At times lying will get you straight where you want to be. Other times it costs you heavily (Uh, that rhymed). What are the costs and benefits of lying? And can we predict when and how humans lie when looking at the economic structure of human story telling?
Benefits of lying:
People have goals. These goals are defined in having things and/or being someone. More importantly people like to show and tell their community what they own and who they are. Most human behaviour is driven by these goals.
If you don’t have things or aren’t anyone of importance, No Problem! You can lie. It’s the best short cut ever. If we assume that the life goal is social status, why not enter the pearly gates by a simple set of lies. Suddenly you own things and are someone. It seems that the benefits of lying are infinite.
Costs of Lying
Well with great social benefit comes great barriers to entry. Humans engage in an arms race of lying and detecting lies. If lies are detected, they are punished severely in order to discourage lying in the future. You will be marginalized. Your community will make sure to tell everyone about your lies (which is weird: Why do people feel obliged to tell others about the lies of individuals?). The cost of being caught seems high. Here the cost is defined as probability of being caught times the magnitude of repercussions.
The Options
When facing the opportunity to lie one has 3 options: (1) Tell the truth (2) Mix truth with lies (3) Tell a complete lie. The cost-benefit environment best predicts which option a person picks.
High-Cost Scenario
Imagine a uni test with high supervision: cheating here could be very costly, up to the point of getting suspended.
Medium-Cost Scenario
Then there is the pub quiz type of environment: You fill out some questions - the moderator reads out the answers in the end – and “of course I meant to write Genesis, not Exodus” – erasing your answer hectically and quickly adding “Genesis”. You hope that no one looked but if they did you can explain that you obviously knew that and can back it up with your exceptional knowledge of Abrahamic literature. (Dan Arieli’s experiments are great here, showing that people in this environment always lie a bit)
Low-Cost Scenario
What if one lets people self-report? Every student in a class room gets a sack with papers numbered 1-10. They are to take one paper out at random- self report it – put it back in – and then pick up a cash reward proportional to the number on the paper. Guess what happened? Uri Gneezy, Agne Kajackaite, and Joel Sobel are some of the more classical economists that conducted this experiment. 99.8% do not under report. 75% lie. Ca 80% of the 75% liars report the highest possible reward. In this environment lying will get you more without any possible costs, thus there will be more lying.
Dating Example.
Instead of those dry experiments with monetary payoff, I like to think about the economics of dating, mating, and meeting. In most cases the reward of mating or dating is achieved by a successful conversation in the meeting part. Now this conversation is open for some lies. Depending on which cost-benefit environment you are in, you are going to lie.
High-Cost environment:
Going on a date with your best friend. Being best friends and then dating will leave very little room to lie. If you try to you will be called out immediately. On top of that she is likely to tell all her friends, which are also all your friends. It will be a disaster.
Medium-Cost environment:
This scenario has actually been tested (more or less). They film people getting to know each other and then ask them how much did you lie in this 10 min small talk? People then say something like “I didn’t lie”. Then each sentence is put back to them and they have to evaluate how much they lied. Turns out on average men flat out lie about 3 times in such a scenario (Women do less). Who doesn’t: You say things like “I love meditating” (I went on a silent retreat once, but never really meditated again; and I certainly don’t “love it”), “Yes I read Thomas Piketty” (I didn’t), “I voted for the social democrats” (Also that I didn’t do). It’s things that are hard to disprove. They might come and haunt me at some point but for now its pretty unlikely she will drill me on them.
Low-Cost environment:
There are countless hilarious stories of pickups abroad, or hookups in hostels. Those constitute a good example of low-cost environments for lying. You don’t know the person or any of her friends and vice versa. She lives in a different country and the likelihood of seeing her ever again is small. So why go with the boring truth? “I write an economics blog called Kruxdelux” aint gonna get you laid. So sometimes I am a tennis teacher with a 3 yo son, other times I work in acting and know some famous people, and other times I do a very complicated econ PHD. This can of course backfire from time to time when actually meeting this holiday fling in real life.
I remember introducing my Schmusi Fenella to my St Andrews friends. Phillip grinned and proudly said: "I celebrated your birthday with you in March 2015". Fen awkwardly answered: “My Birthday is in August”. Philip replied: “But I swear that me and my German friends invited you for some birthday drinks in Thailand in 2015. I was there in March!” Turns out Fen financed her trip to Thailand by telling cute boys that it’s her Birthday most nights. Weirdly enough, everyone thought it was funny, including me. I think this is because we recognize that Fen lied in a low-cost environment. And we all lie in a low-cost environment.
So who lies when? This question cannot be answered with personality traits, integrity, or honor. It is answered by costs, benefits, and environments. People will lie if their costs are lower than their benefits. I’d probably teach my children how and when to lie. “Kids, chose your stories wisely, cause everyone else does too.”
Further Reading
(I have previously written about the costs and benefits of cooperation and deception in Lying to Ourselves is the Optimal Strategy)
(Here is a great intro Video to the econ of lying)
(Lying Aversion and the Size of the Lie by Uri Gneezy, Agne Kajackaite, and Joel Sobel is the more classical economic approach to lying)
(Dan Arieli's "Predictably Irrational", and "The Honest Truth about Dishonesty" is an overview of the behavioural economic approach to lying)
(Here is the interesting video tape experiment by Feldman)
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