A friend of mine, Richard Isaacs--sadly deceased for some years now--kept a laminated card that he called an "explanator" in his wallet. Richard insisted that the simple saying imprinted on it explained most of the problems with the world: People Are Idiots.

He went on to say that it wasn't some people who were idiots but all people, you and me included. We're all idiots, at least part of the time.

Apparently, science agrees. David Dunning, a professor of psychology at Cornell University, is an expert on what is called, partly in his honor, the Dunning-Kruger effect. The most graphic illustration would be to watch a Lie Witness News feature from Jimmy Kimmel Live on TV. People at the South by Southwest (SXSW) festival are more than happy to knowledgeably expound on music acts that don't exist, even when they have names like "Contact Dermatitis" and might be like a "rash that spreads across the U.S." or "Tonya and the Hardings" and are described as "hard-hitting."

Of course the footage was edited and only the worst examples (who would sign a release form, I'm sure) made it into the final cut.

But don't laugh too much. Given the right circumstances, you or I would find ourselves doing something similar.

In one study Dunning did, 90 percent of participants said that they knew at least one of nine fictitious concepts, including "plates of parallax" and "ultra-lipid." In another, people who considered themselves politically savvy nodded their heads sagely about politicians who didn't exist.

The problem is that we're all bad at understanding what we actually know and what we don't. It makes sense. Those who are poor at a subject tend to lack the expertise to recognize how little they know; otherwise they'd have some actual knowledge. And we all have areas in which we're ignorant. As Dunning wrote:

A whole battery of studies conducted by [me] and others have confirmed that people who don't know much about a given set of cognitive, technical, or social skills tend to grossly overestimate their prowess and performance, whether it's grammar, emotional intelligence, logical reasoning, firearm care and safety, debating, or financial knowledge. College students who hand in exams that will earn them D's and F's tend to think their efforts will be worthy of far higher grades; low-performing chess players, bridge players, and medical students, and elderly people applying for a renewed driver's license, similarly overestimate their competence by a long shot.

We pick up patterns from our lives and come to assume they are true and accurate, even if they aren't. But they seem like real knowledge. Some of these misconceptions literally stretch back to early childhood. We ascribe intent and choice to events that are utterly accidental in nature.

The scariest aspect is that the less people actually know, the more confident they tend to be in their attitudes. They know some rule or principle that, in actuality, is completely wrong. We all hold values that we use as a basis to reason about the world, and we'll actually refuse to accept facts if they contradict what we think is right, which helps explain a lot about politics.

I'd argue the same principles apply to business. It's common to find entrepreneurs who have read one thing or heard another and decided that they possess real knowledge about how to run a company, even if they cannot produce results. And, again, that means pretty much everyone in business at one time or another.

The solution is to start to question what you think you know and become, as Dunning puts it, your own devil's advocate. Think about how your assumptions could be incorrect, your conclusions misguided. Consider how events could turn out differently from how you think they will. Dunning literally considers a future time when he was wrong in a decision and then work backward to the most likely way he got to that point. Also, seek advice from others. Even if they are wrong as well, a good discussion might help shake loose the worst of your misconceptions.

Published on: Oct 30, 2014
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