ABSTRACT
The exchange of goods, whether by bartering or, more usually, by buying and selling, is a central economic activity. But these transactions, and the wider system of which they are a part, are not easy for children to understand. A clear picture of the development of some of the basic concepts can be seen in the work of Berti and Bombi (1988) and that of Burris (1983). Burris investigated children's understanding of basic economic concepts (commodity, value, exchange) by interviewing children aged 4±5, 7±8, and 10±12. To explore their understanding of price and value they were presented with pairs of objects and asked which would cost more and why. The youngest children think that the price of a good depends upon its characteristics, especially its physical characteristics. A diamond does not cost much ``because it is so tiny'', while a book costs more than a wristwatch because ``it is bigger''. Similar reasoning is evident in this exchange, reported by Berti and Bombi (1988): ``Which costs more, this lettuce or the chicken?''Ð``The lettuce, because there is more of it''Ð``And what if I only bought this much (removing a part of the lettuce), would I have spent more on the lettuce or the chicken?''Ð``The chicken''Ð``Why?''Ð``because there is more of it (he checks and sees that this is not so) no, no, still the lettuce because there is still more of it than the chicken''. The older children (7±8) see the value (and so the price) of an object mainly in terms of its usefulness or function. So a wristwatch costs more than a book ``because you can tell the time with a watch, but a book you can just read''. The oldest children shift to seeing value and price as determined by the work and materials put in, a point of view expressed very succinctly by one of Berti and Bombi's 10-year-olds ``Things which people work on more cost more''. Very similar ®ndings, using a rather different method, are reported by Fox and Kehret-Ward (1990). They explored conceptions of price from pre-school to adulthood by presenting people with a story about a group of friends who open a bicycle shop and need to set a price for each bicycle. The friends all have different ideas about how the bicycle should be priced: One believes that price should be based on size, another on the amount of work that went into making them, and so on. The participants are asked whether they thought each pricing scheme was a good one and why. This con®rms and extends Burris' and Berti and Bombi's ®ndings: Pre-school children thought price should be based on size, and 10year-olds also favoured pricing by feature but recognised that the amount of work that was put in was also important. Thirteen-year-olds saw price as a function of work put in and customer preferences, with adults expressing similar views but adding ideas about supply and demand.
