Why are people overconfident so often?

Overconfidence helps individuals attain social status, and less capable people who believe they are better than others are given a higher place in the social ladder, according to a US study.

The lure of social status promotes overconfidence, explains Cameron Anderson, associate professor at the University of California Berkeley Hass School of Business, who co-authored the study with Sebastien Brion, assistant professor of managing people in organisations, IESE Business School, University of Navarra and others.

These findings suggest one reason why in organisational settings, incompetent people are so often promoted over their more competent peers, the Journal of Personality and Social Psychology reports.

“In organisations, people are very easily swayed by others’ confidence even when that confidence is unjustified,” says Anderson. “Displays of confidence are given an inordinate amount of weight.”

“Our studies found that overconfidence helped people attain social status. People who believed they were better than others, even when they weren’t, were given a higher place in the social ladder,” says Anderson, according to a California statement.

People are known to be frequently overconfident, believing they are more physically talented, socially adept, and skilled at their job than they actually are.

For example, 94 percent of college professors think they do above average work (which is impossible, statistically speaking). But this overconfidence can also have detrimental effects on their performance and decision-making.

Social status is the respect, prominence, and influence individuals enjoy in the eyes of others. Within work groups, for example, higher status individuals tend to be more admired, listened to, and have more sway over the group’s discussions and decisions.

These “alphas” of the group have more clout and prestige than other members. Anderson says these research findings are important because they help shed light on a longstanding puzzle: why overconfidence is so common, in spite of its risks.

His findings suggest that falsely believing one is better than others has profound social benefits for the individual.

The studies based on 242 MBA students, suggest that organisations would benefit from taking individuals’ confidence with a grain of salt. Yes, confidence can be a sign of a person’s actual abilities, but it is often not a very good sign. Many individuals are confident in their abilities even though they lack true skills or competence.