Children have often been claimed to blend reality and fantasy, but according to some this is a wild exaggeration of the truth. For example, renowned child researchers have written that "even the very youngest children already are perfectly able to discriminate between the imaginary and the real" and certainly a lot of recent research tentatively supports that idea.
Still, it seems intuitively surprising that children should be so good at knowing the real from the imagined. Nearly everyone - even grown adults - has had the experience of saying (or thinking) something, and afterwards wondering whether they actually said it aloud, or merely thought it. It would be somewhat surprising if children did not also make even these understandable mistakes.
Indeed, this intuition is validated by work from Foley, Johnson & Raye, which demonstrated that even 6-year-olds (far from the "youngest children" that can be tested) have difficulty with discriminating imagined words or actions from self-produced words or actions. The authors gave 6, 9 and 17-year-olds several words to either say aloud; half of the children also heard a second list of words spoken aloud by someone else, and the other half were instructed to imagine what it would be like to say the words in the second list. After a three minute break, each subject was provided with several words and asked to determine whether each was new or old. If a word was identified as old, they were to indicate whether it had been spoken, or merely imagined/heard.
The results showed that 6-year-olds had particular difficulty with distinguishing things they had said from those they had thought, but were equivalent to 17-year-olds in their memory for whether they had said or listened to specific words. A second experiment confirmed that this difficulty is specifically between imagined and spoken words, and does not appear when 6-year-olds have to discriminate between two different sources (as when two different adults might have spoken words) or between an imagined stimulus and any other (i.e., one that was spoken by an adult).
So while children do have difficulty discriminating reality from fantasy, the distinction is particularly blurred in memories for self-generated behaviors. And in fact, the phenomenon extends beyond speech to include difficulty at discriminating real from imagined actions: Foley & Johnson later showed that children and adults had similar capacity for discriminating observed from performed actions, but that children are much worse at discriminating imagined from performed actions.
Why should reality and fantasy be so blurred for autobiographical events in particular? According to Foley, Ratner & House, it may be easier for children to discriminate self-generated from observed behaviors because of the memory of the "cogntiive operations" involved in self-generated behaviors. These could act as a source cue - allowing children to identify whether the source of a memory was internal or external. In contrast, the "cognitive operations" involved in actually saying a word or performing a behavior may be highly similar to those involved in imagining doing so, particularly for young children, leading to easy confusion between them.
The Real Reason Children Love Fantasy
The Fantasy-Reality Distinction in Children
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I wonder, though, whether there would be similar confusion between hearing a word read to them and imagining that they heard the word read to them.
Right, I wondered this too - and they did test it in a second experiment in the 1983 paper. [Figures that the one time I try leaving out these more subtle details, someone asks about them! ;)]
Here's the relevant quote:
"Nor could their difficulty be attributed to a general problem in distinguishing memories for their thoughts from any other class of memories because they were at no disadvantage in discriminating their earlier thoughts (words they imagined themselves saying) from words someone else said (experiment 2)."