Background: Questionnaires are the current hallmark for quantifying social functioning in human clinical research. In this study, we compared self- and proxy-rated (caregiver and researcher) assessments of social functioning in Schizophrenia (SZ) and Alzheimer's disease (AD) patients and evaluated if the discrepancy between the two assessments is mediated by disease-related factors such as symptom severity. Methods: We selected five items from the WHO Disability Assessment Schedule 2.0 (WHODAS) to assess social functioning in 53 AD and 61 SZ patients. Caregiver- and researcher-rated assessments of social functioning were used to calculate the discrepancies between self-rated and proxy-rated assessments. Furthermore, we used the number of communication events via smartphones to compare the questionnaire outcomes with an objective measure of social behaviour. Results: WHODAS results revealed that both AD (p < 0.001) and SZ (p < 0.004) patients significantly overestimate their social functioning relative to the assessment of their caregivers and/or researchers. This overestimation is mediated by the severity of cognitive impairments (MMSE; p = 0.019) in AD, and negative symptoms (PANSS; p = 0.028) in SZ. Subsequently, we showed that the proxy scores correlated more strongly with the smartphone communication events of the patient when compared to the patient-rated questionnaire scores (self; p = 0.076, caregiver; p < 0.001, researcher-rated; p = 0.046). Conclusion: Here we show that the observed overestimation of WHODAS social functioning scores in AD and SZ patients is partly driven by disease-related biases such as cognitive impairments and negative symptoms, respectively. Therefore, we postulate the development and implementation of objective measures of social functioning that may be less susceptible to such biases.