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We are All Biased – How to Identify and Evade the Dunning-Kruger Effect

Let’s face it: we are all biased.

Even if we think that we are the most rational people in the world, our cognitive biases are constantly operating in the background. What is sometimes inconceivable is that these cognitive biases directly impact our perception of the world.

In effect, what appears true or accurate to you may appear entirely different to someone else.

There are plenty of great examples, but one of the best ones comes from Charlie Munger. The billionaire and vice chairman of Berkshire Hathaway once told a story about how individuals in Sweden were asked to gauge their driving abilities. Looking at the survey results, more than half of the respondents thought they were above-average drivers. The math obviously doesn’t make sense, yet the survey goes to show that our perceptions can conflict with reality.

Cognitive biases are all around us. While you can explore all different kinds of cognitive biases by clicking here, I want to focus on one of the most interesting—and dangerous—cognitive biases that we face.

It is the Dunning-Kruger effect.

The Dunning-Kruger effect can be found everywhere from corporate boardrooms to conversations that we have around the dinner table. Learning about the Dunning-Kruger effect can help you identify it in your own life andminimize the number of times that the effect leads you astray.

What is the Dunning-Kruger Effect?

At its core, the Dunning-Kruger effect is all about not knowing what you don’t know. Put another way, it is a cognitive bias where an individual incorrectly overestimates their ability or knowledge in a certain area.

The effect is named after two researchers (David Dunning and Justin Kruger) that initially identified this bias. They described it further in their seminal 1999 paper titled “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments.”

Ultimately, once we hold overly optimistic thoughts about our skills, knowledge, or abilities, we face what Dunning and Kruger call a dual burden. The first burden is that our confidence causes us to reach erroneous conclusions, thereby leading to other choices. In other words, the consequences of our overconfidence negatively play out in the real world.

That isn’t all. The second burden is that our overconfidence and incompetence prevent us from actually recognizing that we are overconfident and incompetent. We don’t even know that our brains are blocking us from seeing the full picture. Even though we think things are normal and that we are rationally taking a look at some problem or scenario, we are naive and too overconfident.

There are Plenty of Real-World Applications

With this basic framework in mind, you can see how the Dunning-Kruger effect can play out in the real world.

Munger’s example of overconfident Swedish drivers is one example of that. It was mathematically impossible for more than 50% of Swedes to be better than average, so some Swedes were subsumed by their biases when gauging their driving abilities.

Beyond driving abilities, the Dunning-Kruger effect is often present in the business world. For example, a team (or entire company) may be extremely confident about launching a new product or service, but that overconfidence may blind them from unexpected challenges or pitfalls.

Arguably, this was the case with Quibi. As you may already know, Quibi was a short-form mobile streaming service that launched in April 2020. While the startup had an immense amount of hype—including $1.75 billion in funding and two star executives in Meg Whitman and Jeffrey Katzenberg—it shut down after less than one year.

Like other shuttered startups, there are likely many reasons for Quibi’s dramatic failure. That said, one of the main reasons may be the Dunning-Kruger effect. Both Whitman and Katzenberg didn’t seem to understand the type of content that their users wanted. As the Verge argued, the problem that Quibi wasn’t able to address is “Why do [users] need this?” In other words, their overconfidence wasn’t based on a true understanding of what their users actually needed or wanted.

But looking beyond a nearly $2 billion startup launch, the Dunning-Kruger effect can show up in more mundane circumstances. They can include things like:

  • Being irrationally confident about a colleague’s feelings after you have made a decision that affects him or her.
  • Having overconfidence in your ability to complete a certain task when it’s likely a better idea to delegate that task to someone more skilled or knowledgeable.
  • Failing to respond to cold, hard facts because of your overconfidence in your earlier decision.
  • Improperly evaluating the key takeaways or results from a recent sales or marketing campaign.

If you really think about it, the modern-day workplace is highly vulnerable to the Dunning-Kruger effect. To be influential or persuasive at work, you need to be confident. Confidence is certainly developed through underlying facts and evidence, but it is also developed from within. Arguably, we are incentivized to put on a confident and positive front—even if we may have some internal reservations.

How Do You Minimize the Dunning-Kruger Effect?

The Dunning-Kruger effect is a subtle, yet powerful force that can lead us astray. Even if we are trying to be rational, the Dunning-Kruger effect can cause us to make some irrational decisions.

So what can you do to minimize the Dunning-Kruger effect?

First, the bad news. Like all cognitive biases, it’s impossible to totally eliminate or remove them. Our brains don’t work that way.

The good news? One of the best ways to minimize the Dunning-Kruger effect is by recognizing that it exists.

There are plenty of people in the world that aren’t aware of the Dunning-Kruger effect, meaning that they continue to go through the world without realizing how overconfident they may be.

This leads to an interesting situation. Often, people need to experience some shortcoming or failure to determine how ignorant or overconfident they are. While there is an initial shock, that shortcoming can go a long way in helping you understand the power of the Dunning-Kruger effect.

So by reading this article, you are already one step ahead. You know that the Dunning-Kruger effect exists and that it may cause you to make some irrational decisions.

But beyond pure knowledge, one great way to minimize the Dunning-Kruger effect is to question what you know. Practice humility. In all likelihood, there is some element of a problem or roadblock that you are overlooking, so don’t be afraid to keep digging. The funny thing is that once you dig more into a particular subject or topic, you start to realize that there is plenty you don’t know. This makes you more cautious and more likely to make rational choices and decisions.

Finally, don’t hesitate to get feedback. Whether it is from your colleagues or an executive coach, others can help you see things that you can’t necessarily see. While it may feel awkward or uncomfortable in the moment, getting help from others can help you fight the Dunning-Kruger effect.

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The Dunning-Kruger effect is one of those biases that can sneak up on us. Before we know it, we are making irrational or poor decisions across all areas of our lives.

While we can’t totally eliminate it, we can be proactive in combating it. By implementing the strategies discussed above, you’ll be one step closer to being less biased when making important and not-so-important decisions.

Harry Schechter

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