Institute for Research on Economics and Society – Faculty of Economics and Business – University of Indonesia

When Officials Don't Know What They Don't Know: Dunning-Kruger Effect in the Case of Green Budgeting for Local Government

November 3, 2017

(This guide is only available in English.)

Alvin Ulido Lumbanraja

Abstract:

This paper extends the key ?ndings of Kruger & Dunning (1999), which shows that people who are unskilled in a given domain tend to be unaware of their lack of skills, to government circles that are supposed to be ?lled by professionals. This paper compared individual government of?cials' self-assessment of their of?ces' ability to perform certain tasks related to green budgeting with their responses to questions that implicitly assess their actual ability to perform such tasks. Consistent with Kruger & Dunning (1999), individuals who have insufficient knowledge and expertise in a given domain tend to have more accurate self-assessment when asked to rate their own expertise, and vice versa. This paper also discusses the theoretical underpinning of how compensation structure is related to Dunning-Kruger effect on policy design and how tying the outcome with compensation can promote learning and better metacognitive abilities, even for less knowledgeable individuals.

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