#43: Overconfidence effect

A bias that is pesky, pervasive, and dangerous

In a study published in PNAS, three in four Americans overestimated their ability to distinguish between legitimate and false news headlines.

The definition of the overconfidence effect, according to Wikipedia, is:

The overconfidence effect is a well-established bias in which a person's subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. Overconfidence is one example of a miscalibration of subjective probabilities. Throughout the research literature, overconfidence has been defined in three distinct ways: (1) overestimation of one's actual performance; (2) overplacement of one's performance relative to others; and (3) overprecision in expressing unwarranted certainty in the accuracy of one's beliefs.

Scott Barry Kaufman differentiates between [healthy] confidence and narcissism (a personality style that has been linked to overconfidence).

Danny Kahneman heeds about overconfident people at work:

Overconfident professionals sincerely believe they have expertise, act as experts and look like experts. You will have to struggle to remind yourself that they may be in the grip of an illusion.

Overconfidence is hard to crack because a person’s identity, in other words, ego, tends to become wrapped up in it. And people tend to do everything in their power to maintain their ego, even if it’s self-destructive.

Paul Graham makes the case that politics, like religion, is a minefield because both are tied to a person’s identity. Although we can sometimes, in the company of select people, have fruitful conversations about religion and politics, these instances are few and far between. Paul’s essay, from 2009, Keep Your Identity Small, is particularly prescient in today’s social landscape.

Paul writes:

Politics, like religion, is a topic where there's no threshold of expertise for expressing an opinion. All you need is strong convictions.

Do religion and politics have something in common that explains this similarity? One possible explanation is that they deal with questions that have no definite answers, so there's no back pressure on people's opinions. Since no one can be proven wrong, every opinion is equally valid, and sensing this, everyone lets fly with theirs.

But this isn't true. There are certainly some political questions that have definite answers, like how much a new government policy will cost. But the more precise political questions suffer the same fate as the vaguer ones.

I think what religion and politics have in common is that they become part of people's identity, and people can never have a fruitful argument about something that's part of their identity. By definition they're partisan.

I have a theory: there is a vast middle ground of untapped potential in the poor and the middle class, that direly need encouragement to stir ambition and healthy confidence. Without encouragement, they will become disgruntled and cynical, and as a defense mechanism, to protect their flailing identity, they will become overconfident. We can stop the spread of overconfidence by raising the aspirations of the poor and the middle class.

As Noah Smith writes,

But there are a lot of talented people out there whose abilities never get discovered because no one ever told them they should aim high, or because they didn't have parents to push them, or because they simply lacked confidence.

So our system is so focused on setting up these tournaments for ambitious people that we fail to go out and nurture the ambition of people who have undiscovered talent.

In response to his thoughts about Peter Thiel’s fellowship program, Noah says:

I feel that the Thiel Fellows program isn't the kind of thing that can scale up -- it's not a call for the average person to eschew college to be an engineer or technician, it's a call for a tiny thin sliver of the ultra-elite to eschew college so they can get a head start on amassing vast wealth in winner-take-all markets.

And he concludes with a warning about this kind of elitism:

A successful society rests on a broad foundation of human capital; it does not place all its hopes on a thin sliver of genius. I see too many people in Silicon Valley -- both liberals and conservatives -- tacitly accept the notion that only a few people have real potential. And maybe that's because venture-funded software is such a winner-take-all market. I don't know. But that's not the attitude that will bring this country a broad industrial renaissance or social revitalization.

If we’re going to revitalize our society, we need to raise other people’s aspirations. We will need to look in new and different places, starting with the vast middle ground of talented people who need a boost of encouragement and time.

I am inspired by Meta Gamma Delta’s $1M fund for women which seeks to raise funds for the vast middle ground of women who have untapped potential, but don’t have the time to learn. Programs like this one change lives and the future of our world by creating serendipitous luck - an antidote to overconfidence.

Here, in this snippet from the $1M fund proposal, Meta Gamma Delta reminds us about luck:

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