I never tell my kids they're smart.
"What a rotten parent you are! They need that positive affirmation, do you want them to be damaged forever?!"
Okay, okay, hold on a second. Turns out, a study has found that certain kinds of praise can actually be *bad* for your kids -- including telling them about how smart they are. If you have kids, you should definitely read it.
Still here? Okay, here's a quick summary: when faced with hard problems, the kids who are told how "smart" they are begin to think maybe they really aren't smart at all, and see any failure as evidence of that -- that having to put forth effort is proof they've been misjudged.
On the other side, kids who are praised for their *effort*, e.g. "I like how you always do your best", become more engaged and redouble their efforts when things get hard -- they focus on "trying", which in the end is where success comes from.
Terrific insight into the minds of kids.
And I'm starting to think it works with adults too. =)