Lake Wobegon effect
n. The tendency to treat all members of a group as above average, particularly with respect to numerical values such as test scores or executive salaries; in a survey, the tendency for most people to describe themselves or their abilities as above average.
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We believe the data suggest the first signs of an anticipated slowdown in executive pay," said Gary Locke, leader of Towers Perrin's executive compensation practice. "It's a moderation of the so-called 'Lake Woebegon' effect, where every company's board wants to consider their CEO to be above average.
—Dave Flessner, “Average pay of CEOs here slashed 8%,” Chattanooga Times Free Press, May 04, 2003
In 1987, John Cannell completed a study later popularized as the Lake Woebegone effect. He reported the statistically impossible finding that all states claimed average student test scores above the national norm. In addition to teaching for the test, he concluded that some teachers encouraged low-ability students to be absent on test days, helped students take the test and allowed outright cheating.
—Sheila C. McCowan, “Using standardized test scores to compare schools is unfair,” Buffalo News, July 21, 1999
1988 (earliest)
The public is getting an overly rosy picture of American schools from standardized achievement tests that allow most districts to claim their pupils are above average, a top Education Department official said Tuesday.

Chester E. Finn Jr., the assistant secretary for educational research and improvement, said most test-makers and test experts who attended a closed meeting at the Education Department agreed that the tests have exhibited a "Lake Wobegon effect."

He was referring to humorist Garrison Keillor's mythical hometown "where all the children are above average."

By definition, half the children in the United States are above the national average and half below it.

But John Jacob Cannell, a crusading West Virginia doctor, recently canvassed every state and did not find a single one that reported its elementary pupils were below average on any of the six major commercial tests.
—Christopher Connell, “Education Official Says Achievement Tests Paint Unrealistic Picture,” Associated Press, February 09, 1988
This phrase (sent my way by subscriber James Callan) was inspired by Garrison Keillor's 1985 novel, Lake Wobegon Days, which described life in fictional Lake Wobegon, Minnesota, where "all the children are above average."

This effect is most often seen in educational test scores, where some teachers, schools, or school districts claim that all of their students score above average, a mathematical impossibility.