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conchis comments on A Parable On Obsolete Ideologies - Less Wrong
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The first step in solving a problem is to recognise it. If I discovered I have cancer I would be demoralised immensely but I'd prefer that and take a shot at recovering rather than die unknowingly.
Denial is not a path to improvement.
I agree that denial usually seems like a bad idea, but the problem with things like stereotype threat is that they suggest (and more importantly provide evidence) that sometimes it might actually be useful (a path to improvement, even if not necessarily the first-best path).
The trick, presumably, is to distinguish the situations when this will hold from those when it doesn't.