"The Dunning-Kruger effect is a type of cognitive bias in which people believe that they are smarter and more capable than they really are. Essentially, low ability people do not possess the skills needed to recognize their own incompetence. The combination of poor self-awareness and low cognitive ability leads them to overestimate their own capabilities" (source: verywellmind.com website).
As a former mental health professional and dedicated saver, I have some thoughts on how this effect may impact our economy. Remember, the issue at hand here is not a lack of knowledge, but rather the unawareness of one's lack of knowledge and expertise. For example, my primary care doctor is one of the best around. Because he is so competent, he readily admits when he doesn't know something medically and refers me to the right specialist when that happens. How does that work with respect to financial and economic matters? If the Fed had been more competent, they would have readily admitted several months or a year ago that they weren't sure if inflation was transient--rather than proclaiming boldly and wrongly that it was. In the same way a President or Senator with financial expertise and no healthcare background would readily admit their lack of expertise about Covid and seek counsel from non-partisan experts. A Commander in Chief with nil military expertise (whether Republican or Democrat) would call in their most trusted military advisors and say, "I am commander in chief--but I am a neophyte in this area--each of you give me your expert counsel so I can make a wise decision." In sum, one of the characteristics of the highly competent is to readily admit what they don't know. With that in mind, since my background and experience is in psychotherapy, non-profit senior management, quality improvement, and ministry: I may be guilty of the Dunning-Kruger effect in my own comments above, because I don't have any research to back up my suppositions. They are, therefore, my own personal observations and opinions and should not be given more weight than is due.
