From the April 2010 issue of Investment Advisor • Subscribe!

The Risk of Parental Laissez-Faire

Sidebar to the cover story "The Upside of Irrationality"

In comparing U.S. parenting styles with those of other countries, American-Israeli behavioral scientist Dan Ariely told me we pay a lot for our belief in letting children make their own decisions without lecturing to them about what's right and wrong. In the rest of the world, he pointed out, kids are still kids for many years after they reach 18: "Italians tell their children, 'Save 25% of your paycheck,' and they keep telling them that well into young adulthood." Even if 25% is too low a number, Ariely added, it's better than nothing. He believes parental rule-setting can yield positive results, while allowing youngsters to make their own mistakes may have disastrous financial consequences.

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