Our weekly explainer on economics using lessons from popular culture. In Installment 24, Shah Rukh Khan demonstrates the Dunning-Kruger Effect.
“I’m the best! I’m the best! I’m the best! (Chorus: Oh, you are the best!) I’m the best! I’m the best! I’m the best! (Yes, you are the best!)”
Javed Akhtar is one of the great lyricists of Bollywood — and ‘I am the Best’ from Phir Bhi Dil Hai Hindustani shows that he is not only an expert of Urdu shaairi, but also of Behavioral Economics. This song is a subtle articulation of a cognitive bias called the Dunning-Kruger Effect. In it, the character played by Shah Rukh Khan repeatedly states that he is the best, and the girls in the chorus back it up. But is he really the best?
Wikipedia defines the Dunning-Kruger Effect as “a cognitive bias wherein people of low ability suffer from illusory superiority, mistakenly assessing their cognitive ability as greater than it is.” We see this all around us, every day, with people overestimating their own ability at whatever they do. For example, a famous study showed that most people think their driving skills are above average, which obviously can’t be true. (On average, everyone is average.) This can also be termed Illusory Superiority, or The Lake Wobegon Effect.
The Lake Wobegon Effect takes its name from Lake Wobegon, the fictional town created by Garrison Keillor, where “all the women are strong, all the men are good looking, and all the children are above average.” I have written about this before in the context of poker: in my years as a poker pro, I would find that all the players at any table I played at thought that they were winning players. This obviously wasn’t true, and the main reason for their misconception was that they didn’t know enough about the game to understand their own weaknesses. The more they would know, the less confident they would feel in their own abilities.
The flip side of the Dunning-Kruger Effect is that people who are truly competent at what they do tend to underestimate their own skills. One reason is that because it comes easy to them, they assume it must be easy for others. The other is the cliche that the more you gain knowledge, the more your realise how much you still need to know, and this keeps you humble. As another PBE (poet-cum-behavioral-economist), William Shakespeare, said: “The fool doth think he is wise, but the wise man knows himself to be a fool.” This is why, as yet another PBE (and also a William), WB Yeats wrote, “The best lack all conviction, while the worst / Are full of passionate intensity.”
That said, the Dunning-Kruger Effect might be a feature and not a bug. All of us, when we enter a field or begin acquiring a skill, are pretty bad at it. If we recognised our ineptitude, got disheartened and gave up, humanity would never progress. We need the self-delusion that the Dunning-Kruger Effect provides to persevere. But we also need hunger, and a little bit of humility. We need to learn to balance the self-delusion with self-reflection.
That said, this is a subject I am not an expert at. I know very little. You know what that means, don’t you?