Children are failing to develop important values like courage, fairness and gratitude at school due to a relentless focus on exams and results, according to a report.
It argues that "moral character" is being squeezed out of modern day education, leaving youngsters without key qualities they will need for the future.
Teachers need more time in the school day to teach youngsters the difference between right and wrong, the study argues.
The findings come amid growing calls from politicians and education experts for youngsters to be taught skills and abilities outside of the classroom, like character and grit, that would help them later in life.
The new study, by Birmingham University's Jubilee Centre for Character and Virtues, involved over 10,000 students and 255 teachers completing surveys and taking part in interviews.
Researchers found that eight in 10 teachers believe that a focus on academic attainment in their school is hindering the development of pupils' characters.
"The majority claimed that exams have become so pervasive in schools that they have crowded out other educational goods," the study said.
Pupils taking part in the research were asked to say how they would respond to a series of moral dilemmas, such as a talent young gymnast feeling uncomfortable that her coach is using the good looks of the girls on the team to gain them media attention, and give reasons for their choices. The scenarios all required values such as honest, courage and self-discipline.
Many students appeared to approach the dilemmas from a self-interest perspective, the report concluded.
Around half failed to identify good moral judgements when responding to the dilemmas, with many failing to say why they would take a certain action.
Girls outperformed boys in making decent moral choices, the researchers said.
And they added that despite the widely held belief that sport builds character, the study found that sporty students did not perform any better than those who do not spend time on the playing fields.
But youngsters who said they were involved in music, drama or a choir outside of school did perform better in the moral dilemma scenarios than those not involved in these activities.
A third of the teachers polled (33%) said they had been given specific training in moral or character education, while 60% said that they taught a subject, such as citizenship, which clearly related to the development of the whole child.
Professor James Arthur, director of the Jubilee Centre, said: " While it has been hugely encouraging to see both major political parties in Britain back the need for character education in recent months, more needs to be done to empower teachers to achieve what they came into teaching to do: to develop the whole child".
"Academic attainment is, of course, important, but the moral character of a child matters more. Research shows that a good grasp of moral virtues, such as kindness, honesty and courage can help children to flourish as human beings, and can also lead to improvements in the classroom".
"And that level of understanding doesn't just happen; it needs to be nurtured and encouraged, both in school and at home".
Education Secretary Nicky Morgan has previously suggested that learning traits such as perseverance and confidence are "equally important" to teenagers as gaining good exam results.
She has announced a £3.5 million grant scheme to fund activities which help to instil character, resilience and grit, along with Character Awards to recognise schools and organisations that promote traits such as grit and resilience in pupils. The first accolades were handed out earlier this week.
Shadow education secretary Tristram Hunt has also previously said that building children's character could be more important than pure academic achievement.
Mr Hunt said: "Resilience, character and the ability to bounce back - these are the qualities that young people need to succeed in the global economy in the 21st century.
"If our education system fails to provide young people with these skills, we will waste, not only the talent of the next generation, but our opportunity for Britain to succeed in the global economy."
A Department of Education spokesman said: " Character education is a central part of our plan for education which complements our reforms to raise standards and restore rigour to our schools.
"That's why we are investing £10 million to help ensure pupils develop the grit and resilience they need to succeed in both their academic endeavours and in later life. We know teachers across the country are already doing excellent work to promote character and we have recognised 27 schools and organisations who are leading the way in this work through our character awards.
"Our £3.5 million character grant scheme will also help exceptional projects do even more to help prepare young people for life in modern Britain."