealed to both of them. It was a Sling Aircraft Model 4. It’s a cool looking four-seater plane that’s sleeker and rounder than the typical aircraft you’d see at small airfields. The Sling 4 seemed like the perfect plane. He even pinned a photo of his dream plane on his bulletin board of life goals, but the Sling 4 was too expensive for him at the time. Fast forward a few years, and Michael had saved enough money to actually buy a plane.

MICHAEL: My wife, she said to me, “What about that airplane that we flew back in California?” And now she was talking about the Sling 4. I had a picture of that particular airplane on my dream board for three years, and I’d already forgotten about it. And I remember getting home looking at that dream board and just staring at that plane.

KATY: Michael did another test flight of the Sling 4 just to be sure this was the plane for him.

MICHAEL: I went out to the airplane factory and I flew the newest model, which was the Sling TSi. And in that moment, I remember just touching down with the guys and told them, “I want to build one.”

KATY: Yes, you heard that right. He didn’t just want to buy the plane. He wanted to build it, too. The interesting thing about Sling planes is that you can purchase them pre-assembled, or you can buy them as a kit and assemble them yourself. So now Michael wasn’t just making a big investment. He was also taking on a huge project. Fortunately, his wife was supportive of the idea, but there was a very reasonable caveat.

MICHAEL: I spoke to my wife about it. She said OK. And also she required that the airplane had a parachute system on it for safety reasons.

KATY: Building a plane, even one from a kit, is not a simple project. You need special tools, special skills, and a proper space where you can build it. Add to this that Michael has never done this before, so the learning curve was steep.

MICHAEL: For me personally, I’m a computer guy for the most part. I can do some mechanical work. I can change oil or change tires, but I’ve never built an airplane before. Because the kit ships from South Africa, it took some time to get here. And by the time I place an order for the kit, I had already decided that I would build the airplane with a build-assist.

KATY: Michael was smart enough to realize that he needs some help to get this project off the ground. Pardon the pun. So he signed up for an aircraft build-assist program in California, which provides the facility and tools and professional guidance if he ever got stuck.

MICHAEL: You want to have a space and a big table, a work bench that’s big enough for you to lay things down, stuff like that. You need tools, like riveting tools. So building airplanes, you’re going to rivet and pop, pull rivets a lot. And I mean a lot. You need the right tool to do that. If you have an air compressor, a machine, that would be great because you can use that for all kinds of tools. A deburring tool also. If you decide to paint the airplane on your own, if you have a painting booth, that would be great as well, but you can always outsource some of these options. But for me, the build-assist facility, they pretty much had everything.

KATY: Despite having the support of the build-assist program, it wasn’t a smooth process. It was 2020 after all.

MICHAEL: There were some options down for sure. As you know, 2020, COVID hit and that really set us back. One because in California, for example, there were a lot of restrictions in people coming to work. And then I remember actually in the middle of the year, one person from the crew, they got infected with COVID, which kind of caused a scare. So we shut the facility down for a little bit, but I’m glad that the person made it out. They were fine. But then the work continued.

KATY: Assembling an airplane is a complicated and labor-intensive process.

MICHAEL: On the airplane, you have different major parts. So you have the fuselage. You have the empennage, which is the back end of the plane. You have your two wings. You have your firewall and the cowl, and this is where the front of the airplane with the nose is and where the engine would sit. You sort of build all of these different parts separately, and then you bring them together. That’s typically how it works.

KATY: Michael worked on the plane in several stints over the course of a year, from late 2019 to late 2020.

MICHAEL: Even after the plane was done, we had some crazy hiccups. We had a hole in the fuel tank. We had issues with the paperwork and dealing with the FAA.

KATY: After several technical challenges and bureaucratic setbacks, Michael finished his plane. A major accomplishment. But had he done everything right? Because a mistake could be dangerous or even deadly.

MICHAEL: Sadly, there have been situations that turned fatal where someone would have spent all this time, all these years to build an airplane, and on the very first flight, something goes wrong and they crashed the airplane.

KATY: It was the moment of truth. As a precaution, Michael sat out the maiden flight. He hired a test pilot, someone highly trained to deal with emergency situations.

MICHAEL: Because a test pilot would know what to do if something did go wrong. And I was down, and I was filming it. As a matter of fact, at some point, I turned the camera off because I was so overwhelmed with emotion, and I just wanted to feel what was happening in reality and not having to put it on camera. And I remember just watching that thing take off. I shed a tear a little bit. I was like, “Wow! This happened.”

