Testing the Water in Lake Wobegon

We all believe that we are special. At least here in the US, we are trained to think that we can do anything we set our minds to; that we have a supreme talent at something and the trick is simply to find out what that might be. A short survey of the world’s population and a basic understanding of statistics lead to a very different conclusion. Nevertheless, folk wisdom and even some recent psychological studies contend that believing in your potential and doggedly pursuing your passion will eventually lead to something good.



These days, even corporations have a hard time admitting that they are probably just average in terms of their global standing. Evidence of this reluctance to face the truth has hit the headlines and provoked the ire of a nation as CEO pay has continued to rise despite dismal company performance. The excuse? A company doesn’t want to admit that their CEO is simply average and so boards vote to pay their leaders above the market rate. Even the recent economic bubbles and the resultant crises are in part a function of overconfidence.

Psychologists and many other groups of people have known for decades that we often over-estimate our own capabilities. The ‘Lake Wobegon Effect’ permeates all sorts of skills and domains. In 1999, Justin Kruger and David Dunning from Cornell University published a study in the Journal of Personality and Social Psychology showing that in tasks ranging from humor to logical reasoning, the worst performers over-estimated their own abilities the most. Subjects in their study who actually performed above-average were more accurate in their assessments of their own performance. The authors suggested that the poor performers simply didn’t understand how hard the tasks were: once they were trained such that their skill level improved, they were also more accurate in evaluating their skill level. Justin Kruger then went on to show that when a task is really hard, skilled performers underestimated their own performance, because they did not take into account the comparison group. He concludes that people are just bad at comparing themselves with others.

In 2007, another study published in the Journal of Personality and Social Psychology showed that whether poor or skilled performers are the worst offenders in terms of comparing themselves with others depends largely on how easy or hard a task seems to be. When a task feels easy, poor performers overestimate their competence, and good performers accurately assess themselves as performing above-average. When a task feels difficult, good performers underestimate their performance and poor performers accurately admit that they are below-average.

So what’s the deal? Now that we know this effect exists, why don’t we simply re-calibrate our estimates? Before you plunge into a ‘I’m just an insignificant speck in the universe’ depression, consider this: for some reason, our brains have evolved to make us more likely to remember the good times than the bad times, to pay attention to good news more than bad news, to see ourselves in a more positive light rather than to face the fact that there are many people who are more skilled or more beautiful or more powerful. Eighty-percent of us behave like optimists; and we’re the ones whose genes have survived.