Honesty and dishonesty are learned in the home.  Parents are concerned when they hear their child or adolescent lying about something minor. 

Young children (ages 4-5) often make up stories and tell tall tales.  This is normal activity because they enjoy hearing stories and making up stories for fun. Young children blur the distinction between reality and fantasy... they have a vivid imagination.

An older child or adolescent may tell a lie to be self-serving (e.g. avoid doing something or deny responsibility for their actions). Some adolescents discover that lying may be considered acceptable in certain situations such as not telling the truth because they don't want to hurt the feelings of those they love.  Some may lie to protect their privacy or to help them feel psychologically separate and independent from their parents, especially when they know they might get in trouble.  Parents should respond to isolated instances of lying by talking with the youngster about the importance of truthfulness, honesty and trust

Lying that may indicate emotional problems:
Some children, who know the difference between truthfulness and lying, tell elaborate stories which appear believable.  Children or adolescents usually relate these stories with enthusiasm because they receive a lot of attention as they tell the lie.  Sometimes they tell lies to boost their ego, to appear better than their peers or to avoid feeling ashamed.

Children or adolescents, who otherwise seem responsible, fall into a pattern of repetitive lying. They feel that lying is the easiest way to deal with the demands of parents, teachers and friends. These children are usually not trying to be bad or malicious but the repetitive pattern of lying can become automatic and habitual, such that they may not be able to recognize the difference... they might start believing their own lies..

There are also some children and adolescents who are not bothered by lying or taking advantage of others. Some adolescents may use lying to cover up other serious problems.

Parents are the most important role models for their children. When a child or adolescent lies, parents should take some time to have a serious talk and discuss the difference between make believe and reality, lying and the importance of telling the truth, the importance of honesty at home and in the community, and alternatives to lying.

Parents also need to evaluate the environment they are creating for the child... children learn what they see at home... 
are parents telling lies?  
are the parents setting up the child to lie?

You can't expect the child to be honest and truthful if you are setting the example by lying to your children, or asking them to lie for you.

Are you being unreasonable and rigid when the child is honest in admitting that they did something wrong... thus discouraging them from trusting and relying on you.  Do you listen to them?

Information provided by: 
American Academy of Child/Adolescent Psychiatry
http://www.aacap.org

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