KATY: It was a success. The plane flew beautifully. And most importantly, safely. And Michael found himself the proud owner of a new Sling TSi. It was a huge moment in his life.

MICHAEL: Man, it’s the most rewarding thing. I honestly don’t know anything else that’s more rewarding. When I was a child, like I said, I grew up in Lagos, and I didn’t have toys. So I remember as a child always building my own car toys. It was the same feeling, taking on a project and building my own plane. I honestly don’t know how to put it in words, but it’s the most satisfying thing in the world.

KATY: When Michael finally flew the plane himself, he started to realize what he had accomplished.

MICHAEL: I stayed in the air for like another hour or so just doing pattern work, and that’s when it really started to hit me while I’m flying my own airplane. It’s something that I’ve dreamed about. It’s something that I’ve thought about. I’ve imagined just taking my girls on a cross-country trip, taking family, friends. Emotionally, I was already connected to the airplane. That’s why I built it. I was really falling in love with it. Now I can say, this is my airplane.

KATY: There’s a lot to be said about taking on and completing a project like this, the feeling of accomplishment, the satisfaction of problem solving and learning new skills, getting to know the aircraft inside and out, all great things. And Michael clearly enjoyed the entire process, despite the many challenges he faced.

But here’s why we chose this story: remember how I mentioned that you could purchase this model of the Sling aircraft either pre-assembled or as a kit? Obviously the pre-assembled version is going to cost more off the rack, because of the time and labor required to put it together. But there’s also clearly a cost in terms of time and money to build it yourself, especially if you factor in something like the build-assist program. The end result of these two processes is in theory two identical planes that should have similar market value. If anything, the plane built by professionals should be worth a bit more since it’s less likely to have errors.

But an interesting thing happens when people have invested their own time and effort into a project. We had Michael run a little thought experiment. We asked him to pretend that he didn’t own his plane. Then we asked him to imagine that the plane he built was sitting next to an identical model, tricked out with the exact same options, parachute and all, but one that was built by professional aircraft engineers. Finally, we asked them to imagine that the planes were for sale at an auction and to give us his bids for each one. Here’s what he said.

MICHAEL: I would bet 350,000 on my plane. And for an identical plane, I would probably bet between 250, maybe 280.

KATY: Incidentally, we reached out to Sling Aircraft. They replied that a fully assembled, fully equipped version of the Sling TSi would sell for about $300,000. Michael’s valuation of his self-assembled plane was at least $50,000 over that price.

MICHAEL: For me, the time that went into building my plane, it wasn’t just the time that I had a tool in my hand and drilling stuff or popping rivets. It was time that I spent talking to other pilots, time that I spent talking to designers, time that I spent hours and hours in the airplane. But again, selfishly, it’s something that I built. It’s worth a lot more to me than something that somebody else built.

KATY: You may listen to his reasoning and say, “Yeah, that makes sense. He’s got a lot of sweat equity and sacrifice tied up in that plane he built.” But if you really think about it, the way he bid, he could have theoretically purchased the professionally built plane for at least $50,000 less. Now, we haven’t calculated the cost of his own labor and time, but we can assume he would be paid less than a professional builder. Plus, there was the substantial cost of the build-assist program.

Regardless, Michael clearly values what he created far more than he would value an identical pre-built plane. We’ll explore this phenomenon more in a bit. For now, we’ll leave Michael Ojo with the very real satisfaction of a project well done. At the time of the interview, Michael had only recently brought his plane home. And because of COVID, his family hadn’t even seen it yet.

MICHAEL: So no, my wife has actually not seen the airplane since it’s been home, but she’s obviously congratulated me. She’s very excited, because this is life changing for all of us. We’ve always talked about living a life where we can just get up and go and then travel the country and travel the world. And this airplane will allow us to do that.

KATY: Michael Ojo is a web developer and a digital marketer now based in Atlanta, Georgia. He’s also a pilot influencer with his own aviation-themed YouTube channel called MojoGrip. I have links to his channel and some media about his kit-plane project in the show notes and at schwab.com/podcast.

Michael’s project demonstrates a peculiar but common tendency. It has to do with the way we value things that we’ve worked to create. And while most of us will never build our own airplane, you’ll observe this phenomenon in modest do-it-yourself projects as well.

It’s called the IKEA effect, a term coined by Mike Norton and his collaborators in research that demonstrates how people tend to overvalue things they’ve built more than the market would. Mike Norton is the Harold M. Brierley Professor of Business Administration at Harvard Business School, and he joined me from his home in Cambridge, Massachusetts.

Hi, Mike. Thank you so much for being willing to talk.

