Saturday, February 10, 2007

Lying liars

Robin lists 10 ways to detect lies. I think he knows this is a lie, that it is of no use. Those who read the list, already know it. Those who skip it are not interested in finding the truth anyway. I think all of us live on lies to some extent, and some more than others. I fancy myself as a truth seeker, and I think Robin does too (just look at the names of our blogs, for God's sake). Libertarians generally see themselves as crusaders. And it turns a lot of people off. My mother says I sound like Jesus, and she doesn't mean that as a complement.

But I know I couldn't live without lies. For instance, when I was taking economics at Lund in Sweden, they treated me like royalty, I suppose just because I'm American. One young Swede once blurted out in class, "But you're brilliant!", referring to me. I didn't take him too seriously, since he barely knew me, but it's something I'll not soon forget either. It feeds the ego, even if it is a lie.

Last night a friend told me some horrible stories about her on-again, off-again relationship with a pathological liar. She seemed to truly wonder how she could swallow so many lies. I suspect they served a purpose. He's a salesman who knows what the customer wants. Or, alternatively, we can blame him, via a kind of Say's Law of lies, ie the supply creates the demand. Regardless, it is clear that both sides gained something. At least in the short term, the lies expanded the opportunity set.

The same kind of self-deception is behind many of our most cherished institutions. You atheists will immediately think of religion. Indeed, Larry Iannaccone has used this same language, claiming that religion exists in large part because it expands the opportunity set, from the mundane to the transcendent. He does not, however, call it self-deception, since we simply have no evidence one way or the other as to the existence of God.

Another example is democracy and the whole notion of the State. We all know the politicians are lying to us, and yet many of us continue to vote for them. It is a kind of religion for the voter, since he is basically ignorant of the evidence on government effectiveness. For libertarians, of course, this whole arrangement is appalling, because we've seen the evidence and it doesn't look good.

The same applies to health care. The best evidence indicates that, on average, doctors really don't help much at all. Yet, we treat them as experts, and insist on policies which subsidize health care and health insurance.

As Robin pointed out in class this week, this is essentially no different than our faith in financial "experts." We gladly fork over millions of dollars in fees to pay for actively managed mutual funds, when, on average, they do worse than index funds.

The list goes on and on, from academia to the main stream media.

So why do we believe experts, even when the preponderance of evidence contradicts them? Why do we believe lies? And why do lying institutions prosper in prosperous economies? Do lies somehow make the world go round? Or are they just the baggage of civilization, an unfortunate and unavoidable human condition? Perhaps, just as Fischer Black's noise traders provide liquidity in financial markets, lies and those who trade in them provide a kind of liquidity in the extended order.

Addendum: Women, you're in trouble. Apparently, only criminals are good at detecting lies.

No comments: