You’re So Clever!

At a seminar recently, I asked for a show of hands for everyone who considered themselves ‘above average’ when it came to driving ability.

95% of the room raised their hands.  auction buy property bid sell house sale

Everyone chuckled as they looked around the room.

As you would probably guess, this result is statistically improbable, unless I happened to be in a room of Peter Brock relatives.

Students cram for exams because they believe extra study is not necessary given their superior level of intellect.

Healthy elderly people refuse to get their flu shots each year because they don’t believe they’re at risk.

Over years, people make thousands of stupid decisions, based on their own personal belief systems.

The consequences of a wrong decision don’t seem to matter either!

Just what is going on here?

Why can’t people be honest with themselves about their own abilities, and what effect this can have on their investing? 

Study after psychological study suggest that people’s estimations of their own abilities tend to correlate poorly with their actual performance.

In one 2006 study by Dunning, Heath and Suls, people correlated only 0.20 to 0.30 with performance on intelligence tests, in comparison to their expectations. (Correlation measures the relationship between two principles.

For example, a perfect positive correlation would be +1, and a perfect inverse correlation would be –1.

The correlation between how people expect to perform and how they actually do perform at the workplace hovers around 0.20 for complex tasks.

Clearly, we are fairly lousy at evaluating our own performance.


Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.

Louise Bedford


Louise Bedford is a full-time private trader and author of several best-selling books. To pick up her ‘Trading Made Simple’ 5-part e-course, register on her website and she’ll send it to you straight away -

'You’re So Clever!' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts