Games With 10-Year-Olds

My granddaughter won money in a music composition contest and wanted to spend $4 of it on some artificial fingernails.? I accompanied her to the store; being a proud grandfather, I’d like to reward her for winning the contest.? So after she picked out the nails and we walked to the cashier, I offered to pay half.

I figure this way I am transferring income, showing pride, but not lowering the price of fake nails and not giving her an?incentive to spend more on fancier junky fake nails. This little?strategy seems sensible for a one-shot game; but in a?repeated game I know that she will catch on and spend more next time, expecting a subsidy from me.??I like to transfer income, but I don’t want to subsidize specific purchases. I need to cook up a new strategy for the next similar situation.


Next time, tell her you will match 100% (or 50%) whatever she puts in the bank in a savings account. My parents did it for me when I worked summer jobs cutting the grass, and I will do the same when my little ones starting earning money from small jobs outside the home (lawns, babysitting, etc.). I think it teaches a great lesson and transfers some income.

Shaun G

What you are essentially doing is handing her $2, with which she can do anything she pleases -- except, apparently, apply it to her current purchase. She might not waste the $2 on fancier nails, but she could just as easily spend it the next day on candy that'll rot her teeth.


You could pay for her to have a pedicure to match her new nails. Some related thing to whatever it is she's chosen to do with her money would be a nice bonus.


I had a similar problem with gift checks from Grandma. The check was for $75 and when they were babies, I would spend the money on coats, clothes and a small toy.

Once, they got big enough to spend their own money, there was no way I was going to let them drop $75 on whatever junk they picked out.

Our policy is only half of any gift money can be spent, the rest is savings. I keep track in a spread sheet of what they have in their account, and how much spending money they have at any given time.

Allowances are $2 spending, $1 savings and $1 for the church. Money made by workings is 50/50 spending and savings.

I want saving to be part of any thought process involving money: being given it, getting it regularly or earning it.


Matching the award (rather than the expenditure) with cold hard cash might better incentivise her to pursue the sort of achievements you celebrate. You might throw her a curve ball by offering to convert every $1 she hands back to you at the end of your shopping trip into $2 (or more) at some well-defined future date or upon the achievement of some goal that builds upon the present success.


You should ask her to pick a stock from the S&P and put her new funds on it. (You wouldn't actually have to invest the funds, just set up a parallel private account for her; the idea is that she might develop the interest in following the market and investing.)

Or you could have her watch you set up a "Social Security" fund for her and pour the money down a rat hole.

At 10 years old, my grandparents and my parents were all working. I was selling things door-to-door so I could save up to buy my first bicycle and clarinet.

Eric M. Jones

You could offer to pay for her tattoo.

levi funk

e85 anyone?

Peter Malinger

Why don't you do the responsible thing and tell her to save her money until she has enough to buy them herself? A gift is one thing but subsidizing a purchase in cruel to the effect that she will not understand how to deal with money responsibly.

sean lancaster

i have a 10 year old daughter and i cannot tell you how badly i want grandparents to stop buying knicky knack gifts for my kids, but that's not really what this story is about.

i am assuming she won more than $4 in the contest so she could have spent more if she had wanted to spend more and it was allowed, no? if your granddaughter already won $$$ in a contest then i would just let that naturally be the reward and you allowing her to buy what she wants is gift enough from you, i'd think.

Lisandro Gaertner

I think you need to understand what really drives your granddaughter. Maybe you are overestimating the money issue as a reward program. What if she would rather spend some time with you than getting money?

I know this is a behavioural economy blog, but, remember, economy is not just about money... I believe you would get some good ideas from Hayek or Skinner...


Next time -- who said anything about next time?


Randomly subsidize her purchases. This will prevent her from catching on and picking out more expensive items expecting to be subsidized and still give you the utility of subsidizing her now and then.

Alan S. Dambrov

You have the wrong question. Once you gratuitously gave her the $2, you were not acting rationally or in the course of a game. You were acting as a grandparent. One of your jobs as a grandparent is to enforce feelings of love and self worth. Of course, the satisfaction that you got far exceeded the cost.
So get used to acting like a grandparent and don't worry about the consequences. Let the parents teach, thrift, hard work, etc. Don't get me wrong, you should reinforce their efforts in those areas but your first priority should be in building a warm relationship with your granddaughter.


@ Alan Dambrov:

I agree with you that the first priority should be building a warm relationship, but your initial statement - that Daniel was not acting rationally - is incorrect by your own logic. If the feelings of love and self worth that Daniel experienced "far exceeded the cost", then he made a rational purchasing decision and picked up a little consumer surplus on the way.

That is what economics (and Freakonomics in particular) is all about.


I say foster a passion in her for something you are passionate about -- fishing or birdwatching or something, I dunno -- by paying 100% for a fishing rod or binoculars. It may not take, but then again, maybe it will.


I remember as a tween saving all the money I needed to take my younger cousins and brother out to the movies (including popcorn) only to have my uncle insist on paying for half. It really took the wind out of my sails. I wanted this to be MY gift with MY money.
Generous parents (and uncles): Saving money for an item or an event can be a source of pride so be careful not to undermine that for your kids!


I think it's pretty fair as it is. She still has to pony up half the money, so it gets more expensive for her as it gets more expensive for you. And since her resources are considerably more limited, you really don't need to be worried about her cleaning you out.

If it gets to the point where her savings is large enough that matching her expenditure becomes painful for you, I guess that's just her being smart - which is probably what you want anyway.


Subsidizing the purchase distorts her sense of economics. When somebody isn't available to pay half -- whether that be a grandfather or a government -- she will feel she's being cheated by the vendor. Much better to give her a gift than to cripple her understanding of prices.


why not give her 1/2 of whatever you got PAID to write these two paragraphs?

Sounds like you are talking advantage of a little kid---giving her $2 for your $50 story. (just kidding--maybe)