Baby-Tooth Bubble: Has the Tooth Fairy Lost Her Mind?

Dan Kadlec

You may not believe in the Tooth Fairy, but she believes in you and the U.S. economy in a big way. The winged pixie this year is leaving a bountiful $3.70 per tooth, on average. That’s up 23% from last year and up 42% from two years ago, according to an annual Visa survey. This surge in generosity coincides with a strengthening economic recovery: The stock market is up this year and home prices have begun to rebound. Second quarter GDP was just revised to an annual rate of 2.5%, up from an initial estimate of 1.7% and well above economists’ expectations. Many believe the third and fourth quarters will show further improvement. So it may make sense that the Tooth Fairy is cutting loose. But it’s starting to look like, well, a baby-tooth bubble. The mythical figure “visits” 90% of homes with kids and her largesse varies widely at each stop. Some 2% of children get $50 for an incisor, a sum so outrageous it deserves comment. “Kids are obsessed with the Tooth Fairy,” says Jason Alderman, who runs Visa’s financial literacy initiative. “Losing a tooth creates a great opportunity to talk about money with them. But telling them their tooth is worth $50 is counterproductive. It devalues the dollar in their eyes.” Such households are outliers, of course. But don’t assume the biggest payments are made in the biggest houses. The younger the parent and the lower the income, the bigger the molar bounty, Visa found. The most common payout is $1 per tooth. But parents aged 18-24 give an average $5.20 and parents earning less than $25,000 a year give an average $4.10. This smacks of competitive tooth fairying. “Parents really are paranoid about their kids getting as much as their friends,” says Alderman. With the amounts being so small to begin with, just about any household can afford to go large. Young parents do it out of inexperience; low-income households do it as an easy way to keep up or even best higher-income neighbors or schoolmates.



via Business Feeds

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