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In "The 7 Habits of Highly Effective People", Stephen Covey gives an anecdote about a computer error in England in which a group of 'bright' students are accidentally labelled as 'dumb' and a group of 'dumb' students are labelled as 'bright'.

The mistake is discovered after a period of time and the students are tested. It turns out that the dumb students are now classified as 'bright' as well. The moral of the story is that people rise to the level expected of them.

This anecdote can be found, with minor variations, in many places on the internet:

"Believe in your students"
"Children with parents who have high expectations tend to strive to reach them."
"Scripting Others"
"People will rise or fall to your level of expectation"

Have any scientifically valid studies been done which support or disprove this claim?

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This is known as the Pygmalion effect:

The Pygmalion effect, or Rosenthal effect, is the phenomenon whereby the greater the expectation placed upon people, the better they perform

The wikipedia article has more evidence, but here's a quote about the original Rosenthal study:

All students in a single California elementary school were given a disguised IQ test at the beginning of the study. These scores were not disclosed to teachers. Teachers were told that some of their students (about 20% of the school chosen at random) could be expected to be "spurters" that year, doing better than expected in comparison to their classmates. The spurters' names were made known to the teachers. At the end of the study all students were again tested with the same IQ-test used at the beginning of the study. All six grades in both experimental and control groups showed a mean gain in IQ from pretest to posttest. However, First and Second Graders showed statistically significant gains favoring the experimental group of "spurters." This led to the conclusion that teacher expectations, particularly for the youngest children, can influence student achievement

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There was an exercise where a teacher labelled kids with blue eyes as being not as smart and eventually the class treated them like that and the kids began to not do as well in school, and then she did the same thing with children who had brown eyes.
It pretty much showed that simply being part of the majority group helped improve the grades of the students.

Jane Elliot was the teacher.

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    Welcome to Skeptics. Answers here need to include references; can you provide one for the study you mention?
    – Goodbye Stack Exchange
    Mar 22, 2014 at 16:40
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    Elliot's Blue Eyes/Brown Eyes exercise is well-known, but I am not sure it is an answer to the question.
    – Oddthinking ♦
    Mar 22, 2014 at 22:50
  • Agreed, this is at best a piece of the answer. But have submitted an edit using one of the wiki sources as a reference for this.
    – Goodbye Stack Exchange
    Mar 22, 2014 at 23:08
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    Note: It wasn't a study (edited), and it didn't show being in the majority group helped, but not being in the discriminated against group. Grades (in the sense of end of year results) were not measured, but anecdotally students performed worse individual exercises.
    – Oddthinking ♦
    Mar 23, 2014 at 1:57

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