The 18-year-old was selected as back-up to Leighton Baines in the left-back role for Roy Hodgson's final party of 23.
Shaw was named ahead of experienced campaigner Ashley Cole, who promptly retired from the international game in the wake of the announcement.
With Shaw arguably unlikely to feature in Brazil unless Baines suffers injury or suspension Pearce, who won 78 caps for England at left-back, believes Cole would have been a more logical choice.
"Luke should have been playing in the Under-21 qualifier against Wales and then going on to the (Under-20) Toulon tournament," he told TheIndependent."
"You'd be giving a young player tournament experience.
"If he comes back from Brazil having not featured, it's a wasted tournament for him.
"I would have taken Ashley Cole to fight out the left-back position with Leighton Baines."
Fabio Capello took no teenage players to South Africa 2010, though both Aaron Lennon and Theo Walcott were included as youngsters in Sven-Goran Eriksson's 2006 squad.
In an eight-year international career, Lennon has accrued just 21 caps, while Walcott was snubbed for South Africa, before missing this year's tournament through injury.
