K is for Kruger-Dunning Effect

The Kruger-Dunning Effect (or, more traditionally, the Dunning-Kruger Effect) identifies the issue that some people are too stupid to know that they're stupid. They're also completely convinced that they're correct, regardless of outcomes or feedback. This is a very dangerous combination, especially in a world of digital connectivity, where whoever is most confident is the guru most followed.

Example

The Dunning-Kruger effect is named after its discoverers, Justin Kruger and David Dunning. The name of their seminal paper sums it up really: Unskilled and Unaware of It: How Difficulties in Recognising One's Own Incompetence Leads to Inflated Self-Assessments. I can't outdo the paper for humor, however unintentional, so here's a quote from the abstract:

"Across 4 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."

Most of us suffer from overconfidence, but Dunning-Kruger victims do so to an extraordinary degree, and do so even on tasks on which they have received repeated feedback demonstrating that they're bloody useless. One study showed that good students got better with feedback but that the poorest performers didn't, and continued to demonstrate gross overconfidence in their abilities despite repeatedly being told they were idiots (I paraphrase).

Causes

Although the problem has been repeatedly demonstrated no one knows why this affects certain people and not others. Worryingly this means that you may have the problem because, if you do, you'll never know. So I'm afraid there's not much I can do about that. It's just something you're born with. Sorry.

Mitigation

While I can't help people who have the problem I can, at least, help those who don't. Because Dunning-Kruger sufferers don't realize they're hopeless they tend to be extremely overconfident - and extreme overconfidence is something that attracts followers. In a digitally connected world this is very dangerous, because we lose the social cues that tell us when people are, well, a bit odd. I mean, on-line everyone's a bit odd.

So, don't take anyone on-line at face value, don't follow people who don't exhibit any degree of self-awareness or a sense of humor or who can't spell or conjugate a verb and don't have anything to do with anyone who can't tolerate sensible, contradictory, advice. They may just be afflicted by confirmation bias, but they may be much, much more dangerous. People with D-K, you see, can't even recognize competence in others.

And also: Don't Lose Money in the Stupid Corner
Read more: A Liberal Arts Investor's Reading List

The A to Z of Behavioral Bias