Discount Confidence

You should probably discount confidence, even your own, when it comes to the certainty of a given outcome or event. I previously wrote about confidence stemming from the logical coherence of the story we are able to tell ourselves. I have also written about how logical coherence of personal narratives is easier when we lack key information and have a limited set of experiences to draw from. The more we know, the more experiences we have, the harder it becomes to construct a narrative that can balance conflicting and competing information. Laddering up from this point, we should be able to see that the more detailed and complete our information, the less coherent and easily logical our narrative about the world should be, and the less confidence we should have about anything.

If you have a high level of confidence in your own intuitions, then you probably don’t know enough about the world. If someone tells you they are very confident in something, like say an investment strategy, then you should probably discount the outcome based on their certainty. They may still be right in the end, but their certainty shouldn’t be a factor that leads to your support of the outcome they tell you to be a sure thing. As Daniel Kahneman writes in Thinking Fast and Slow, “The confidence that people have in their intuitions is not a reliable guide to their validity. In other words, do not trusty anyone – including yourself – to tell you how much you should trust their judgment.”

We tend to be very trustworthy. Our society and economy run on trust that we place in complete strangers. Our inclination toward trust is what causes us to be so easily fooled by confidence. It is easy to assume that someone who has a lot of confidence in something is more trustworthy, because we assume they must know a lot in order to be so confidence. But as I laid out at the start of this post, that isn’t always the case. In fact, the more knowledge you have about something, the less confidence you should have. With more knowledge comes more understanding of nuance, better conceptions of areas of uncertainty, and a better sense of trade-offs and contradictions. Confidence alone is not a predictor of accuracy. Our assumptions influence how accurate our prediction is, and we can be very confident in our assumptions without having any concrete connection to reality.