On the way to the grocery store this afternoon, I passed through a construction zone. As I was driving by, I glanced over at the work they were doing and remarked, “Oh, it looks like they’re almost finished. They’ll probably be done by the end of the month.” I kept on driving and then laughed out loud. I know nothing about construction and certainly don’t know enough to look at the progress of the job site regarding road reconstruction to be as “confident” as I was in saying they’ll be finished in a month.
Earlier this year, I wrote about lectures I listened to on my trip from LA to DC. One of those lectures was by Maggie Neale on the subject of negotiation (I highly recommend listening to it!) One of the things she spoke about in this lecture is exemplified by my story about the construction site.
She had a pop bottle full of paperclips and asked the audience to guess how many paperclips were in the bottle. She told them there wasn’t some sort of trick to it and asked them to think up a number. Then, she asked them to come up with a 95% confidence interval. Meaning, she wanted the people to come up with a range of the number of paperclips that could be in the bottle, such that they could be 95% confident that the number of actual paperclips in the bottle fell within the range. If I recall correctly, she even said something about being certain that there were less than 1,000,000 paperclips in the bottle.
After they were all done, she told them how many paperclips were in the bottle and then polled the audience to find how many people had the actual number of paperclips within their range.About half of the audience raised their hands. Neale went on to say that statistically speaking, only 5% of the audience should have not guessed a range wherein the actual number of paperclips lay. That is, 95% of the audience should have had the actual number of paperclips fall within their range. As only 50% of the audience raised their hands, she went on to explain why.
The explanation for the paperclips is the same explanation as to why I made a guess about the construction site. Humans have a tendency to be confident — nay — overconfident about their judgments (regardless of their accuracy). This is known in some circle as the overconfidence effect.
I knew about this particular bias and I still fell into the trap (albeit shortly) of making an overconfident assessment about the construction site. I wonder what judgments you (or maybe your compatriots) are being overconfident about? Now that you know about this particular bias, I hope that you’ll be a bit more mindful when making estimations and the like.