not knowing that you don't know: "anosognoism" and the economics of information

Excerpts from the first in a five-part series by Errol Morris in the New York Times...

This first part was excellent; I've used the idea in my classes to help with the importance of (imperfect) information and its impact on economic markets. It is typical to talk about contexts in which information is asymmetric and leads to something akin to monopoly power. For example, the seller of a used car has more info about the car than prospective buyers.

Two interesting things result: 1.) it's less intuitive, but sellers are also harmed, since they cannot credibly commit (at low cost) to the quality of what they're selling; and 2.) the market tries to deal with the information asymmetries.

Beyond the information asymmetries I know about, a far more damaging/dangerous problem is information asymmetries of which I am unaware. That's the subject of this essay...

Morris opens with a terrific anecdote, from David Dunning, a Cornell professor of social psychology, who studies this. A bank robber is arrested soon after his crime, but can't believe they caught him. Why?

Wheeler had walked into two Pittsburgh banks and attempted to rob them in broad daylight. What made the case peculiar is that he made no visible attempt at disguise. The surveillance tapes were key to his arrest. There he is with a gun, standing in front of a teller demanding money. Yet, when arrested, Wheeler was completely disbelieving. “But I wore the juice,” he said. Apparently, he was under the deeply misguided impression that rubbing one’s face with lemon juice rendered it invisible to video cameras...

As Dunning read through the article, a thought washed over him, an epiphany. If Wheeler was too stupid to be a bank robber, perhaps he was also too stupid to know that he was too stupid to be a bank robber — that is, his stupidity protected him from an awareness of his own stupidity.

Dunning wondered whether it was possible to measure one’s self-assessed level of competence against something a little more objective — say, actual competence. Within weeks, he and his graduate student, Justin Kruger, had organized a program of research. Their paper, “Unskilled and Unaware of It: How Difficulties of Recognizing One’s Own Incompetence Lead to Inflated Self-assessments,” was published in 1999.[3]

Dunning and Kruger argued in their paper, “When people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it....

It became known as the Dunning-Kruger Effect — our incompetence masks our ability to recognize our incompetence. But just how prevalent is this effect? In search of more details, I called David Dunning at his offices at Cornell...

ERROL MORRIS: Knowing what you don’t know? Is this supposedly the hallmark of an intelligent person?

DAVID DUNNING: That’s absolutely right. It’s knowing that there are things you don’t know that you don’t know. [4] Donald Rumsfeld gave this speech about “unknown unknowns.” It goes something like this: “There are things we know we know about terrorism. There are things we know we don’t know. And there are things that are unknown unknowns. We don’t know that we don’t know.” He got a lot of grief for that. And I thought, “That’s the smartest and most modest thing I’ve heard in a year.”...

I found myself still puzzled by the unknown unknowns. Finally, I came up with an explanation. Using the expressions “known unknowns” and “unknown unknowns” is just a fancy — even pretentious — way of talking about questions and answers. A “known unknown” is a known question with an unknown answer. I can ask the question: what is the melting point of beryllium? I may not know the answer, but I can look it up. I can do some research. It may even be a question which no one knows the answer to. With an “unknown unknown,” I don’t even know what questions to ask, let alone how to answer those questions.

But there is the deeper question. And I believe that Dunning and Kruger’s work speaks to this. Is an “unknown unknown” beyond anything I can imagine? Or am I confusing the “unknown unknowns” with the “unknowable unknowns?” Are we constituted in such a way that there are things we cannot know? Perhaps because we cannot even frame the questions we need to ask?...

Anosognosia is a condition in which a person who suffers from a disability seems unaware of or denies the existence of his or her disability. [11]...

DAVID DUNNING: An anosognosic patient who is paralyzed simply does not know that he is paralyzed. If you put a pencil in front of them and ask them to pick up the pencil in front of their left hand they won’t do it. And you ask them why, and they’ll say, “Well, I’m tired,” or “I don’t need a pencil.” They literally aren’t alerted to their own paralysis....