The term derives from a 1999 article in the Journal of Personality and Social Psychology which showed that low performers tend to overestimate their abilities. It’s not that low performers think they are better performers than higher-skilled people (that’s the illusory superiority effect); it’s just people think they’re better than they actually are.
Dunning and Kruger explained that low performers lack the skills to distinguish between good and bad performance. The low performers can be considered “unconsciously incompetent”. In the words of the original study,
…people who lack the knowledge or wisdom to perform well are often unaware of this fact. We attribute this lack of awareness to a deficit in metacognitive skill. That is, the same incompetence that leads them to make wrong choices also deprives them of the savvy necessary to recognize competence, be it their own or anyone else’s.
Here’s a good example of the Dunning-Kruger effect from psychologist Tal Yarkoni,
…if you’re not very good at learning languages, it might be hard for you to tell that you’re not very good, because the very skills that you’d need in order to distinguish someone who’s good from someone who’s not are the ones you lack. If you can’t hear the distinction between two different phonemes, how could you ever know who has native-like pronunciation ability and who doesn’t?
The original study also demonstrated a less publicized effect: in general, high performers tended to underestimate their abilities compared to others. It’s not that they fail to recognize their own high performance but rather they believe that everyone else has a higher level of performance than they actually do. You’ve probably experienced this when an expert has trouble explaining an advanced topic to you; the expert assumes you have background knowledge you might not have and can’t understand why it’s not obvious to you.
The tendency of low performers to overestimate their own abilities and the tendency for high performers to underestimate theirs are both examples of the bias blind spot. We don’t recognize our own biases.
The solution? Challenge your beliefs. Ask more questions. Have empathy for others. In other words, be more open-minded.