Do We Really Need Self-Confidence Boosting Advices?

Often we are given Self-Confidence Boosting Advices from lecturing books, and the self-help sections in weekly magazines. Confidence, usually positively associated with character strength  is rarely examinedfrom its backside. But where does confidence come from? Take a look with me, and tell me whether you agree with me upon it.  This will be my advice on confidence.

On Poul Krugman’s blog, I have recently read his own reflections upon his own career choices. Being a columnist at New York Time, a leading economist among academics, a professor, an author and editor of bestselling books, and not least, a Nobel Prize Laureate, he is nominated for a Secretary of Treasury position.

Now serving a useful purpose in the world of Economics and Journalism, he doesn’t believe that he will do a better job in that position, because he is not sure about his own capabilities to play that political game.

Dr. Krugman, a guru of Economics, one of the brightest, most intelligent (his followers compare him to Steve Jobs, Obama, Warren Buffet) is questioning his own perceived limitations. He is not confident with his own administration,  persuasiveness, influence and decision making skills. Thus, he is going to reject the offer.

I believe the voice of his logic and reasoning is very strong, he has a great influence on societal debates, he innovates and leads economic debates for the better. In spite of that, he assumes that at this new position he will not have such an influence on the politics. He is questioning whether politicians will listen to him at all.

At the same time we often face the situation, when an incompetent person tends to grossly overestimate their skills and abilities. Have you ever met a weak leader, who thinks he is great leader- that he or she is more able than the typical manager; or a graduate, or just a student, who believe he will become a great leader in just 2 years? What about the un-experienced driver, who thinks that he is an excellent driver, as opposed to an experienced and less confident, one? Very often we face the tendency of the average person to believe he or she is above average.

So why is that so, that one of the most influential, brightest  person in economics is questioning his own level of abilities, while less-competent persons tend to over-estimate their abilities, and therefore, seem to be more confident?

As our skills/expertise/intelligence grows, so does the depth of our understanding of our reality. The more experienced you become, the more aware you become of your own and others limitations and our bounded rationality. For example, in Economics you can no  longer expect the expected, nor can you predict the unpredicted. In banking, you cannot rely on economic and financial modeling-it is just a nicely build statistical model, based on unrealistic assumptions.

Also, as more experienced and knowledgeable you will become, the more mistakes you will have done by that time. Consequently, you start to reflect upon your own mistakes more and more.

But an unskilled person (which can be driven by the luck of experience, irrationality, incompetence in particular area, or just low intelligence level) will not have a prerequisite to reflect upon his or her own mistakes, question his own abilities and simply evaluate the external factors. Not only do they draw mistaken conclusions and make regrettable errors, but their incompetence robs them of the ability to realize it, making them to believe in their own rightness. This will result in higher self-assessment and over-confidence.

 It’s like the economics during the recent boom and burst periods. There were  so much optimism and over-confidence in the economy (believing that we will never experience hard economic lending; or that the housing prices will always grow) simply because that generation had not remembered/experienced deep recessions. Now, when we have faced the Black Swan Events (the collapse of the biggest banks, or fall in housing prices), we have more “real” facts upon which we can reflect. We realize we can lose jobs, pension plans, houses- thus, we are not that confident any more .

It’s actually the same in our private life. On the picture above can see me doing the bungy jumping in New Zealand. Back then my confidence was the trigger for doing the jump- what could happened to me- was I thinking. Now, having experienced “life” (by that I mean having more responsibilities), I wouldn’t be so confident to take that jump from the bridge.  

So, the more experienced/knowledgeable you are, the more perspectives you have to integrate into your decision making. Furthermore, the external factors will constantly change the proportions of these perspectives. Nobody is able to manage these proportions, because:

•      We lack the ability and resources to decide  what should be  the optimal solution
•      Our mind is limited and cognitive
•        We have limited information
•      We build the illusions of reality, which cannot be trusted
•      Our moods influence our competences differently   
•      Economical, statistical and mathematical models are not a reflection of our reality.

These are just some of the good reasons for questioning our own abilities.

So, my point here: Personally I think it’s not a sin to be  confident. But if you are questioning your own abilities and competences, weakening the level of your confidence, so don’t worry- you are simply recognizing your own true level of abilities; you learn from your own mistakes; you are simply approaching a higher level of your experience and understanding of the complexity of our reality. You are getting cleverer. Only non-competent individuals have more difficulty recognizing their true level of ability, masked by very high level of confidence.