Self-observation is the key to a higher order of awareness; it is how we learn to become inwardly vigilant to our own thoughts and feelings, even as they pass through us.
To observe yourself means that you can't be self-absorbed. Higher awareness through self-observation increases your field of choices, because this elevated inner position places you high above the game and lets you see all of the players. On the other hand, self-absorption is like being on the field. Not only can you not see all of the players, but those that you can see are more often than not slamming into you, turning you around and around until you don't know which way to run. That's the whole point: stop running and bumping, and start seeing.
There is no greater power for self-change than self-observation because this new inner vision alone can provide you with true self-knowledge. Being self-liberated is the same as living fully from your higher nature. In this lofty state, you enjoy the freedom that comes with having let go of your false self. This higher nature rests above you. Join it. Let it guide you all the way back to your true home within yourself.