In a study conducted at Yale, graduate students were asked to rate their understanding of everyday devices, including toilets, zippers, and cylinder locks. They were then asked to write detailed, step-by-step explanations of how the devices work, and to rate their understanding again.
Apparently, the effort revealed to the students their own ignorance, because their self-assessments dropped. (Toilets, it turns out, are more complicated than they appear).
Sloman and Fernbach (researchers who conducted this experiment) see this effect, which they call the "illusion of explanatory depth", just about everywhere. People believe that they know way more than they actually do.
People conflate information with theory. While information comes through the virtue of being in the situation, theory is an explanation of the underlying mechanisms of the system.
Familiarity gives people a false sense of expertise. Consider the following two examples.
If one observes closely, this is also reflected in the way bureaucrats' discourse on policy. The analysis of bureaucrats is on the lines of 'xyz scheme' has come, 'abc' were problems (most administrative related) etc. It's not the true analysis and understanding of the system. True understanding requires systematic thinking to differentiate proximate and root causes. Often, this isn't the case with bureaucrats. Probably, it's also the reason for their approach of coming up with another scheme in response to failure of the earlier, without realizing that the problem may not lie in the particular schemes but somewhere else.