MIKE NORTON: Thanks Katy, for having me.

KATY: Could you tell us about what the IKEA effect is?

MIKE NORTON: A few years ago, Dan Ariely and Daniel Mochon and I, when we were all still at MIT, we had this kind of like realization that almost everyone we knew, including ourselves, had something in their house that they made, like a bookshelf or a watercolor or something that was really, really ugly. But every time they moved, they would carefully pack it up in bubble wrap or whatever, and their spouse or partner was always wondering why they had to bring this terrible thing with them. The first thing we thought was, “That’s pretty silly that we all do that, that we have that special thing.” But right after that, we thought, “You know what? When we make things, we really actually love them enough to put them in bubble wrap and carry them around. Maybe it’s not so silly.” It might be technically irrational. But if people are getting these amazing emotional experiences, maybe that’s actually something we should encourage. And that led us to think about what actually does happen when people make things themselves. And of course, the first thing we thought of was everybody’s struggling with their IKEA furniture.

KATY: OK, so that answers my second question, which is why did you call it the IKEA effect?

MIKE NORTON: Yeah. Sometimes people think it’s something like an endorsement of a Nordic model of business or something like that, but really all we were referring to was a lot of people will have IKEA furniture that’s not assembled exactly correctly, and they don’t love the thing. The bookcase isn’t their favorite bookcase ever. But the IKEA effect is not necessarily that you love the thing you made. It’s that you love the thing you made more than the exact same thing made by somebody else. So your uneven bookcase is not your favorite possession, but the one that I made compared to the uneven bookcase that you made, I still love mine more than I would love the one that you put together incorrectly as well.

KATY: I love that. Could you talk a little bit about the research you did that showed people exhibit this effect, this tendency to prefer things they put together to things other people put together that are identical?

MIKE NORTON: The first domain that we thought of using is origami. By the way, if you ever want to do research with origami, definitely go to MIT and put out an ad for students saying, “Are you interested in origami?” Because a lot of them are.

KATY: It just opens the floodgates.

MIKE NORTON: You can really get a lot of origami aficionados.

KATY: Amazing.

MIKE NORTON: And so that was the initial thing. It was kind of a strong test, I guess you could say, because origami in the end is just crumpled-up paper, technically speaking. Now, people who are good at it, they’re amazingly beautiful works of art. I don’t mean to say it’s not incredible, but technically it’s just you crumpled it a little bit better than I did. The idea was would I like my crumpled paper better than your crumpled paper? And that’s exactly how we started.

KATY: I’m going to pause the interview for a minute. Because this is such a fun study, we decided to reenact the original origami experiment that Mike and his collaborators ran as part of their research. We sent several volunteers video instructions for folding a simple origami butterfly.

WOMAN 2: So I’ve got my paper, which is a cryptic crossword on one side and blank on the other side, and I’m hopefully going to turn this into a butterfly.

MAN 2: OK. Then you’ve done the ... Open the paper again, flip it over, then turn it into a half like an envelope, I guess.

KATY: We explained that they would not own the butterfly, but that it would end up in an auction. What they didn’t realize was that their butterfly would go up against another one of the exact same design, but constructed by an origami expert. None of our volunteers were particularly skilled at origami.

WOMAN 2: Oh no. Oh no. This is not the tidiest. Maybe I should have done the other side.

MAN 2: OK. OK. OK. OK. OK. Hold up, hold up, hold up. Oh, no.

KATY: Some projects turned out better than others, meaning they kind of resembled the finished butterfly in the instructional video. But of course, none of them looked anywhere near as good as the one completed by our origami expert.

MAN 2: And it looks nowhere close to being a butterfly, I would say.

WOMAN 2: I mean, it kind of looks like a butterfly. Yeah, I guess that’s it.

KATY: Next, we had each volunteer bid on their creation and the expert piece.

MAN 2: For the origami that I built, I think it would be about $2, $2.50. The origami butterfly that is made by the professional, I think it would be kind of the same, like $2. Yeah, I would, pay $2 for that.

WOMAN 2: OK. I think for mine, I would probably pay maybe a quarter, maybe 25 cents. Built by the experts, I would pay still 25 cents.

KATY: Much like the story I shared earlier about building an airplane, most participants bid the same or more for their creations as they did for the better-folded butterfly, the one crafted by an expert. Here’s Mike Norton again.

