Nobel-Winning Psychologist Daniel Kahneman On the Danger of Overconfidence

Nassim Taleb and Daniel Kahneman speaking at NYPL. 2013. Via: (FLICKR)

In a conversation with Krista Tippett, Daniel Kahneman, a psychologist who won the Nobel Prize in economic science in 2002, the author of Thinking Fast and Slow, talked about the danger of overconfidence.

The transcript:

Krista Tippett: One thing you’ve also said is that if you had a magic wand, overconfidence is the thing you would banish. Would you explain that?

Daniel Kahneman: Well, and I’m–I did say that, but I’m not sure I was right. But what I meant to say was that when you look globally at people’s actions, overconfidence is endemic. I mean we have too much confidence in our beliefs, and overconfidence really is associated with a failure of imagination. When you cannot imagine an alternative to your belief, you are convinced that your belief is true. That’s overconfidence. And overconfidence–whenever there is a war, there were overconfident generals. You can look at failures, and overconfidence had something to do with them. On the other hand, overconfidence and overconfident optimism is the engine of capitalism. I mean entrepreneurs are overconfident. They think they’re going to be successful. People who open restaurants in New York think they’ll succeed; otherwise, they wouldn’t do it. But at least two-thirds of them have to give up within a few years–more than two-thirds, probably.

Krista Tippett: Well, and too, what’s also baked into that is, we reward overconfidence. We celebrate it.

Daniel Kahneman: Absolutely, we want people to be overconfident. We want our leaders to be overconfident.

To devour Kahneman’s insights on the mystery of human thought and behavior, listen to the podcast below:

Maybe, after all, what we need to tell people, especially aspiring creators, is that confidence is not the prerequisite for any creative endeavor. It is courage that counts–the engine that propels us to take the first step of anything unfamiliar and scary. In a conversation with Chase Jarvis, Debbie Millman, who got inspired by Dani Shapiro’s notion of confidence, said eloquently about the necessity to be courageous. She said:

“I believe that the act of being courageous—taking that first step—is much more critical to a successful outcome than the notion of feeling confident while engaged in the process. Courage requires faith in your ability before you experience any repeated success. But that doesn’t mean taking that first step will be easy. It won’t. Taking ANY step for the first time is difficult and there is a tremendous amount of vulnerability and nervousness you are likely going to experience. But experiencing that vulnerability and nervousness doesn’t give you an excuse not to take the step.”

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