The Evidence-Based Investor

We’re not as good as we think we are

Posted by Robin Powell on November 21, 2017

There’s a cognitive bias, widely recognised in the field of social psychology, called illusory superiority. In fact it’s been called many things — leniency error, the superiority bias and the primus inter pares effect, for example — but it’s perhaps most popularly known as the Lake Wobegon effect, named after the fictional town created by the author Garrison Keiller.

In short, it refers to our natural tendency to overestimate our own capabilities. In Lake Wobegon, “all the women are strong, all the men are good looking, and all the children are above average”. The truth, of course, is that we can’t all be above average, but that still doesn’t stop us thinking, for example, that we’re better at driving, funnier or smarter than other people.

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Robin Powell

Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector. Regis Media.

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