MIKE NORTON: So we have kind of like three prices in the market. One is the actual price for an expert one, one is your price for yours, and then the main one is other people’s price for yours. What do we find? First off, people will pay about a quarter for the expert one. People with their own crumpled-up paper will pay basically the same thing. So I see mine as being as wonderful as the market sees the expert’s one. And the main thing is when we asked other people about mine, they say something like a nickel. And some of those people even say they just feel bad for you. Like, “Well, I didn’t want to pay nothing because he went to all that trouble.” So really there’s a huge, huge … And I mean, 20 cents isn’t changing the world economy, but it is like a 5x difference in valuation of paper just based on whether I crumbled it or you did.

KATY: Could you talk a little bit about why it is that that happens? Why is it that we value the very same things more after we’ve put effort into creating them?

MIKE NORTON: If you think about your everyday life, and at the end of the day, you say, “Did I get anything done today?” Very often the answer is “I’m not sure. I had some meetings and I did some email and something, but I’m not sure if I really did anything today.” Many people have that experience. When you make a little thing, even a little origami thing, it’s evidence to yourself that you actually did a thing. This is why people make lists that say the first thing on their list is cross this off your list, so at least they can feel like they crossed something off their list. I think making things is a little bit like that, but it’s realer because I actually have a little frog on my desk that shows me that I’m capable of doing something. And then I think the other big thing is just we imbue these things with our identity, with ourselves. They come to represent more than just a piece of paper. It’s my creation that I worked on, and it becomes important to me. And we do that in all sorts of domains in life. The things that we try hard on become things that we really, really start to value.

And again, as I said at the beginning, like that’s a mistake technically because we know the paper isn’t worth as much to other people as it is to you, but I don’t see it as a mistake exactly so much. It’s kind of nice that we can fold up paper and really love it and put it on our shelf and look at it and reflect on how great it is. Even if the market doesn’t feel that, there’s nothing wrong with me feeling that.

KATY: Yeah, that’s interesting. One of the questions I was going to ask is if you thought this was a bias, or if it served some function. So you’re saying you think it serves as like an ego boost? Is that the right interpretation?

MIKE NORTON: Yeah, I think so. It can go badly, right? We did some surveys at some point about people. We never published it, but we asked people who were selling their house how much work did you do on the house yourself. And we see the thing, right? Which is if I put in the tile backsplash myself, I think it’s amazing, and I think that the house should sell for more than if I had somebody else put in the tile backsplash. So there you could see it going wrong, right? Where I actually overvalue my house and I can’t sell it because of the effort I put into it.

The other thing that happens there actually is people customize their house, and they assume that the work they put in is widely liked. So they’ll put in like hideous stucco or something all over the place, but they do it themselves so they think it’s amazing. And then of course, everyone else doesn’t like stucco or something like that. So there you can see how it can go wrong in the market. You can see how it could be a mistake. But most of the everyday things, putting something together yourself compared to what else would you have been doing with your time, it’s probably not the worst use of your time that you could have compared to like doom-scrolling or watching TV or something like that.

KATY: OK. We did an episode a while ago about the endowment effect—or people’s tendency to overvalue the things that they own—like the famous mug study, where people given a mug at the start of an experiment will pay more to purchase it and take it home than people from the same experiment who by chance were not handed a mug at the outset. And I was wondering if you think the IKEA effect relates at all to the endowment effect.

MIKE NORTON: For sure. And in fact, there’s a middle effect as well, which is specific to touch. You can think about the endowment effect, I get something. You just put it in front of me, and right away I think my mug is amazing compared to your pen, whatever it might be. Joann Peck and our colleagues have shown that just mere touch already moves the endowment effect to be even stronger. So once I touch the pen, now suddenly it’s part of me even more, and now I show a bigger endowment effect. To me, the IKEA effect is kind of another level of it where I’ve actually not just gotten it and touched it, but I made it. And the ownership that people feel over the thing they made is even stronger than the crazy amount of ownership we feel over silly things that somebody just put in front of us.

KATY: OK. If someone’s familiar with this research, what can it help them do better?

MIKE NORTON: Life and market economies are, let me go big, are we want to spend less time on things that we don’t want to do and/or that we’re not good at doing. Markets can amazingly help us with that. As long as I have enough cash, of course, I’m going to default to let’s have them do it and not me. And I think often that’s very wise, like electrical wiring. I don’t think you should do it yourself at home, but I think there’s more things that don’t necessarily take a ton of time. Yes, it wouldn’t be quite as amazing as what’s made by an expert, but it would be more amazing to us, and we would care more about it.

