- Technology can fill some of the gaps that many of us are currently experiencing with social distancing and isolation.
- Thinking about others can help counteract stress and anxiety.
- Broadening our perspective can not only lead to more rational decisions, but also a more positive outlook.
- Try to stay positive. Connect with those who bring you joy. Stay active. Better yet, do all 3.
The coronavirus (COVID-19), coupled with recent dramatic stock market drops, have created fear, uncertainty, sometimes even anxiety for many of us—from all walks of life.
To help you better psychologically cope with the current events, Fidelity Viewpoints® recently caught up with Fidelity's behavioral economics research lead and psychologist, Andy Reed, PhD. Here are some highlights from a wide-ranging discussion.
How does social distancing affect how one thinks about their community, family, and work?
Reed: We'll find out soon! Psychological studies have shown that the perception of loneliness actually hurts more than being alone. Social isolation can be extremely harmful to mental and even physical health. Interacting with close family and friends gives our lives joy and meaning. We've seen plenty of evidence going back decades demonstrating that the erosion of social connections and community has harmed our collective wellbeing. On top of that, when we stay at home our sedentary time tends to increase—which is extremely harmful to our health and longevity. So the lack of social and physical stimulation is potentially quite dangerous.
The good news is that technology can fill some of these gaps—and we're already seeing evidence of people using FaceTimeTM to stay connected with older parents in nursing homes. Some friends are holding "virtual happy hours" via video conferencing.
A few years ago, my colleagues and I published research showing that the oldest adults who use social technologies have significantly higher mental and physical wellbeing, so there's hope! Virtual interactions may not be a full substitute for in-person—after all, you can't hug someone through the internet—but they certainly help.
Why are people panic-buying and stockpiling toilet paper to cope with coronavirus fears?
Reed: Fear and uncertainty are 2 sides of the same coin—facing the prospect of losses that are unpredictable and of unknown probability is especially terrifying.
When people are in a state of fear they feel inherently powerless to affect the situation—in the current context people know they can’t individually affect the stock market or the pandemic.
Our minds kick into "uncertainty mode" when we have an inability to predict the future—no one knows how bad it will get, we overestimate the odds that stores will run out of essential supplies. We all know stocking up on supplies is an irritational thought, but if everyone is doing it, maybe we should too. This is the herding bias in a nutshell—we're uncertain about the best course of action, so we follow people around us.
How do we know when we are fearful for others vs. being fearful for ourselves?
Reed: Thinking about others actually has several benefits in times of crisis—first, we tend to be less biased when making decisions on behalf of other people and/or taking others' perspectives. Second, social connections offer psychological benefits that can help counteract stress and anxiety. Taking the opportunity to reconnect with loved ones in a positive way can be a huge silver lining to the current crisis.
Psychologically, how do people begin to believe that things will bounce back and return to normal?
Reed: Fear narrows our attention to the most salient information—whatever is top-of-mind, right in front of us, or here-and-now dominates. But investing isn’t about the present—it’s about the future. Broadening our perspective can lead not only to more rational decisions, but also to a more positive outlook.
Can you share Fidelity's findings on social isolation and its impact on our overall wellbeing?
Reed: Sure. These connections are not only well established in the research literature, but they’re also supported by Fidelity's own research on total wellbeing*, conducted with Stanford University. In our study of over 9,300 individuals we found that people who feel socially isolated are:
- Nearly 4x more likely to frequently feel "stressed or anxious"
- 15x more likely to frequently feel "sad or downhearted"
- 3x less likely to be highly satisfied with their lives
- 2.5x less likely to have a clear sense of purpose
- 30% less likely to get recommended amount of sleep
- 20% less likely to get recommended levels of exercise
- 23% less likely to report having a healthy diet
What family dynamics come into play when boomer parents welcome their now professional millennial children back home temporarily?
Reed: Stress, and lots of it at times. People's routines are disrupted, their budgets are thrown off-kilter, and in some cases their retirement savings and plans are busted because of "boomerang kids." This may not be an ideal scenario, but the upside is that people will be more socially connected—as long as they don't drive each other mad.
Read Viewpoints on Fidelity.com: Move forward by moving back home—for now
For people who are soon to retire (or hope to do so in the next 1 to 2 years), how should people be thinking about protecting what they have?
Reed: For many people who can see retirement on the horizon, the key is to think as long-term as possible. Retirement can last 20 or even 30 years—it's a full third phase of life. Making hasty decisions based on emotional reactions to a month of market volatility that can affect a third of your life doesn't make sense.
Getting perspective could mean turning to planning tools if you like a do-it-yourself numbers-based approach, or turning to a financial professional if you prefer talking things through to create a disciplined investment and income plan that suits your individual goals, risk tolerance, and life situation. It may be time to reassess and modify your goals and plans. Just don't abandon them entirely because we're in a temporary period of crisis.
Don't be afraid to change your plans to ensure long-term success. Pushing back retirement by a year or 2 isn't ideal, but it could be the key to having enough of a nest egg to live comfortably.
What can people do to combat fear or isolation?
Reed: Here are a few things to consider:
- Focus on the positive—what's going well in your life? Ruminating over all the things that are going wrong is a one-way ticket to stress and depression. People who focus on positive instead of negative information tend to have higher wellbeing.
- Connect with people who bring you joy—who makes you happy? Call them out of the blue—you'll boost their mood and connectedness as well as yours.
- Stay active—even 30 minutes of brisk walking can boost your mood immediately.
- Better yet, do all of the above at the same time—call someone to "count your blessings" while taking a walk.