How people assess their social environments plays a central role in how they evaluate their life circumstances. Using a large probabilistic national sample, we investigated how accurately people estimate characteristics of the general population. For most characteristics, people seemed to underestimate the quality of others' lives and showed apparent self-enhancement, but for some characteristics, they seemed to overestimate the quality of others' lives and showed apparent self-depreciation. In addition, people who were worse off appeared to enhance their social position more than those who were better off. We demonstrated that these effects can be explained by a simple social-sampling model. According to the model, people infer how others are doing by sampling from their own immediate social environments. Interplay of these sampling processes and the specific structure of social environments leads to the apparent biases. The model predicts the empirical results better than alternative accounts and highlights the importance of considering environmental structure when studying human cognition.