I even sometimes teach, when I teach executive education, I’ll give executives … I give them sets of Legos that are meant for three-year-olds, and I have them put them together, and then they really like it. And then I say, “OK, can you please pass them forward because I need you to take them apart so I can use them for the next class.” And these men and women, they kind of put their arm protectively around their Legos, and they’re infuriated. They won’t give them back to me. These are people who could like buy the Lego corporation. So it’s not that they can’t afford Legos, it’s that it doesn’t occur to them to do something like buy a little thing that you can make yourself, and you’ll really, really love it. And when we follow up with them a month later, they still have the little thing on their desk at work because they’re still getting happiness out of it.

So there’s little things that we’re just … It’s almost like we’re leaving it on the table, because we could just make a few more things ourselves and get these kinds of great experiences.

KATY: That’s really interesting. And actually it makes me think of some of the other work on the happiness literature that I feel like I’ve probably learned about from you on giving experiences versus giving things. And it sort of seems like what you’re saying is when you make it yourself, a thing becomes an experience.

MIKE NORTON: I love that idea. And I think that when people hear experiences are better than stuff, it really resonates. But I think people often think about things like vacation or going out to dinner, those sorts of experiences, which are great, we should all do them, but there’s some experiences that can be a little bit painful like having to put a thing together yourself. But it’s still a much better thing to do with your time and money than buying another stupid thing. So sometimes we have to force ourselves to do something that’s a little bit hard, and the hardness actually, the difficulty, is one of the things that makes us really value it.

KATY: That’s really interesting. OK, last question: Is there anything that you do differently in your own life as a result of having done this research?

MIKE NORTON: I do, actually. I do try to when I’m not endangering anybody not outsource things as much as I once did. So I think that you can actually make things and scatter them about your office and it will make you happy to have them scattered about or your home or wherever it might be. Not six-week construction projects, but little projects that don’t take you too long that ultimately now you did a thing, you have something on your list, and you crossed it off. And that thing’s a part of you in a way that lots of the other things that we spend time on, they don’t really resonate in that way.

KATY: I love that, and I love that the prescription also had the footnote of, like, when it won’t be a safety hazard basically.

MIKE NORTON: I think I’m not legally liable, I should say out loud, if anyone does try to rewire their home and it goes … Is there a waiver I could sign or something? I’d appreciate it.

KATY: We’ll try to figure that out for you.

MIKE NORTON: OK, great.

KATY: Mike, thank you. This was so fun. I really appreciate you taking the time.

MIKE NORTON: Thanks. It’s always so fun to chat.

KATY: Mike Norton is the Harold M. Brierley Professor of Business Administration at the Harvard Business School and author of the book Happy Money: The New Science of Smarter Spending. You can find links to his book and his research paper “The IKEA Effect: When Labor Leads to Love” in the show notes or at schwab.com/podcast.

As Mike said, building something yourself can lead to a well-earned sense of satisfaction, like with your investment portfolio, for instance. But you don’t want to become too emotionally attached to any particular investment, which is why it’s important to know the right time to sell. On a recent two-part episode of the Financial Decoder podcast, Mark Riepe and his guests discuss when to sell various investments—from individual stocks and bonds to mutual funds and ETFs. Check it out at schwab.com/financialdecoder or wherever you get your podcasts.

An important aspect of the IKEA effect is that completing your creation is key. A half-finished project is not going to make you feel proud. If you start building a bookshelf for your den, but don’t see it through, you’re obviously not going to overvalue it. What I find most interesting about this phenomenon is that it suggests do-it-yourself projects can be a way to boost our happiness, engagement, and sense of accomplishment. If you want to love your home, spending some time on odd jobs, hanging the art, and putting together some pieces of furniture yourself may bring you more joy and satisfaction than you anticipate.

By looking for opportunities to engage and create things ourselves, we can gain satisfaction and benefits from the IKEA effect, which makes it an unusually delightful bias.

You’ve been listening to Choiceology, an original podcast from Charles Schwab. If you’ve enjoyed the show, we’d be really grateful if you leave us a review on Apple Podcasts. It helps other people find the show. You can also subscribe for free in your favorite podcasting app.

And if you want more of the kinds of insights we bring you on Choiceology about how to improve your decisions, you can pre-order my forthcoming book, How to Change: The Science of Getting from Where You Are to Where You Want to Be, or sign up for my monthly newsletter, Milkman Delivers, at katemilkman.com/newsletter.

Next time, we’ll look at how subtle changes in your expectations can have real effects on your life. I’m Dr. Katy Milkman. Talk to you soon.

MAN 3: For important disclosures, see the show notes or visit schwab.com/podcast.

Important Disclosures

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

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