A Blog by Jonathan Low


Jul 22, 2013

What Makes Us All Think We're Above Average?

When my colleagues and I first started analyzing organizations' perceptions of their abilities and output relative to the views of their customers, investors, lenders and other stakeholders it quickly became apparent that even given access to the same data, the two sets of evaluators, management teams and outsiders, reached very different conclusions about performance.

The stakeholders who, after all, have a vested interest in the success of the enterprise, tended to be more critical, in a constructive way, of shortcomings and less fulsome in their praise of the institution in question's strengths. Insiders, the management team, invariably rated themselves superior in most, if not all, qualities and definitely better than the average across any consideration set one might wish to imagine.

At first we thought this might be unique to certain organizations. Then to certain industries. And finally, to denizens of certain geographical or cultural groupings. But the more examples we accumulated, the more apparent it became that this was a relatively universal attitude. People on the inside always think they are better at what they do than do others, even those who know them intimately.

This phenomenon carries over into other realms, as the following article explains. Children think they are better than others, most westerners perceive themselves to be ten years younger than they actually are, and so forth. Is the human species massively delusional? Or hardwired to brim with self-confidence as some sort of genetic protection against the threats of the pre-historic African savannah?

There do appear to be both neuroscientific and cultural explanations that answer, at least in part, the questions raised by this anomaly. Asian cultures, for instance, do not think of themselves, individually, as superior, but when the matter is framed from the perspective of the group, they are as proud as anyone else.

The broader issue is what organizations can and should do with this knowledge. Management teams must be made aware of their proclivity towards defensiveness and misperception because failing to properly evaluate their own performance can lead to misallocation of resources, misinterpretation of threats or opportunities and mistaken assumptions about whether things are really running well or not.

Similarly, organizations must understand how their customers, investors, lenders, suppliers and competitors view them. Realizing that these outsiders have their own sometimes inflated sense of superiority may help explain behavior in negotiation, alliance building and strategy execution.

We may not all be above average in everything we do, but understanding how people, especially people within enterprises, view their performance relative to others can assist in making better decisions that will result in more likelihood of success. JL

Alex Mayyasi reports in Priceconomics:

In a statistical impossibility, over 50% of adults consistently report that they are above average. Almost all drivers think they are better than the average driver. Ninety four percent of college professors believe that their teaching skills are above average. A survey of high-school students found that 70% described themselves as above average leaders. Is everyone engaged in egotistical self deception?
In 2011, Anya C. Savikhin of the University of Chicago had classes of preschool children compete with each other to win candy. Savikhin’s research team matched children up into competing pairs. In separate rooms, each preschooler in the pair attempted to catch as many toy fish as possible using a magnetic pole. The more successful fisherman moved on to the next round in a tournament, chasing the promise of a candy windfall.
Savikhin designed the experiment to study the competitiveness of young boys and girls with an eye toward how gender differences in competitiveness may affect educational outcomes. 
But she discovered something else of interest during the experiment. When the children were asked if they thought they had beaten their opponent - who they had not seen play - over 80% believed that they had. Yet only half of them could have possibly beaten their opponent. In other words, the Chicago preschoolers were seriously overconfident in their toy fishing abilities.
It may seem like just a funny quirk that these children assumed that they were better at a new game than the other kids. But it actually captures an interesting psychological puzzle.
The problem is that - like the preschoolers who have never seen any of the other players - everyone is answering the question with incomplete information. We haven’t seen every other driver, college professor, and high school soccer captain. Maybe we assume that we’re better drivers because terrible drivers on the road are so memorable and good drivers so forgettable. Or maybe, in light of the difficulty of knowing the truth, we just want to show a little optimism. Perhaps we lie because confident people are viewed more positively, because we believe in the power of positive thinking, or (as some academics have proposed) because overconfidence gave our ancestors an evolutionary edge in fights for mates and resources where the outcome was not clear.
We have not seen a definitive answer, but some research claims to narrow down the list of possible explanations.
One explanation given is that evidence of this overconfidence effect has been observed in the United States in Europe - and Westerners are an unusually individualistic and egotistical bunch. Some researchers testing for the effect in more “collectivist” cultures like Japan found that the effect disappears, while others did not. What gives?
The answer proposed by two psychologists - one American, one Japanese - is that since, in general terms, these other cultures wrap up social relationships into their sense of self-worth, asking only about them as individuals misses out on what they consider important. When they asked Japanese students about friends and family members, they found that students rated them as above average in comparison to others - a finding replicated in other non-Western cultures.
Like many of the explanations though, this begs the question of whether people really believe (or thought realistically) about their answers. After all, how many people do you expect to rate their mothers below average?
One study sought to investigate by having participants perform a personality test. The participants then predicted how they fared compared to the rest of the group, after which they made a series of bets based on their rank. Once again, people brimmed with confidence, expecting that they rated higher than their peers in traits like intelligence. But when money was on the line, they stood by their overconfident predictions. The results can only prove so much (after all, the academics only had enough funds to make the bets worth a few dollars), but it is evidence that people really believe that they are above average.
Whatever the explanation, we’re living in a statistically impossible world in which every parent is right that their child is special, talented, and most of all, above-average.


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