The book Mindset: The New Psychology of Success by Carol Dweck,offers interesting insight into the current "self-esteem" fad that has become a part of modern parenting.  While we do want our children to feel good about themselves, it is important that this feeling is more than superficial and supported by data that the child can use when the ongoing praise isn't available. Dweck advances an idea about two opposing mindsets that influence self esteem: the fixed vs. growth mindsets. 

   The fixed mindset is more rigid and is tied to a believe that abilities are given at birth and set in stone. Growth mindsets believe there is always more room for learning  and new development.  Dweck performed a series of tests where she related these mindsets to praise. Her findings showed that when subjects were praised for simply "being smart" they were more likely to develop a fixed mindset and rely on natural ability. However, when things get really tough, they were more likely to be paralyzed.  On the other hand, when subjects were praised for their effort, they are more likely to take the challenge since there is no end to the amount of effort one might exert.

  Dweck sees this mistake in both lower and upper/middle class families and concludes her testing with : " Telling children they're smart, in the end, made them feel dumber and act dumber, but claim they were smarter."  Fixed mindset kids are more likely to look for outside approval while growth mindset kids tend to be more self sustaining.

 Summarized from an article in Psychotherapy Networker, July/August 2007 by Richard Handler