When I was growing up, many kids earned pocket money by babysitting, mowing lawns, walking dogs or washing cars for their neighbours. Part-time jobs delivering local papers or circulars (junk mail) were also popular.

At home, some kids got a weekly allowance in cash that increased slightly each year. Others didn’t – the amount and the “inflation rate” of these payments depended mainly on how wealthy a family was.

The norm for me and my friends was that you did the chores your parents told you to do. Normally, you’d get your allowance whether or not you did your chores.

The rise of kids’ money apps, spending trackers and more has changed the landscape for today’s children, and for their parents or guardians.

Times have changed, but human nature hasn’t. Decisions about pocket money still involve some timeless questions that intrigue behavioural economists like me. Should kids earn cash only in “the market” – such as by doing jobs for neighbours? Or should their efforts at home be rewarded with money, too?

If we do pay our kids for their chores, do we risk creating kids who care more about money than doing good deeds for their own sake?

Doing good for its own sake

The notion that offering monetary payment can “crowd out” someone’s intrinsic (independent and internal) motivation to do something is not new.

Behavioural economists have explored this idea for decades – for example, by studying whether offering people money to donate blood makes them less likely to do it.

The evidence on whether this crowding out occurs is mixed. It’s also not yet widely understood why it happens in some cases but not others – though new research suggests that giving privileges or “honour”-based rewards instead of money may preserve intrinsic motivation.

In the case of children and chores, like any good economist, let’s think about the incentives, as well as the messages being sent, when parents pay them in a few typical situations.

Routine chores

First, suppose parents pay a child for routine, everyday chores such as clearing the table or walking the dog. Assume these chores are not too unpleasant or difficult for the child.

In this case, parents are implicitly telling children that what others in the family do for no extra money or recognition, they will be paid for.

This may risk making children feel they are different from others in the family, in the sense of not having any socially expected (but not materially rewarded) responsibilities.

It may weaken the social norm that “we all contribute every day to our family” in the child’s mind.

At the same time, it could send a signal to only contribute when you are paid to do so.

Special jobs

Second, consider a case where a child is offered a special job – such as washing the car or helping parents paint the house – for money.

In this case, the job itself is somewhat challenging, and could be outsourced: the parents could hire someone outside the family to do it. What’s more, others in the family do not regularly perform the task.

In this case, the message is that this is a special opportunity to build a skill, save his or her parents some money and get a reward in return.

What about a regular allowance?

If parents can afford a regular allowance to help their child afford small rewards – such as going to the movies once a month with friends – this does not have to be tied to doing chores.

It could instead be presented as a way to help teach the child about money management.

Without any money to manage, a 12-year-old with many material wants might later become a 16-year-old who doesn’t know how to save or how to control his or her spending.

The rationale for the regular weekly allowance is more about supporting the child’s maturation into a financially prudent adult, and less about compensating the child for work done in the home.

If you can’t afford to pay your child a weekly allowance, finding a local job your child can perform for neighbours is a great option.

Opportunities for life lessons

If your child does simple, everyday chores in the home just like the rest of the family, that can be good preparation for becoming an adult with intrinsic motivation to serve others.

Paying for this should not be necessary and may have negative side effects. Instead, consider paying for special jobs that motivate children to master new skills, with less risk that the social norms you want them to absorb will be weakened.

For more pocket money, encourage them to offer their effort to neighbours, and if you can afford it, pay them a modest weekly allowance to teach them money management skills.

Parents can help their children mature into pro-social, financially wise adults if they take a thoughtful approach to work, money and community.