How to navigate a world our brains weren't built for, and ways to mitigate the psychological impact on the next generation.

On this episode of The Long View, Dr. Daniel Crosby, chief behavioral officer at Orion Advisor Solutions and author of a new book called The Soul of Wealth: 50 Reflections on Money and Meaning, breaks down the research on the relationship between money and happiness, how our mindset around money plays a role in retirement, and how social comparison and social media affects our financial and psychological well-being.

Here are a few highlights from Crosby's conversation with Morningstar's Christine Benz.

Christine Benz: I wanted to ask about social comparisons, because you've got a lot in the book on this topic. You obviously think it's hugely important to be thinking of. In fact, you call social comparisons the thief of joy. So, maybe you can talk about why you think comparing ourselves to others, comparing what we have to what other people have, why is that such a bad thing?

Daniel Crosby: Well, one of the things that I found when doing the research for the book that I thought was just staggering to me was that when you're looking at financial contentment -- basically how well-off do people think that they are -- there are two variables that are equally predictive. The first one is exactly what you think it would be, and it's how much money do you have. It makes complete sense that yes, how financially content I am would have something to do with how much money I have. But the second variable, which is at least as predictive and at least as powerful is who are you comparing yourself to, who are you benchmarking to, is as material as the number of dollars you have in your bank.

I don't think most people would assume that or understand that that's the case or are even cognizant that they are making a choice. Because, Christine, we find ourselves in this weird moment. Again, we are living in a day and age that we're just not built for.

When you look at how many people humans can really know and associate with and know well, it's about 150. It's about 150 people that we can fit in our Rolodex to know and vet and be friends with and know well. And yet, we all have access to just about every at least high-profile human on the planet through things like social media. So, whereas a couple of hundred years ago and for all of human history before that, humankind would have been benchmarking their professional success to the 100 people that they knew who lived in their little village and probably did jobs kind of like theirs. But now, I can wake up in the morning, bleary-eyed, click open Instagram and see that I have a lot less money and a lot less fun than ...

Benz: ... than everybody.

Crosby: ... than certainly superstars, right? Certainly, the Taylor Swifts and the Messies of the world. But even friends, even friends who are, of course, doing what we all do and curating a highlight reel of their most notable moments, by comparison, we are found lacking. So, both in terms of reach and in terms of just the way that social media works, we're presented with this weird catch-22 about wanting to be connected to people but finding ourselves comparing every bump and every pimple of our own lives to this highly edited version of everyone else's life, and it makes us sad.

One of the studies that I quoted in the book found that if people just limited their screen time on social media to 10 minutes in the morning and 10 minutes at night, it was good for a 13% increase in happiness. That is bigger than medication. It is a wild finding to know that just by not doomscrolling and looking at your friends' fun weekend as much, you can get more happiness than by getting psychiatric medication.

Benz: You make the point to be very careful about social media. I would think this goes doubly true for young people. I'm curious if you can talk about that, how we should coach young people on using or not using social media, because it does seem like the data are pretty dark about the implications, especially for young girls or adolescent girls.

Crosby: So, this is where I'm going to get the most hate mail, but I will tell you what I do as a parent, because this is me imperfectly wandering through the wilderness of trying to be a parent of a teen and a teen girl in particular. But we have made the rule for our kids that they won't have a phone until they can drive. So, my kids use ... and I know that that feels draconian and like very lame by the standards of most parents.

But when you look at the data, and you look at how dangerous these things are, and you look at how dangerous they are for girls in particular, the thing that got me into psychology was actually an interest in eating disorders. And my first-ever rotation was at an inpatient eating disorder treatment center in Utah, where I was going to school. I'll never forget that when I got there, the first thing we did with the women there, who were mostly young women, was media training, media literacy training. Basically, how to become an informed consumer of the messages that they were receiving about their bodies and their worth. I thought that was so powerful that before we talked about nutrition or therapy or 100 other directions you could take a multimodal treatment approach, we talked about, here's how you are being marketed to, here's how these images are created, here's how the marketing industrial complex makes you want to feel bad about yourself, so you'll go out and buy things. I think that that is an important message, but it's a hard one for someone whose prefrontal cortex isn't formed to understand in a meaningful way. So, Nassim Taleb says, never ask someone their opinion, just ask them to see their portfolio.

So, this is me showing you my portfolio. I don't let my kids have a phone until they're 16. After that, it will be put up at night, locked in a box at night, and screen time limited. Because I think that phones and social media are the smoking of the new generation, and I think we're going to look back many years from now, and we're going to wonder that we ever gave people such free rein on these devices that have really staggeringly bad psychological impact on young people.

Benz: Well, a related question, though, that I sometimes hear as a counterpoint is that are you kind of isolating your kids by having such a draconian approach to this? I think a lot of parents do agree with you, but they are scared that their kids will feel really left out of the conversation if they're the only ones without a phone, they're the only ones who aren't on Instagram. What do you say to that?

Crosby: My kids have access to phones. My kids can use my phone, my wife's phone, or a shared family iPad to text their friends. So, there is an element of training wheels. There is an element of training wheels and not wanting them to be left out. I will also say, I fault no parent for doing it however they do it because I am deeply conflicted about my own approach. I have misgivings about all of it. I don't profess to be doing it right. So, I respect every parent's approach, but I think that's a real concern.

But I will also say that in-person communication has a payoff that is dramatically better than text communication and other forms of digital communication. So, what we emphasize in our house is facilitating in-person get-togethers with my kids and their friends, which I want them to have.

I think a lot of times one of the hallmarks of our misunderstandings about money and going back to our initial conversation about the disconnected, lonely place we find ourselves in is that all these kids have 2,000 followers, 2,000 friends on Instagram, but no one to spend time with in real life. So, there's a degree to which texting all day or sending little messages and sending little tweets or snaps or whatever it may be is sort of junk food communication. It's sort of the cotton candy of connection. I think we do need to be encouraging connectivity between our kids and their peers, but I think it needs to happen to the degree possible in the most meaningful and the most direct way possible.

Benz: In terms of traditional social comparisons with neighbors and so forth, you make the point in the book to be careful about what you call reference classes in order to limit unhealthy social comparisons. So, what are reference classes? It seems like the neighborhood that I choose to live in would be one. What are some other examples of those reference classes, and how can we be thoughtful about them?

Crosby: It's sort of endless. I think different cultures emphasize different things. I think for some cultures, this idea of portable wealth is very big. So, having the right purse or the right car. I think for some cultures, a wedding, something like a kid's wedding is a status symbol and they'll go deeply into debt or spend big money to have the wedding be a big deal. For some folks, it's a house. So, I think it's on each of us to understand what that looks like for us in our own context.

But so much of the book, I think, can be around just raising awareness that we're doing this in the first place. In the same way that a fish doesn't know that it's wet, we are always benchmarking our lives to other people. I just want to make sure that we are making these reference-class judgments thoughtfully and intentionally. We're always going to do it, because past a very basic level, once we get past taking care of things like hunger and warmth and safety, wealth becomes a relative subject. Whether or not someone is wealthy sort of becomes a matter of degree and a matter of perspective and a matter of comparison.

So, someone who is very extremely wealthy, someone who is living in the US is likely to be extremely wealthy by world standards. But that's not likely their reference class. Their reference class is likely the people in their neighborhood, the people at their school. I just want people to be intentional and thoughtful about who they're benchmarking to, how they're making those judgments and making sure they have the proper perspective.