The findings revealed that our ability to reason about our self-worth as individuals develops early in life.
Young children can think of themselves as possessing abstract traits and abilities, and they can also reason about their self-worth, which has implications for self-esteem, the researchers said.
"Young children's self-concepts are not qualitatively different from those of older children and adults," said Andrei Cimpian, Associate Professor at the New York University in the US.
"However, this level of maturity in reasoning about the self also means that young children can become dispirited in the face of failure and are not the undaunted optimists that previous theories have described," Cimpian added.
It has long been thought that young children think of themselves in concrete, behavioural terms and, unlike adults or older children, are cognitively incapable of reasoning about their traits or their worth as individuals.
For the study, which appeared in the journal Child Development, the team conducted a series of studies of children ranging from four to seven years in age, where the children were asked to imagine they could not complete a task despite "trying really hard".
In some cases, they were told the task was easy and in others that it was difficult.
The results showed that children lowered their estimation of their abilities, but not their global self-worth, when told they failed an easy, as opposed to hard, task.
Conversely, they lowered their estimation of their global self-worth, but not their abilities, when informed they failed an adult-requested (vs. self-initiated) task.
Importantly, adult involvement could negatively affect self-esteem, independent of the task.
"It is therefore important for both parents and educators to understand that children may become more discouraged than we previously realised and find ways to foster a productive learning environment," Cimpian noted.