Buy low, sell high: the development of an informal theory of economics.

Two experiments were conducted to examine the development of economic understanding among 5-, 7-, and 9-year-olds (n = 31, 29, and 32, respectively). Most 5-year-olds exhibited understanding of the goal of acquiring desired goods but not of the goals of seeking profits, acquiring goods inexpensively, or competing successfully with other sellers. In contrast, most 7-year-olds and a large majority of 9-year-olds showed understanding of all of these concepts. The older children's understanding of these key concepts and the relations among them suggested that they had constructed an informal theory of economics, qualitatively different from the psychologically based understanding of the 5-year-olds. Increased information-processing skills appeared to be among the sources of this new understanding.