"You think you're better than everyone else and that's actually good for mental health," Horswill said.
And the trend varies considerably with culture.
"North Americans seem to be the kings and queens of overestimation. If you go to places like Japan, Korea or China, this whole phenomenon evaporates," Dunning said.
That is possibly because Eastern cultures value self-improvement, while Western culture tends to value self-esteem, he said.
Finding the truth While it's not possible to get a completely clear-eyed view of oneself, people can bring their self-perception more in line with reality, Dunning said.
For one, people should look to others whose lives inspire admiration, figure out what they're doing right, and try to emulate them, he said.
And since people are generally pretty accurate in assessing other people (just not themselves), people should be aggressive about getting - and taking to heart - constructive criticism from others, he said.
"The road to self-insight runs through other people," he said.