He sees them when they're sleeping. He knows when they're awake - and believing in him helps children to be good, according to a psychiatrist.
He knows if she's been bad or good
Santa Claus - and his ability to "know if you've been bad or good" - helps children learn the difference between right and wrong, said Dr Lynda Breen.
Writing in this month's Psychiatric Bulletin, she said the Santa myth gives parents an "ace up their sleeve".
She said it was parents who are upset when children stop believing in Santa.
Dr Breen, from Alder Hey Children's Hospital in Liverpool, said: "It came about after I was thinking about my young nephews who are coming up to the age when they will relegate Santa.
"I was thinking about how sad it was to lose that belief so decided to do some research into the social benefits for children of believing in Father Christmas.
"Teaching children about Santa is a useful ace up a parent's sleeve as it encourages their moral development as they believe he knows which children are good or bad."
It is widely reported that Santa has a list, that he consults twice, to determine which children are naughty and which are nice.
Children are warned to watch out, not cry and certainly not pout when Santa is coming to town, lest they be overlooked.
They are also urged to be good, for goodness sake.
Eventually children outgrow the belief in Santa Claus, a time Dr Breen said was often tougher on parents than the kids themselves.
"Most of the evidence suggests that children are actually quite positive when they find out the truth and it is actually parents who mourn the loss.
"I suspect my nephews know he doesn't exist but they are pretending he does because of all the associated benefits, such as presents, which go with it."
Writing in the same issue of the journal, Dr Mark Salter, a consultant psychiatrist from Homerton Hospital in London, considered the fallout of the demise of the Santa legend.
Santas are coming to town
He said the emphasis on rationality in modern society put myths such as these at risk.
"The imagination which created Father Christmas is being destroyed by a society which holds rationality above anything else.
"Whenever anything goes wrong we hold an inquiry into it. We no longer seem to accept that bad things may happen in our lives.
"If Santa died, we would hold a serious incident inquiry and if we had any sense we should ask the Tooth Fairy to chair it."