Quote from yesterday’s New York Times, “Urban Legends Told Online” by Farhad Manjoo, p. B7:
“Jacqueline D. Woolley, director of the Children’s Research Lab at the University of Texas at Austin, has found that children are far more capable at distinguishing reality from fiction than perviously thought. ‘By the time they’re 9, they’re at adult levels,’ she said.”
That tallies with my observations of children in religious education settings. Children as young as 6 begin to be able to make distinctions between fact and fiction, and yes, by 9 years old they are probably at adult levels.