Why Gen Z is feeling 'money dysmorphia'

Alright, let's do it. Wilder works in film and also at a climbing gym. We chat about his money.

Wilder is Gen Z. He's part of a generation anxious about debt and bills credit. One bank surveyed young American adults aged 28 and younger and three out of five said they were stressed or anxious about their finances. And yet what if I said Generation Z was the richest generation at that age ever?

You account for inflation and on average they're doing well.

I don't know.

So this is the indicator from Planet Money. I'm Jerrian Woods. Today on the show Financial Dysmorphia, we speak to a neuroscientist who has a theory about why a lot of us of old generations can feel like we're in the economic dumps when many of us are actually doing all right. One's teens and twenties can always be an anxious time. Economically, you haven't built up much savings yet. You're early in your career, you're still getting your footing. But there is a puzzle here that could shed light on economic anxiety in general. Young people in the US today are richer than young people yesterday. The median income for a 25 year old is somewhere between $42,000 and $50,000 a year. Millennials, Gen Xs, baby boomers all earned significantly less at that age. Even accounting for inflation, baby boomers earned less than two thirds of that when they were 25. Young people's wealth is also higher, and yet a significant portion of young people today feel like they don't have enough. There's student debt, high house prices and inequality, yes, but they don't fully explain this mismatch. Overall, the economic picture is looking pretty benign, if not bright for young Americans today. Tali Sharratt is a neuroscientist at MIT and University College London. She thinks there are some other factors at play.

A sense of progression is important, Tali says, because we easily get used to the status quo in old domains. Like a smoky room, within 20 minutes,

This is called habituation, a fundamental concept in psychology.

The second reason for young people's financial dissatisfaction, Tali says, is comparison.

What this can add up to is what has been called informally, money dysmorphia.

This is not a clinical diagnosis. It's a label that sprung up on TikTok and money blogs a couple of years ago.

Tali Sherritt says that the pains of comparison are real.

Say somebody's getting paid $100,000 a year and that's more than anybody else. Tali says that person will be happier than someone on $200,000 a year whose peers are getting more. After all, comparison is the thief of joy.

The importance of expectations for happiness shows up in all kinds of areas. Tali talks about a curious fact when it comes to women's rights. In the early 1970s, women reported being happier than men. At the same time, women generally needed a man to co sign their application for a credit card. From those decades through to the early 2000s, discrimination against women lessened.

What Tali says happened is that girls were told they could be anything. An astronaut, a president. But that meant that expectations for equality rose faster than the reality of equality. And when those girls grew up to be women facing less pay and more housework, that's a recipe for unhappiness. And to be clear, Tali is not saying that women should lower their expectations. I wonder if this could be applied to the US As a whole. I mean, the US Is among the richest nations in the world, and yes, it has major problems with poverty. Inequality is very high. The social safety net is a lot lower than European countries say. But despite its wealth, a lot of people in this country feel like economic victims. Donald Trump embodies the sense of other countries ripping America off despite it being among the very richest countries in the world. Do you think this may relate to this at all?

Now, somebody listening into our conversation might say, you two are gaslighting me. You're saying that economic situation is not that bad, that I shouldn't be feeling anxious over money, I'm in a precarious position, and that you're essentially saying this is all in your head. What do you have to say to that critique?

Tali also points out that dissatisfaction with the status quo can be a powerful driver for change.

After all, if we'd stayed happy with how things were thousands of years ago, we might never have left our caves. This episode was produced by Cooper Katz McKim. It was engineered by Neil Rouch and Debbie Daughtry. It was fact checked by Sarah Juarez and edited by Cake and Cannon. The indicator is a production of npr.