Decision Making: Over Confident, Under Skilled or Both?

4 min read

Your business should be taking steps to fight incompetence and be more self-aware. Ask a group of car drivers to raise a hand if they have average or above average driving skills, and the majority of them will do so. (If the group asked are all male it’ll probably be almost 90% with raised hands!) Obviously not everyone can be above average, so some people are mistaken. To put it differently, when it comes to any skill, a significant portion of people are likely to be unjustifiably confident. This behavior is an example of the Dunning Kruger effect, which is the tendency for less skilled individuals to overestimate their own abilities.

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By James Richardson, Qlik

This overestimation doesn’t just relate to physical skills: in their 1999 paper, psychologists Justin Kruger and David Dunning of Cornell University explored how: “People tend to hold overly favorable views of their abilities in many social and intellectual domains… Across four studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in meta-cognitive skill, or the capacity to distinguish accuracy from error.

Let’s not forget that this applies to all of us some of the time! I might be in the upper quartile for some skills, but weaker in others. Our tendency is to believe that we’re better at something than we are – until we see the evidence.  More problematic still, those with the lowest skills – the least competent – display the biggest gap between self-belief and capability: “when people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it… they are left with the mistaken impression that they are doing just fine.”

As Dunning wrote in a 2014 article “In many cases, incompetence does not leave people disoriented, perplexed, or cautious. Instead, the incompetent are often blessed with an inappropriate confidence, buoyed by something that feels to them like knowledge.”

Conversely, the most skilled underestimate their abilities – see the redrawn chart from the 1999 paper below. As a side note, you could say that this finding in the study data is clear empirical evidence for humility (or at least caution) in the most-skilled people – an interesting finding.  The most skilled are somewhat humble, and the least skilled disproportionately confident – remind you of any politicians?  As my mother sometime says, “empty vessels make the most noise”.

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Why should humans display this over and under estimation of their skills? Well, if we recognized we were terrible at things we’d likely give up doing them – look at the dropout rate of those trying to learn a musical instrument, where it’s obvious that skill is lacking. In other skills where we can convince ourselves it seems that we’re psychologically hard wired to believe in our capabilities and just keep moving forward. Sooner or later, through practice and trial and error we might get better, and become more competent, more skilled, at which point we’d recognize how hopeless we used to be.  As the paper reports: “Paradoxically, improving the skills of participants, and thus increasing their meta-cognitive competence, helped them recognize the limitations of their abilities.”  Speculatively, under estimation may have a social benefit, keeping those with high skills from becoming unbearably smug!

Making tactical or strategic decisions in the workplace is a skill like any other. As such the Dunning Kruger effect applies to it too.  How many managers and business leaders mistakenly think they are doing just fine?  Wouldn’t it be great to be able to figure out which managers are the most skilled and which are not and lack self-awareness? According to Qlik-gathered data, under a quarter of organizations routinely check the outcome of business decisions**.  Given that the often cited main reason for investing in BI is to ‘improve decision making’ this is a problem. Helping people to learn from their mistakes more quickly could be another, as yet unrealized, value that analytics brings to organizations – but only if we turn it to analyzing decision outcomes and the performance of those that make them.

*Chart redrawn from the original in ‘Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments’ (1999) by Justin Kruger, David Dunning.

**You can see a little more on decision reviews in my blog on BI Speculations for 2021: Part II

Best Regards

About Arne Rosness

Arne er redaktør av BI-blogg.