The obvious, egocentric explanation for why we do this is that it makes us feel better about ourselves. But there are at least two other more innocent explanations, which are based on subtle flaws in our thinking.
The first possibility is that we find it easier to consider the favourable evidence for a single person than we do for a whole group. Consistent with this is the finding that people tend to be biased when comparing any single individual, not just themselves, against a group of others.
There's also the possibility that we're biased towards the "target" in any comparison. The "target" is the entity that is being measured up against some benchmark. Following this logic, if I asked you how good all other drivers are compared with you (thus making other drivers the "target" of the comparison and you the benchmark), then this ought to reduce the bias you'd show towards yourself.
A new study has tried to get to the bottom of what causes the "above average effect" by pitching these three explanations against each other. Zlatan Krizan and Jerry Suls Dozens asked dozens of undergraduates to list a group of friends or acquaintances, to take one member of that group and then compare that individual with the rest of the group on some attribute - say, generosity.
The researchers varied the contribution of the three factors thought to cause the "above average effect" by altering whether the student or another individual was the target of the comparison, by varying whether the student was or wasn't left among the remaining group members to be compared against, by varying the size of the group, and by switching whether it was the group or the individual who was the target of the comparison.
The researchers' conclusion after inviting the students to perform all these comparisons was that the obvious egocentric explanation for the "above average" effect is actually far weaker than has previously been assumed.
For example, asked to compare the generosity of an individual with the generosity of the rest of the group, students still showed a preferential bias toward the individual, even if they were themselves one of the members of the rest of the group. This remained true even if the group (which the student was themselves a member of) was made the target of a comparison against an individual. In other words, it is the difficulty we have thinking about the favourable evidence for groups, as opposed to individuals, that seems to be the crucial factor underlying the "above average effect".
KRIZAN, Z., SULS, J. (2008). Losing sight of oneself in the above-average effect: When egocentrism, focalism, and group diffuseness collide. Journal of Experimental Social Psychology, 44(4), 929-942. DOI: 10.1016/j.jesp.2008.01.006
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