Are You Certain?

The-Big-Short-Epigraph

How do you know what you know?

Everyone has witnessed a couple arguing over some inconsequential detail of their vacation. The wife will say their waiter told them about a fabulous deep sea fishing hole, and the husband will interrupt to say that, no, it wasn’t the waiter but the valet who gave them the tip.

Depending on their personalities (and perhaps how much they’ve had to drink), they’ll either fight it out or one will back down, saying that yes, honey, you’re right, it was the valet. But make no mistake—each one believes they are right.

It happens at the office too—many times in corporate America a decision is made to follow the person who has no doubt what to do, who shoots holes in alternative suggestions, and swats away any objection to his solution.

Even if they are dead wrong.

Overconfidence is part of the human condition.

But we are as susceptible to our own overconfidence as we are to the charming hot shot in the office.

We know what we know, even if we’re not sure how we know it. You know?

But do we?

Back in 2011, I read an article by David Brooks in the New Yorker called “Social Animal.”  In it, he discusses a study about how much people know—and how much they think they know.

To quote from the article:

“Human beings are overconfidence machines. Paul J.H. Schoemaker and J. Edward Russo gave questionnaires to more than two thousand executives in order to measure how much they knew about their industries.  Managers in advertising gave answers that they were ninety-per-cent confident were correct.  In fact, their answers were wrong sixty-one per cent of the time.  People in the computer industry gave answers they thought had a ninety-five per cent chance of being right; in fact, eighty per cent of them were wrong.  Ninety-nine per cent of the respondents overestimated their success.”

That quote has stuck with me for over seven years now, and I often think of it when I see someone confidently spouting off answers to complicated problems—politicians, corporate managers, journalists, pundits, the guy at the end of the bar.

I try to remember it most when I am the one doing the spouting off. That I, like most people, don’t know what I’m talking about even when—maybe especially when—I am certain that I do.

Later in the article, Brooks writes:

“…stressed the importance of collecting conflicting information before making up one’s mind, of calibrating one’s certainty to the strength of the evidence, of enduring uncertainty for long stretches as the answer becomes clear, of correcting for one’s biases.”

The more I learn the less certain I am of everything I think I know.

Maybe this is wisdom.

Then again, maybe not.

And by the way, that Mark Twain quote in the picture is from the opening credits of The Big Short, a film all about overconfidence before the 2008 economic crisis.

Only there’s no record of Twain ever saying or writing it.  It’s a bogus quote.

How’s that for irony?

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