I love this quote:

“Overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.”

I have to work that into my presentation today: “unfortunately. their incompetence robs them of the metacognitive ability to realize erroneous conclusions.


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Category: Apprenticed Investor, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Overestimation and Cognitive Error”

  1. Mannwich says:

    Sounds like an affliction that many in positions of “leadership” today share…….

  2. Robespierre says:

    “The dumb get confident, while the intelligent get doubtful.”

    Taleb actually alludes to a similar thing on “successful traders”

  3. The Curmudgeon says:

    in other words, they’re wrong because they are stupid, but they are so profoundly stupid, they don’t even have the ability to realize they’re wrong.

    Sounds like cognos.

  4. alecu says:

    Oh, cheer up people! You are too self-critical. You need to improve your self-esteem. I have read on Project Weight Loss that if you work out you feel much better and energized. I play tennis to stay in a good mood. Tennis players are higher in optimism, self-esteem, and vigor having a low level of anger, confusion, depression, tension, and anxiety. I play 3 times/week.

  5. dsawy says:

    Get back to me on the predictive skill of the oh-so-terribly smart in this world. We can start with Irving Fisher’s prediction of stocks reaching a permanently high level and enumerate from there to Ben Bernanke’s confident prediction that sub-prime would be ‘contained.’

    The single best predictor I’ve seen recently for high-quality stupidity in this world recently is a degree from Harvard.

  6. CIGA Monitor says:

    The more you learn, the less you “know”.

  7. Mannwich says:

    Where is cognos? Such typical troll behavior to bail when the going gets tough. Too bad.

  8. Mannwich says:

    But those in the “the club” (as George Carlin put it) all assure each other just how “brilliant” they and their friends are, and we believe them (for a while). That’s coming to a close.

  9. Mr.E. says:

    Strike metacognitive and clearly make the point.

  10. Daffyorbugs says:

    Mr. E,

    Nice editing. Work with Mark Hoffer.

  11. The Curmudgeon says:

    An example of an intellectual clubs that exist mostly as a mutual admiration society, and examples of its mutually-admired stupidities

    theoretical physicists–string theory; dark matter and energy; the theory of everything–if you need to imagine a host of new dimensions and universes to explain the one you have, then you ain’t ‘splained nothing as Ricky might say; neither have you ‘splained anything if your theories require that 94% of the universe be invisible and undetectable

  12. Daffyorbugs says:

    The world is flat.

  13. alnval says:

    Mr. E: Thank you. “Meta” is one of those subversive prefixes they teach to use at Harvard when you don’t know what your’e talking about it and hope nobody else does either.

  14. Arequipa01 says:

    “Metacognitive”. Disagree; it’s a valid word choice. (unless meta means cone and I can’t support coneheaded-thinking.)

    Meta: a prefix appearing in loanwords from Greek, with the meanings “after,” “along with,” “beyond,” “among,” “behind,” and productive in English on the Greek model: metacarpus; metagenesis; metalinguistics.

    “Thinking about thinking” is a category that merits a functional descriptor, just as metalinguistics does.

  15. rootless_cosmopolitan says:

    The Curmudgeon,

    neither have you ’splained anything if your theories require that 94% of the universe be invisible and undetectable

    I’m afraid you have misunderstood something about the so-called “dark matter”, or non-baryonic (i.e., not protons or neutrons) “weakly interacting massive particles” (WIMPs). To explain certain cosmological phenomena, the existence of such WIMPs is required according to the “concordance model”. It is not required that this “dark matter” is “invisible” and “undetectable”. On the contrary, particle physicists work on experimental setups to detect WIMPs, since this is essential to test the validity of the theory or the model. Look here, for instance:

    Bertram Schwarzschild, “Underground detector yields tantalizing hint of dark matter”, Physics Today — February 2010, Volume 63, Issue 2, pp. 11-13, http://scitation.aip.org/dbt/dbt.jsp?KEY=PHTOAD&Volume=63&Issue=2

    I don’t know whether you can access the article, though.

  16. “Researchers consistently posit that metacognition plays an important role in reading. Metacognition has been defined as “having knowledge (cognition) and having understanding, control over, and appropriate use of that knowledge” (Tei & Stewart, 1985). Thus, it involves both the conscious awareness and the conscious control of one’s learning. In this digest, the implications of metacognition will be discussed as it relates to an important type of learning–reading to learn…”

    “Metacognition is defined in the Mayer text as “knowledge and awareness of one’s own cognitive processes�? (Mayer, 100).

    Three basic elements of metacognition.

    1.) Developing the plan
    2.) Implementing and maintaining the plan
    3.) Evaluating the plan

    I don’t know, BR, I’d let ‘em chew on ‘metacognition’/’metacognitive’, it’s one of ideas whose sum is greater than the parts..

    and, you never know, a little insight from cogPsych/ e.e. might, really, be a longer-term benefit for some of those found in your audience..

  17. flip, speaking of ‘editors’..

    “it’s one of ideas”

    “it’s one of..those..ideas”

  18. alnval says:

    Mr. E was talking about clarity in communication not publishing in a peer-reviewed journal. Would you prefer to think of gravity in terms of the apple that fell on Newton’s head or the explanation that a contemporary physicist might offer us of the same phenomenon?

  19. Julia Chestnut says:

    Knowing what thou knowest not
    is, in a sense, omniscience.

