Ron Leiber of The New York Times wrote a book about how not to raise spoiled children. You can read a review and summary of the book here, including the seven important lessons from the book.
He advocates supplying an allowance independent of chores because, he writes, children “ought to do [chores] for the same reason we do — because the chores need to be done.”
He considers an allowance a teaching tool, like art supplies or musical instruments. “In the same way we don’t take them away when kids don’t do their chores or don’t do them well, we shouldn’t take money away either,” he says, adding that parents should leverage whatever the child likes more than his or her allowance. For instance, you could change the wifi password or ban him or her from a soccer practice.
In the book, Lieber also describes one innovative way to create a hybrid allowance: One boy earns no money for basic chores, but his parents promised him a bonus if he found and solved other household problems. It got his entrepreneurial juices flowing and after washing his grandparents’ car for extra money, he began doing the same with other people’s vehicles.