Thanks for this I love it!

I don't agree… Is the Tooth Fairy real? How about the garbage man? Those questions may seem trivial, but how young children answer them is an important indicator of cognitive development.

For years, imagination was thought of as a way for children to escape from reality, and once they reached a certain age, it was believed they would push fantasy aside and deal with the real world. But, increasingly, child-development experts are recognizing the importance of imagination and the role it plays in understanding reality. Imagination is necessary for learning about people and events we don't directly experience, such as history or events on the other side of the world. For young kids, it allows them to ponder the future, such as what they want to do when they grow up.

"Whenever you think about the Civil War or the Roman Empire or possibly God, you're using your imagination," says Paul Harris, a development psychologist and professor at the Harvard Graduate School of Education who studies imagination. "The imagination is absolutely vital for contemplating reality, not just those things we take to be mere fantasy."

Psychologists like Jacqueline Woolley, a professor at the University of Texas at Austin, are studying the process of "magical thinking," or children's fantasy lives, and how kids learn to distinguish between what is real and what isn't.

The hope is that understanding how children's cognition typically develops will also help scientists better understand developmental delays and conditions such as autism. For instance, there is evidence that imagination and role play appears to have a key role in helping children take someone else's perspective, says Dr. Harris. Kids with autism, on the other hand, don't engage in much pretend play, leading some to suggest that the lack of such activity contributes to their social deficits, according to Dr. Harris.

Dr. Woolley's group at the Children's Research Laboratory has conducted a series of studies involving Santa, the Tooth Fairy and a newly made-up character known as the "Candy Witch" in order to examine the age at which children are able to distinguish between real and fictional entities and how they process contexts and cues when dealing with them.

In one study involving 91 children, Dr. Woolley asked young kids if a number of people and characters, including Santa and the garbage man, were real. She found that 70% of 3-year-olds reported that Santa Claus was real, while 78% believed in the garbage man. By age 5, kids' certainty about the garbage man grew, and Santa believers peaked at 83%. It wasn't until age 7 that belief in Santa declined. By 9, only a third believed in Santa while nearly all reported the garbage man was real.

So, "if kids have the basic distinction between real and not real when they're 3, why do they believe in Santa until they're 8?" says Dr. Woolley.

The researchers found that while children as young as 3 understand the concept of what is real and what isn't, until they are about 7 kids can be easily misled by adults' persuasive words or by "evidence." They hold onto their beliefs about some fantastical characters—like Santa—longer than others, such as monsters or dragons. Most of the kids in the study were Christian, and the numbers of those who believed in Santa would likely be smaller if there were children of other religious backgrounds in the sample, says Dr. Woolley.

I was one of the children who always knew the truth and knew how much each gift meant and how much effort my mother put into giving me something special. My mother, while telling me the truth, also gave me the gift of imagination and I probably have a more active imagination that some of the children who believed in Santa Claus. I had books and stories and movies and a mother that entered my world when she played with me. I don't understand how telling my child the difference between fantasy and reality will in any way stop her from dreaming, playing etc. I want to open her mind, to all possibilities (not just believing what others tell you). There is enough wonder and magic in real life for her to explore. Mia, I totally agree with you.