    — Piet Hein

  20. phb says:


  21. S Brennan says:

    I think this line:

    “Overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.”

    Describes perfectly this:

    “In 2009, the Obama administration intervened to support the reversal of a court order that would have halted offshore oil drilling in the Gulf of Mexico. Obama’s Interior Secretary Ken Salazar**, who has long had close ties to the industry, specifically cited BP’s Deepwater Horizon operation as one that should be allowed to go forward, according to a group involved in the court case…A Washington DC Appeals Court ruled in April 2009 that the Bush administration’s five-year plan for offshore oil and gas drilling (covering 2007 to 2012) was not based on a proper review of the environmental impact of the drilling. Only days before the ruling, the Obama administration had granted BP a “categorical exclusion,” exempting it from an environmental impact study for the Deepwater Horizon project.The American Petroleum Institute, the oil industry trade group, intervened to reverse the court order, and was backed by the administration….Kierán Suckling, http://www.biologicaldiversity.org/, involved in the original lawsuit, said that Salazar “filed a special motion asking the court to lift the injunction, and he cited the BP drilling several times by name in the request.”

    *Even since the explosion of the Deepwater Horizon less than three weeks ago, the Interior Department’s Minerals Management Services (MMS) has continued to grant “categorical exclusions” to oil and gas companies, allowing them to bypass environmental studies. The administration has publicly announced that no new offshore drilling grants will be issued until a review, to be completed by the end of the month. Nevertheless, at least 27 exemptions have been granted, including one for a BP exploration plan for drilling at more than 4,000 feet. Another exemption was granted to Anadarko Petroleum Corporation for an exploration plan at more than 9,000 feet. The Deepwater Horizon was drilling at about 5,000 feet.

    **The Obama administration’s appointed Salazar as Interior Secretary, as a Senator for Colorado Salazar supported expanded drilling. Salazar received money from BP, and when he became Interior Secretary he brought several BP officials on his staff.

    Obama is the biggest recipient of BP political contributions

  22. S Brennan,

    nice post to pull it into the Topical (helps to explain the Concept)..

    add’l to the BP/DH scene:

    “”BP contracted Schlumberger (SLB) to run the Cement Bond Log (CBL) test that was the final test on the plug that was skipped. The people testifying have been very coy about mentioning this, and you’ll see why.

    SLB is an extremely highly regarded (and incredibly expensive) service company. They place a high standard on safety and train their workers to shut down unsafe operations.

    SLB gets out to the Deepwater Horizon to run the CBL, and they find the well still kicking heavily, which it should not be that late in the operation. SLB orders the “company man” (BP’s man on the scene that runs the operation) to dump kill fluid down the well and shut-in the well. The company man refuses. SLB in the very next sentence asks for a helo to take all SLB personel back to shore. The company man says there are no more helo’s scheduled for the rest of the week (translation: you’re here to do a job, now do it). SLB gets on the horn to shore, calls SLB’s corporate HQ, and gets a helo flown out there at SLB’s expense and takes all SLB personel to shore.

    6 hours later, the platform explodes.”

  23. S Brennan says:

    Thanks M Hoffer,

    I knew some of the details…but not that “BP executives, engineers, drilling supervisors on site & in their chain of command had or should have had reasonable foreknowledge of the events as they were about to unfold.

    I agree that these actions should result in “charges of and convictions for negligent homicide & multiple counts of criminal destruction to private, state, & federal property”

    BP executives, engineers, drilling supervisors clearly understood more about the resultant destruction than the hijackers of 9/11/2001.

    Compare, Bush whose inaction caused death & destruction of 911 and Obama/Salasar who took direct action to contravene judicial order which allowed a WASP terrorist cell to kill, maim and destroy US lives and property.

  24. Seattle Chill says:

    Mannwich Says: Where is cognos?

    Trying to think of a new nickname, I would imagine.

    Like “survival of the fittest,” the “Dunning-Kruger effect” is so obvious that it’s practically a tautology. To put it simply, if a dumb person could learn from his mistakes, he wouldn’t stay dumb for very long.

  25. S Brennan,

    this: “Compare, Bush whose inaction caused death & destruction of 911 and Obama/Salasar who took direct action to contravene judicial order which allowed a WASP terrorist cell to kill, maim and destroy US lives and property.”

    makes for a redoubtable Comparo..

    all the better, because, no matter one’s view of the events, or the individuals involved, it’s accurate..

    I guess we’ll have to see if the MSM has the ability to put these two events in proper context to each other..
    as of yet, http://www.google.com/search?hl=en&q=BP%20Deepwater%20Horizon&um=1&ie=UTF-8&tbo=u&tbs=nws:1&source=og&sa=N&tab=wn , it doesn’t seem like it..

  26. grimreaper says:

    I apologize for the low-brow comment, but this reminds of an episode of “Taxi” in which Louie says to Jim, “You’re too stupid to know how dumb you are.”

  27. CB says:

    It’s just a fancy way of saying:
    Them that know – they know that they know.
    But them that don’t know – they don’t know they don’t know.

  28. Jack says:

    Someone once said (Rumsfeld stole part of it):

    We have conscious competence, unconscious competence, conscious incompetence (Piet Hein) and unconscious incompetence. It’s the last one that scares the shit out of me. Too many of our “deciders” don’t know how effin’ stupid they are.