Children do not distinguish efficient from inefficient actions during observation.

Observation is a powerful way to learn efficient actions from others. However, the role of observers' motor skill in assessing efficiency of others is unknown. Preschoolers are notoriously poor at performing multi-step actions like grasping the handle of a tool. Preschoolers (N = 22) and adults (N = 22) watched video-recorded actors perform efficient and inefficient tool use. Eye tracking showed that preschoolers and adults looked equally long at the videos, but adults looked longer than children at how actors grasped the tool. Deep learning analyses of participants' eye gaze distinguished efficient from inefficient grasps for adults, but not for children. Moreover, only adults showed differential action-related pupil dilation and neural activity (suppressed oscillation power in the mu frequency) while observing efficient vs. inefficient grasps. Thus, children observe multi-step actions without "seeing" whether the initial step is efficient. Findings suggest that observer's own motor efficiency determines whether they can perceive action efficiency in others.