Economics 101-ism and the Dunning-Kruger effect: Reducing overconfidence among introductory macroeconomics students

Abstract

In numerous subjects, people with the least knowledge also lack the ability to assess how much they don’t know. Specifically, the less competent the individual, the greater is their overconfidence in their knowledge - the Dunning-Kruger effect. However, in order for the incompetent to overestimate their knowledge, they must satisfy a minimal threshold of knowledge that suggests to themselves that they can generate correct answers.Many students, perhaps the majority, who study any economics complete no more than a single credit of Principles. Perhaps out of necessity, most introductory textbooks describe a set of basic theories which are often presented as absolute truths. Unfortunately, this may leave students overconfident with the impression that complex real-world problems can be analyzed using the simple theories of Economics 101.The challenge faced by economics educators is to identify how to help students who lack the technical skills and knowledge to conduct appropriate analyses and understand the uncertainty and complexity of economic problems and policies. This article describes an experiment designed to determine whether including readings and discussions around economic complexity reduces overconfidence among introductory macroeconomics students. The results suggest that the Dunning-Kruger effect is present among introductory economics students, and that the level of overconfidence is significantly reduced by the introduction of such readings and discussions.