The critical point to note is that there’s a clear positive correlation between actual performance (gray line) and perceived performance (black line): the people in the top quartile for actual performance think they perform better than the people in the second quartile, who in turn think they perform better than the people in the third quartile, and so on. So the bias is definitively not that incompetent people think they’re better than competent people. Rather, it’s that incompetent people think they’re much better than they actually are. But they typically still don’t think they’re quite as good as people who, you know, actually are good.
Yet another example of someone (almost) learning a cool concept and then thinking it applies to everything related.