Most parents worry about why their children lie and wonder what causes their children to lie. However, according to this source lying is a normal a normal developmental process for children of all ages. Psychologists and economists alike study this subject for a long time both from the determinants side and its consequences. The main motivating factor that push researchers to conduct such studies is not because it has any harm on the kids at early age, rather this behavior could transcend to permanent personality trait which could be costly to treat at a later age.
Children lie not only to protect themselves from the consequences of their actions, but to: (i) test boundaries between fantasy and reality, (ii) enhance self-esteem and gain approval, and (iii) to get the focus off themselves. According to Dr. Ross and Dr. Brady, parents can play a role in minimizing the incentives that make kids lie once they know about which function(s) cause(s) their children to lie. These group also argue behavioral treatments depends the severity of the problem, and whether it is pathological or compulsive lying. Pathological lying is when kids lie for no apparent reason, and presumably without planning or motive. On the other hand, compulsive lying happens when kids do it to get things they want to or to escape punishment.
According to Dr. Roses, there are three levels of lies. (a) level 1 – this is a low-level lie that is not hearting anyone. It is usually caused by attention-seeking behavior. And parents could ignore it and refrain from asking follow-up questions. (b) level 2: If kids continue telling the inflated fantastical type of lie, parents could intervene by pointing out the behavior and advise them to tell what really happened instead of exaggerating things (c) level 3: this is where older kids lie about where they have been, or they have done their homework. The Psychologists advise if it passes the threshold may grow to pathological lying hence parents need to intervene by setting different consequence. To the minimum, could let their kids know there will be consequences for their actions. For example, if a child hit another child and lied about it, the consequences could be two-fold- for both hitting and lying. Hence the punishment could be separating them for a certain duration and having them write a sorry letter to the kid they hit. According to this source, parents need to give attention if the reasons their kids are lying is due to mental health issues such as trauma and abuse, anxiety, low self-esteem, personality disorder, or other mental health issues, they need to see a family therapy
Economists are also interested to identify factors that cause kids to lie. According to the Center for Economic Policy Research(CEPR), governments make huge economic on kids this behavior is beyond parents for it could affect tax evasion and other business ethics. Some economists also argue that a high level of lying could aggravate information asymmetry problems such as moral hazard and adverse selection highly prevalent issues in financial and secondhand goods markets.
Johannes Abeler, Professor of Economics, St Annie College of Oxford using randomized treatment method has found that there is a significant difference between kid’s honesty varying by socio-economic characteristics of parents and gender of kids, with kids from high-income families and girl kids are more honest than kids from low-income families probably due to punishment in the latter. He also argued that parents/mentor’s intervention plays a significant impact in changing kids’ behavior.
Education and Immigration 
I think children reflect their parents.
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Agree. The gender difference is also interesting!
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