Children approaching the advanced age of 3 1/2 don't understand the first thing about "shades of gray." Instead they tend to see things as all good or all bad. Good people do good things; bad people do bad things. It may be simplistic, but it's right on the money as far as the development of a child's ability to think goes, and it explains a lot about the lies kids tell at this age.
The Positive Side of Lying
The good news about lying — yes, you should see it this way — is that it is a sign of intellectual growth and sophistication. It is really an act of creativity that shows mostly how a child wishes things were. You've had such thoughts yourself! So your preschooler isn't a liar when she denies absolutely that she put the red handprints on the wall, though she's completely covered with red paint. Her thinking goes like this: "I am a good girl. Mommy thinks that red handprints on the wall are bad. Bad people do bad things. So no, I didn't leave those bad handprints, because I'm good." Why should she fess up? She wants to please and she's smart enough to know that Mommy's reaction doesn't look good for her. The most common reason for lying is fear of punishment.
Parents can understand this kind of behavior as "creative coping" with a situation that the child suddenly perceives as stressful. Untruths shouldn't be supported, but it does no good to press a child to admit to a lie. It isn't in her intellectual ability yet. Your child does know that the story isn't really correct, but lying doesn't enter into it as a concept. It's probably the best solution she can think of at the moment. And who knows, it may work!
What's Yours Is Mine
Another difficult concept for children to grasp at this age is ownership. If something is attractive enough, she may "borrow" that purple book of her sister's because she wants it to be okay to do so and because she thinks she could give it right back. A parent's job is to give her child information about what is acceptable behavior and how to correct a wrong. Telling her to give her sister's book back to her sister is enough; telling her that she can't just take things that belong to other people, and how would she like it if other people took her things, is too much. It's behavior at this point, not a moral principle that needs to be learned.
Think of yourself as a teacher, not the police. Acknowledge how much she wanted that purple book and explain another way to behave, such as asking if she could borrow the book or if she could exchange one of her books for the purple book.
Strategies for Coping With Lying
Ask yourself if you're really giving your child permission to tell the truth. Remember that your reasonable and clever child is trying to avoid punishment, so if she tells what really happened, she knows that punishment is certain. You don't have to like her behavior; you do want to help her correct it.
And look for patterns in these untruths. They may help you discover what's really going on in your child's life, especially if she appears to be "lying" much more than usual or much more than others her age. A child who lies to a wide range of people may have problems with her self-esteem; a child who lies mostly to one or two people is probably afraid of them and is trying to protect herself.
Developing a Moral Sense
By the time she is 4, your child shows increasing reasoning ability and is starting on the journey to understanding what is moral (as in: truth is "moral" and right; lying and stealing is not). Her primary goal still is to receive approval (and to avoid punishment), but she can understand rules, though she probably still bends them. She can recognize the difference between truth and fantasy but doesn't always tell the whole truth.
A 4-year-old can recognize the rights of others — "It's my sister's turn now" — but may not always respect those rights because her own needs are more important to her. The same 4-year-old will show a good sense of justice — "That's not fair; Mikey never gets to be first" — and can show unselfish sympathy and concern for others when she is directly shown unfairness or sadness on another child's face. At this age, your child's moral sense is still mostly based on the consequences of her actions rather than any abstract concept of doing the right thing. But slowly and surely, she's building a moral code through specific actions and your reactions to them.
Adapted from Encounters with Children: Pediatric Behavior and Development,by Suzanne D. Dixon, M.D. and Martin T. Stein, M.D. Eds. (Mosby, 2000) and Toddlers and Preschoolers,by Lawrence Kutner, Ph.D. (Avon, 1994).