Confidence vs. Competence

Confidence is often based on perception and expectation, while competence is the actual reality or fundamentals. I truly believe that competence should be prioritized, as genuine confidence is a natural byproduct of true competence—not the other way around. However, the relationship between confidence and competence is more complicated due to their reflexive nature.

Reflexivity

Confidence and competence are reflexive, meaning they influence and reinforce each other. Competence stimulates confidence, and confidence can further motivate us to improve our competence, creating a positive feedback loop. However, this reflexive relationship implies that confidence might—perhaps more often than not—grow faster than competence, creating a large gap between perception and reality.

George Soros refers to this phenomenon as a self-reinforcing pattern—one that can continue to inflate confidence until it becomes unsustainably high. When confidence deviates too far from competence, a single event, crisis, or failure can turn this self-reinforcing pattern into a self-correcting one, often in a much faster and more drastic way.

The Crisis

When a crisis hits, the reflexivity reverses. The fall of confidence to its natural level is often much more rapid and devastating than the slow build-up of competence. Many people today interpret this fall as “impostor syndrome,” but I believe this can exacerbate the issue. Misinterpreting the crisis as impostor syndrome may lead to an attempt to artificially boost confidence, causing an even greater divergence between perception and reality. It only fuels overconfidence even further and delays the inevitable self-correction process.

Awareness

This is why I believe that being aware of our actual competence is just as important as working to improve it. Preventing our perception of ourselves from deviating too far from reality is crucial. Sometimes, the crisis of overconfidence may not happen within our lifetime, or by the time it does, it’s too late—we’ve already become too cocky. However, the one factor that keeps us from being aware is that competence is inherently difficult—perhaps impossible—to measure.

Unobservable Competence

Competence is somewhat of an unobserved variable. No one can truly know their own competence, and the available proxies, such as GPA, awards, or recognition from others, are unreliable at best. In fact, I believe that the measurement error of competence is the primary cause of both overconfidence and underconfidence. This fluctuation is a part of life, one has to live with it and can never run away from it.

Perception

While competence may be difficult to fully control—no matter how much we practice or study, we may still struggle to obtain certain skills—I believe that, at least in the short run, our perception is far more manageable. We have the ability to control how we perceive ourselves: to be humble, not overconfident, and to keep our expectations grounded in reality. While competence takes time to build, our perceptions can be consciously regulated to avoid the pitfalls of overconfidence.