I like to think that I'm smarter than average. Probably also a better driver than most. Definitely better than average at my job. But I'm also not alone in believing that. You probably believe those same things, and maybe more. In fact, the vast majority of us see ourselves as "better than average," which obviously isn't possible. We call this type of bias in thinking Illusory Superiority.
This is something that is seen consistently and to such a degree that I can say you definitely do it too in some way. A study of college professors in the 1970s found that 94% thought they were "above average" compared to peers. More recently, a 1999 study found that people who scored in the bottom quarter on tests of humor, logic, and grammar consistently thought of themselves as "above average" in those areas.
Illusory Superiority can actually be beneficial to our sense of self-esteem. I feel better about myself because I think I'm good at a bunch of stuff, mistakenly or not. You know, ignorance is bliss and all that. But it can also cause problems. If I think I'm better than you, I'm more likely to avoid or ignore any advice you offer - even if it's really good advice I could learn from. If I already believe myself to be better than most, I'm less likely to want to learn more and improve my skillset. That can lead to overconfidence in my decisions, a tendency to spend less time researching and "trust my instincts" more, and ultimately make me a worse investor - who somehow still think I'm above average.
So how do we stop ourselves from doing this? There are a few things that may help:
- Illusory Superiority has a bigger effect when we compare ourselves to an imaginary "average person" but much less so when we have an actual, real person we compare ourselves too. So, find specific peers or friends that you can talk to about this stuff.
- Find someone you admire or you think is very good - an expert on cryptocurrencies or investing. Try to learn about what they do well and emulate it. An example I know a lot of people may look up to from an investing standpoint is Warren Buffet. And if that's the case, maybe your lesson from the expert is to buy, hodl, and if possible stake for that sweet, long-term compounding interest.
- Seek out and accept constructive criticism. Don't let yourself think the other person can't offer advice or criticism because they aren't as good at this as you. You may be wrong.
- Knowledge is power. Increasing skills actually leads to less tendency to over-inflate our abilities - when you know more about something, you become more aware of what you don't know. So always work on educating yourself more and seek out opportunities to learn more.
As always, self-awareness is key. I'm sharing this so we can all be better at catching these patterns that may be holding us back. Notice when you think of yourself as "better" and intentionally remind yourself about Illusory Superiority and how it may be biasing your thinking.
