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Specifically, a large, cross\u2010sectional sample of children from grade 2 to grade 4 was exposed to pairs of words, pseudowords, digit strings, and pseudo\u2010letter (Armenian) strings while their sensitivity to transpositions (T) and substitutions (S) of internal characters was investigated in a perceptual matching task. The results showed that the development of identity and position decoding diverged between the four stimulus categories. Most importantly, sensitivity improved with longer exposure to formal education and higher reading level to <jats:italic>both<\/jats:italic> S and T pairs for digit strings, but <jats:italic>only<\/jats:italic> to S pairs for words and pseudowords. The results were successfully reproduced in two small independent samples. We propose a general framework, the Adaptive Specialization Hypothesis, to accommodate the results. 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