Financial education: with young children, even for household chores, money should be used as a reward and not as an incentive
by Luigino Bruni
published in Avvenire on October 3, 2025
"The Adventures of Pinocchio" is not only a classic of world literature, but also contains a great deal of economics. Classics never grow old, and neither has Pinocchio's economic ethic. In some passages, we find real lessons on the use of money for children and young people. From the beginning of his adventures, Pinocchio develops a terrible relationship with money, which is at the root of the unfortunate pages of his story. He ends up in Mangiafoco's theater selling his alphabet book, and then, for the five gold coins he is given, he ends up in the clutches of the cat and the fox and their economic abuse.
Pinocchio's interpreters, including the few economists who have tried to study him, faced with Pinocchio's unpreparedness and naivety in handling money, have drawn the conclusion that seems most obvious to many: it is good for children to be educated from an early age about finance and the logic of money, otherwise when they grow up they will end up becoming victims of cats and foxes: “The story of Pinocchio offers food for thought about our money” (FEduF).
In reality, I am convinced that the message of Collodi's book is exactly the opposite, namely: keep your boys and girls away from money and its logic while you still can. Money and children live—or should live—in different worlds. Their mother tongue is gift-giving, and when they come into contact with money and economic logic, it must be done with infinite care because too often the power of economic language devours the delicate register of gift-giving—and that would be a real educational disaster.
When they need money, they ask their parents for it, and it is within this non-economic and gratuitous relationship that they also learn the basics of tomorrow's economy. Their economic dependence on their parents is excellent, because money known at the beginning as a gift creates the ethical conditions for assigning the right value to contracts and work tomorrow. There is now empirical evidence that children and pre-adolescents (in experiments conducted in controlled settings) engaged in activities governed by extrinsic incentives (monetary or otherwise) show a lower aptitude for performing activities with intrinsic rewards during their development (David Greene and Mark R. Lepper 1974).
The main issue at the heart of the use of money with minors is therefore the so-called motivational crowding-out (Frey 1997; Aknin, Van de Vonderwoort and Hamlin, 2018). The introduction of extrinsic motivation (money) to an activity in order to get a child to perform a given action gradually erodes the strength of the intrinsic motivation for that action in younger children, with the possible outcome of educating people who respond only to external incentives. If, for example, a family introduces an incentive system for their children's domestic activities (clearing the table: $3; dishes: 3; walking grandpa: 4; walking the dog: 2...), over time it will become very difficult to educate them in the ethics of virtue, according to which the table should be cleared for a reason internal to being a child and part of a family, grandpa should be accompanied because we love him and it is part of a grandchild's ‘duty’ to do so, the room should be kept tidy because it is good to do so, and so on. This does not mean never using money with young children; however, it should be used as a reward and not as an incentive, i.e., to reinforce good behavior and not as the “reason” for doing good—the reward reinforces virtue, it does not create it; the incentive creates the action, which would not happen without the incentive.
Incentives used with adults can serve their purpose if they are based on an intrinsic ethic that is capable of withstanding the manipulative impact of incentives – let us not forget that incentive derives from incentivus, the flute that tuned instruments, the magical charmer that takes us where we would not go spontaneously. If, on the other hand, the incentive is given to people who do not have a strong ethic of virtue, over time they will find themselves like donkeys that respond only to the stick and the carrot. It is freedom, and therefore the capacity for gratuitousness, that is at the heart of these tools and these arguments. Yesterday, it was easier for the incentive to be based on an intrinsic ethic of ‘a job well done’; today, it is much more difficult, especially if it is introduced too early at home or at school.
A similar, albeit different, argument applies to pocket money. Even in these cases, although pocket money is not the same as an incentive (they can coexist, or one can be activated without the other and vice versa), a contractual and economic framework is triggered. The pedagogy of pocket money also inevitably leads to the growth of the economic-financial register and leaves in the background that of gratuitousness and gift-giving, and of healthy dependence on parental mediation.
Today, young people are not developing a good relationship with the world of work, partly because economic logic enters the home too early, through the Trojan horse of responsibility. The dominant culture of the ‘empire’ is increasingly that of business, and as in every empire, its culture enters everywhere, almost always without our knowledge.
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