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New parents may be at a loss to figure out the best response to their toddler's incoherent babbling, but a new study may shed light on a good solution: pretend like you understand your kid.
The study concluded that sensitively responding to a child who can't form complete words or sentences is a good way to develop pragmatic communication skills later on. So, if you talk to your child as if you're engaging in a normal conversation, the child will be better equipped to communicate effectively when she does gain the ability to use language. 

How did researchers come to this conclusion? The Atlantic has details: 

Researchers from the University of Iowa and Indiana University observed a small group of mothers and their infants in individual unstructured play sessions over the course of six months, beginning when the children were eight months old, and coded the mothers’ responses to their babies’ babbling into two categories. 
“Redirective” responses involved turning the babies’ attention elsewhere, like showing them a toy or pointing out something in the room, while “sensitive” responses were ones where the mothers verbally replied to or imitated their sounds ...

A month after their last session, the mothers filled out a survey assessing the progress their children had made towards speech. The infants whose mothers had shown “sensitive” responses, the researchers found, showed increased rates of consonant-vowel vocalizations—meaning that their babbling more closely resembled something like real syllables, paving the way for real words. The same babies were also more likely to direct their noises at their mothers, indicating that they were “speaking” to them rather than simply babbling for babbling’s sake.
So, if you want your children to develop language skills more quickly, it may be a good idea to talk with them, not just at them.