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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

266. Dunning-Kruger Effect: Are you on the Peak of Mt. Stupid?

Today’s episode is all about the Dunning Kruger Effect, which was the second most downloaded episode of the year in 2022, so in case you missed it I wanted to be sure you had a chance to listen to it like so many of your peers did. 🙂 

If you DID hear this episode last year when it came out, I highly recommend you still tune in now because I can guarantee it will hit you differently today than it did back then. You are a different person and you will glean different insights from the episode, I promise. 

So, why this episode and why today? Well, in Friday’s episode with Dr. Tomas Chamorro-Premuzic, we talk explicitly about the Dunning Kruger Effect and how it applies in life and business when he shares about his new, fascinating book I, Human and our discussion is specifically around one of his other books, Why So Many Incompetent Men Become Leaders (And How To Fix It). That book has too good of a title to not be honored with a refresh on the Dunning Kruger Effect, which looks at the relationship between confidence and competence, as you will learn more about today.

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HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

  • [00:39] Today’s episode is all about the Dunning Kruger Effect, which was the second most downloaded episode of the year in 2022.
  • [02:22] To put the Dunning-Kruger effect into its simplest form, it would say essentially that people who are unskilled tend to overestimate their abilities and those who are very skilled experts will underestimate theirs.
  • [03:15] Think about a kid who graduates from high school and believes they know everything.
  • [03:35] When someone graduates from high school, they are at a point that has come to be known as the “Peak of Mount Stupid.” At the peak of mount stupid, someone has lots of confidence, but it isn’t built on much competence. They have no idea how much they don’t know so they are blissfully unaware of their precarious position and how close they are to falling right off the cliff. When this kid gets to college and realizes they don’t know nearly as much as they thought they did, they fall into the “Valley of Despair.”
  • [05:51] This is an opportunity to look at the things you don’t yet know and begin to research them. This gradual climb is called the “Slope of Enlightenment.” You slowly gain confidence as you grow your competence…though you might never get back up to the level of confidence you had way back at the peak of mount stupid.
  • [06:48] If you take a moment now to reflect upon your own life, I am guessing you could pretty easily come up with at least half a dozen examples where the Dunning-Kruger effect reared its ugly overconfident head.
  • [08:17] While you are an expert in one thing, you are way overconfident in something else, where you don’t have any idea of the ocean of stuff you don’t know.
  • [09:23] How the effort heuristic relates. 
  • [11:16] I can live in blissful unawareness of my inadequacies forever and never have it be an issue until I try the thing enough to realize that I should have been a little less confident.
  • [12:30] Have some awareness and don’t assume you know better than everyone else.
  • [13:27] There is a flip to this as well. (It isn’t all about mount stupid). Remember, there is a point where you become an expert and then grossly underestimate your own abilities.
  • [14:45] You can’t do this for everything, but on the things that matter it is worth doing a little Dunning-Kruger evaluation every so often to discover if you are underestimating or overestimating your confidence and competence at this point.
  • [15:41] Look at your own moments where you have high confidence and low competence (or high competence with not enough confidence) to determine if you are showing up in the best way possible. Also, look at others to determine where they are on that Dunning-Kruger scale.
  • [17:08] Another place where the Dunning-Kruger effect is really critical to keep in mind is when you look at coaching or giving advice to members of your team.
  • [18:40] Giving them too many things to change while they are feeling the stress in the “valley” is going to make the problem worse, so you need to be selective on what advice to give them.
  • [19:55] Know that when people have low competence in something, they are likely to be overconfident in their own abilities. Those who are very competent have a tendency to underestimate their own skill or ability.
  • [20:3] There is an interesting point when there is an increase in knowledge where you realize all of what you don’t know—that increased competence results in a drastic drop in confidence.
  • [21:17] As you build knowledge, know that you will gradually underestimate your abilities, skills, and all the effort and training that went into what you now know and can do. Just because it is easy for you doesn’t mean it isn’t of value to someone else. Especially when someone is new, overshare information to help with where you both are on the Dunning-Kruger scale.
  • [22:04] Don’t take your spot on the Dunning-Kruger scale as a fixed point. The context is always changing, there are new discoveries and technologies and experts every day.
  • [23:16] I just love this concept in so many ways. It is a great opportunity to look at ourselves, and others so we can overcome obstacles we may be putting in our own way, avoid big crashes into that valley of despair, be better at coaching others, and have better relationships with colleagues of all kinds — and even understand our relationship with technology.
  • [24:12] Keep the Dunning Kruger Effect in mind as you look around at your own choices and the relationships you have with others over the next couple of weeks.

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