We all lie

Kid Swearing Potty Mouth

News flash: We all lie! Behavorial economist Dan Ariely explains why - and how it's contagious.

Dan Ariely is a professor of psychology and behavioral economics at Duke University. He and his fascinating research on dishonesty are featured in the documentary, "Dishonesty, The Truth About Lies," which was recently released in theaters. An hour-long version will appear on CNBC on Thursday, May 28 at 10 pm ET/PT. Here, Ariely answers some pressing questions about how we lie, how we justify it - and why it's contagious!

What made you interested in studying the behavior of dishonesty?

I noticed some of my own dishonesty - dishonest acts. And I was wondering about how general it is. I was trying to understand its nature ... Why do we do it?

I created an experimental paradigm that allowed us to measure precisely how much people cheat. And then Enron started and some other scandals started and all of a sudden I realized it ... was an important question for society. When Enron happened, people were very quick to raise a finger and say, "Oh, there's just some bad people out there!" But that was not what we saw in my experiments. What we saw was a lot of people were able to cheat a little bit and still feel good about themselves.

What percentage of the population lies?

Virtually everybody. We all tell white lies. In fact, when I give talks, from time to time people come up to me and say, "Oh, I'm unable to lie." Or, "My kid is unable to lie." And so far, 100 percent of the people who came and told me that were on the autistic spectrum. And, it is possible that, in autism, the difficulty of having - a theory of mine - an understanding of what people are feeling and caring about is going to eliminate their ability to tell white lies. Because, you see, white lies are one where I think about your benefit and I lie for your benefit. If I don't understand your benefit, I might not develop that.

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Why do people lie?

Lots of reasons. In a white lie, we lie for other people. In not-so-white lies, we lie for ourselves. Now, in economic rational thinking, we think that people do the cost-benefit analysis: What do I gain from this lie? What do I lose?

What we find is that lying is really about rationalization. Dishonesty is about rationalization. I prefer to use the word dishonesty. To what extent can we can be dishonest and still think of ourselves as good people?

What is the "fudge factor"?

The fudge factor is exactly this notion: We want to benefit from dishonesty and we want to think of ourselves as honest people. What contributes to this are all the things that allow us to rationalize. Thinks like:

  • Everybody else is doing it.
  • I'm doing it for a good reason.
  • I deserve it.
  • It doesn't really hurt anybody.

Read More Five red flags that pop up when someone is lying

Is dishonesty bad?

Not always. For example, white lies.

Is dishonesty contagious?

Absolutely! We've done some experiments showing that the moment you see other people behaving in a certain way, their behavior is contagious. You basically look at what other people are doing and that can help us define what we feel is OK and not OK. In law, we think that people are thinking about what's the cost and what's the punishment and what will they get for this. But what we find out is that it's not about that. People don't think about the punishment.

Are there different types of liars?

So far, we haven't found that. We've found that we all have the capacity to lie - just a little bit - and still feel good about ourselves. And then once we do it, we rationalize what we've done.

How easy is it to be dishonest?

Very easy.

Have you ever been dishonest? When was the last time?

Of course. Probably this morning. I gave a lecture to a large group of bankers and I'm sure that at some point, I said something nice to them - something about how attentive or thoughtful or something they were without truly meaning that.

Do most of us believe that we're honest?

Absolutely. That's one of the most fascinating things is that, despite the fact that we often are not honest, if we actually paid attention, we would see that we are dishonest many times a day. We are nevertheless capable of holding this high opinion of ourselves. It's because of rationalization.

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Does the chances of us lying change if we are convinced we won't be caught?

So, the answer so far is no. Now, I am sure, that if there was something where people had a 100-percent chance of being caught, we would behave very differently. So, imagine if, for example, every time you texted while driving, there was a 100-percent chance you would get caught and get a $100 fine. Of course, nobody would do it under those conditions. But when we change the probability of being caught to something more modest - 20, 25, 10 percent, which is kind of more realistic, and then we reduce that to smaller numbers - that doesn't seem to have an effect.

Think about the time horizon: There's a time before the dishonest act. The time after the dishonest act. And the legal theory is all about the time after. As long as we have a good chance of catching people and giving a good punishment, people would think about it upfront. But people rarely think about anything upfront. This is why we overeat and undersave and you name it, we do all kinds of terrible things to ourselves.

How does wearing something fake make us cheat more?

This is about the fact that once you take a small act, the next act is simple. And if it's something that you're wearing fake - and in our case, we used sunglasses - all of a sudden it's a part of your personality. It's a part of your representation to yourself. ... And the moment you start thinking of yourself as slightly dishonest, the next step is simpler.

Dan Ariely is the James B. Duke professor of psychology at and behavioral economics at Duke University and the founder of the Center for Advanced Hindsight. He is also the author of the recently published book, "Irrationally Yours." Follow him on Twitter @danariely.

For more on why we lie - from harmless fibs to extraordinary acts of criminal deceit, watch the CNBC premiere of, "Dishonesty: The Truth About Lies," Thursday May 28 at 10pm ET / PT.

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