Why does failure inspire some and demoralize others?

Good Question.

Stanford Magazine reports on the applications from psychological research Carol Dweck's work, which uses careful experiments to determine why some people give up when confronted with failure, while others roll up their sleeves and dive in.

Through a series of exercises, the experimenters trained half the students to chalk up their errors to insufficient effort, and encouraged them to keep going. Those children learned to persist in the face of failure—and to succeed. The control group showed no improvement at all, continuing to fall apart quickly and to recover slowly. These findings, says Dweck, “really supported the idea that the attributions were a key ingredient driving the helpless and mastery-oriented patterns.” Her 1975 article on the topic has become one of the most widely cited in contemporary psychology.

Attribution theory, concerned with people’s judgments about the causes of events and behavior, already was an active area of psychological research. But the focus at the time was on how we make attributions, explains Stanford psychology professor Lee Ross, who coined the term “fundamental attribution error” for our tendency to explain other people’s actions by their character traits, overlooking the power of circumstances. Dweck, he says, helped “shift the emphasis from attributional errors and biases to the consequences of attributions—why it matters what attributions people make.” Dweck had put attribution theory to practical use...

...[S]ome of the children who put forth lots of effort didn’t make attributions at all. These children didn’t think they were failing. Diener puts it this way: “Failure is information—we label it failure, but it’s more like, ‘This didn’t work, I’m a problem solver, and I’ll try something else.’” During one unforgettable moment, one boy—something of a poster child for the mastery-oriented type—faced his first stumper by pulling up his chair, rubbing his hands together, smacking his lips and announcing, “I love a challenge.”

Such zest for challenge helped explain why other capable students thought they lacked ability just because they’d hit a setback. Common sense suggests that ability inspires self-confidence. And it does for a while—so long as the going is easy. But setbacks change everything. Dweck realized—and, with colleague Elaine Elliott soon demonstrated—that the difference lay in the kids’ goals. “The mastery-oriented children are really hell-bent on learning something,” Dweck says, and “learning goals” inspire a different chain of thoughts and behaviors than “performance goals.”

The Effort Effect,
Carol Dweck's book, "Mindset: The New Psychology of Success"