I am a strong believer in this effect. I saw it expressed well once in a book, paraphrased: "You are comparing your inside with other people's outside."
I've held on to that concept and its been an important part of me keeping my natural self-pessimism in check.
Example: corruption. You judge others because they evade taxes. You do it too, but you forgive yourself because you are only evading taxes because you need the money to pay for your mother's treatment.
This way you are very harsh on others, using a very rigid moral judgement. But very flexible on your own moral.
But the better part of my effort goes towards keeping that self-pessimism in check, simply because I naturally compare myself. I've found it better just avoiding a lot of those perception warpers, or remembering that I live my life at my own pace and as long as I stick to what I want to do, I'm better off than most.