“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
Last year Michael Mauboussin and Dan Callahan from Credit Suisse performed an experiment to test how accurate people are at estimating their own abilities. They set up a trivia quiz of 30 true or false questions, but went one step further and asked respondents to rate how confident they were in their answer for each question.
Here’s the big takeaway:
When the subjects selected 50 percent, their probability of being correct was random. This means they were well calibrated. They didn’t know, knew they didn’t know, and answered as if they didn’t know.
However, as the assigned probability of correctness rose, the subjects became less calibrated. For instance, when the subjects selected 100 percent, they were only correct 77 percent of the time. At 90 percent, they were only correct 65 percent of the time. Overestimation of ability was greatest at the high levels of assigned probability of correctness.
People often wrongly assume that if they can just figure everything out that it will ensure success, but progress typically occurs when you’re able to figure out what you don’t know.
For instance, there was basically zero economic growth or technological progress for thousands and thousands of years. So why did the Scientific Revolution — which eventually kicked off hundreds of years of progress in information, productivity and technology — finally get off the ground in the 1500 and 1600s (and then the Industrial Revolution and so on)? And why was it the Europeans who were the ones to do it and not another country or empire?
According to Yuval Noah Harari, in his excellent book Sapiens: A Brief History of Human Kind, it was the willingness to admit ‘we don’t know’:
Until the Scientific Revolution most human cultures did not believe in progress. They thought the golden age was in the past, and that the world was stagnant, if not deteriorating. […]
There is poetic justice in the fact that a quarter of the world, and two of its seven continents, are named after a little-known Italian [Amerigo Vespucci] whose sole claim to fame is that he had the courage to say, ‘We don’t know.’ The discovery of America was the foundational event of the Scientific Revolution. It not only taught Europeans to favour present observations over past traditions, but the desire to conquer America also obliged Europeans to search for new knowledge at breakneck speed.
If they really wanted to control the vast new territories, they had to gather enormous amounts of new data about the geography, climate, flora, fauna, languages, cultures and history of the new continent. Christian Scriptures, old geography books and ancient oral traditions were of little help. Henceforth not only European geographers, but European scholars in almost all other fields of knowledge began to draw maps with spaces left to fill in. They began to admit that their theories were not perfect and that there were important things that they did not know.
In the past the kings and leaders tried to control people by controlling the information and the history books. Everyone assumed they already knew all there was to know so there was little reason to explore or create.
Progress was only able to occur once people were able to admit that they didn’t know the ways of the world with complete certainty. And once the learning and exploration process began people continued to realize just how much there was out there that we still needed to learn.
The scientific method is really just a system for learning. Sometimes it leads to a successful discovery and sometimes it leads to failure, but it’s always working. Even when you’re wrong you’ve learned something valuable about what not to do in the future.
Progress begets progress once you’re able to to accept how much there is that you really don’t know.
IQ vs. RQ (Credit Suisse)
The Value of I Don’t Know