The Tooth Fairy is a beloved childhood figure, slipping money under pillows in exchange for tiny teeth. Surprisingly, folklore customs can also be used as an economic indicator, at least in the US.
The Tooth Fairy Index is an informal economic indicator that tracks the average amount of money children receive from the Tooth Fairy for a lost tooth. It’s used to reflect trends in consumer spending, inflation, and economic confidence. When the economy is doing well, consumer spending increases and investor confidence rises. This makes stock markets do well and drives up the S&P stock market index that tracks the performance of 500 of the largest publicly traded companies in the US—as well as the Tooth Fairy Index.
Traditionally, the Tooth Fairy Index has correlated well with the S&P 500. But recently, the tooth fairy isn’t doing so well. For the second year in a row, an annual Delta Dental survey found the tooth fairy is paying less for lost teeth than the year before, even as the stock market is going up.
The survey, carried out on 1,000 parents of children ages 6-12, showed that the value of a single lost tooth declined by 14% from $5.84 to $5.01. The record value was reached in 2023: an average of $6.23 per single tooth.
Overall, the trend shows growth. In 1998, the average cash gift per tooth was around $1.30. Interestingly, the Tooth Fairy Index saw notable growth during the economic uncertainty of 2020, when COVID-19 disrupted global markets. However, the current situation seems more uncertain for parents as payouts are dropping. Overall, however, the pattern follows traditional economic cycles, reinforcing the idea that even folklore traditions are sometimes tied to major financial forces.
However, what’s more surprising is that the Tooth Fairy Index and the S&P are apparently decoupling. If the S&P 500 is rising while the Tooth Fairy Index is declining, it could suggest that stock market growth is not translating into increased consumer confidence or household spending. This might happen if economic gains are concentrated among corporations and investors, while everyday families remain cautious due to factors like inflation, stagnant wages, or economic uncertainty.
In other words, Wall Street may be thriving, but Main Street isn’t feeling the benefits. Parents who feel insecure about their finances are less likely to be more generous, reflecting broader economic confidence (or lack thereof).
Of course, the Tooth Fairy Index is more of a fun cultural phenomenon than a strict economic measure. The sample size is small, and cultural differences play a role—some households stick to a firm $1 per tooth tradition, while others may go big and “index with inflation”. Some don’t do it at all. Still, as a quirky economic indicator, the Tooth Fairy Index offers an interesting look into consumer sentiment in the US.
For now, one thing is certain: The Tooth Fairy isn’t just about childhood magic—she may also be a reflection of economic trends.
