Lying: it's awesome

In writing, I mean.  And by "lying" I mean both outright denial ("I didn't kill him, fuck you!") and obfuscation ("I'm just a little old lady, what do I know?").  Both are lies; both are great.

What do they do? One or more of these things:

1. They create mystery.

When a character is lying, but we (the audience) don't know the truth, it's fascinating.  We make guesses, and we stay engaged; we focus intensely to find clues.  Memento is a great example of this, since the protagonist has no more information than the audience does.

2. They create tension/raise the stakes.

When a character is lying to another character, but the audience knows the truth, that can be a hell of a nailbiter.  There are a lot of terrible ways to do this, and my least favorite is OH NO I GOTTA GO ON TWO DATES AT THE SAME TIME, because shut up, Mrs. Doubtfire.  One place it's done extremely well is Reservoir Dogs, which is about an undercover cop in a group of thieves and therefore fundamentally about lies.  Once the movie reveals who the cop is, watching him deceive everybody -- even someone he really cares about -- is deliciously painful.  Is he going to be found out? What is he going to deny himself in order to maintain the lie? 

3. They reveal character.

What does a character lie about? Does he reveal that he came from an abusive home but not that he cheated his way through college? Does she tell people she's an alcoholic but not that she's obsessed with Teenage Mutant Ninja Turtles? This is a great way to communicate what matters most to your character, and what he or she is ashamed of.  

And how does he lie? Does she do it well or badly? Does he guilt-trip the questioner in order to get the moral high ground? Does she use misdirection to derail the conversation? In the second episode of Skins, an anorexic character demonstrates to a friend how she deceives everyone she knows into thinking that she has eaten.  In that scene, we understand: 1) the extent to which she has perfected these destructive behaviors and how hard they must be to leave behind; 2) that she is determined to keep the extent of her illness a secret from multiple people; 3) that she feels comfortable enough to reveal the truth to the guy she's talking to.  A lot of heavy lifting gets done there.

4. They create an obstacle.

And you always want an obstacle.  The classic example here is the police interrogation, in which dismantling the lie is the entire plot.

5. They introduce threats and limits.

Why is this character lying? Will they get in trouble with their significant other, with the principal, with the police? Are they scared? Are they embarrassed? Are they doing it for fun? Are they unable to stop lying?

6. Telling the truth is explosive.
In two ways.  First, the character was probably lying because the truth came with terrible consequences, and telling the truth means she will now have to face those consequences.  Second, the character has probably deceived someone else, and that person will feel betrayed.  Fallout all over the place.  This is why truth-telling is so often done around the climax of a story -- there is a massive emotional consequence for the characters, and the world of the story is fundamentally changed now that the truth is out.

It's always good to check, I think, whether your characters are lying enough.  Very few people tell the truth all the time -- lying makes things easier, or it's more diplomatic, or it gets us what we want -- and putting more deception in your writing will make your dialogue more realistic in addition to adding all those fantastic complications to your story.