This is known as the Dunning-Kruger effect. The basic idea behind it has been a well-established rule for centuries. Charles Darwin, for instance, has stated "Ignorance more frequently begets confidence than does knowledge". It has been empirically proven in 1999, by psychologists David Dunning and Justin Kruger in their report "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments". This was proven through a study in which participants take tests of their logical reasoning skills, grammatical skills, and humor, and then estimate their own abilities in those subjects. Those participants who scored in the bottom quartile grossly overestimated their own abilities. Those in the12th percentile had estimated themselves to be in the 62nd percentile. Overall, Dunning and Kruger found that incompetent people overestimate their own skill level, fail to recognize the skill of other people and fail to recognize their own inadequacy. Also, as they receive training to improve their skills, incompetent people tend become more aware of their own inabilities. Read more about the Dunning-Kruger effect in Wikipedia. For a similar, less scientific theory, check out the "Peter Principle".
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