The proverbial “Honesty is the best policy” begs plurium interrogationum (many questions) as it is an implied dilemma. The question “Do honest people exist” is a misleading discourse because something is implied without being said explicitly. Nowadays, this question imposes outcome of a negative response to validate the dilemma, and in which the positive response has an invariant outcome in the concocted dilemma. Of course the common way out of this argument is not to answer the question (e.g. with a simple ‘yes’ or ‘no’), so allow me to challenge the assumption behind this question (and I am working on my 10th cup of coffee and too much thoughts swirling in my head).
This question in itself is complex because it presupposes something that has not been proven or accepted by all the people involved. This typical fallacy within my short life experience is often used rhetorically, so I find that the question limits direct replies to those that serve the question’s agenda. Bluntly put, I think it is relative.
It is also a psychological fact that when someone touts “I AM HONEST” or “I DO NOT GOSSIP” usually are the first people who contradict themselves. I would classify this question as cognitive dissonance because it holds two contradictory ideas simultaneously. The “ideas” or “cognitions” in this question includes attitudes and beliefs, and also the awareness, justification and rationalization of one’s (or anyone for that matter) behavior. I guess I am guilty of dissonance because I perceive this as a logical inconsistency among my cognitions (and other people that I know). A powerful cause of this dissonance of course is when this idea conflicts with a fundamental element of the self-concept, such as “I am a good person” or “I made the right decision.” There´s always an anxiety that comes with the possibility of having made a bad decision can lead to rationalization, the tendency to create additional reasons or justifications to support one’s choices. For instance, a person who just spent too much money on a new car might decide that the new vehicle is much less likely to break down than his or her old car. This belief may or may not be true, but it would likely reduce dissonance and make the person feel better. I think we can safely say that this dissonance can also lead to a confirmation bias, the denial of disconfirming evidence, and other ego defense mechanisms.
HONESTY is a very loaded because the word itself has plenty synonyms that is best described as principles and values: bluntness, candor, confidence, conscientiousness, equity, evenhandedness, fairness, faithfulness, fidelity, frankness, genuineness, goodness, honor, impeccability, incorruptibility, integrity, justness, loyalty, morality, openness, outspokenness, plainness, principle, probity, rectitude, reputability, responsibility, right, scrupulousness, self-respect, sincerity, soundness, straightforwardness, straightness, trustiness, trustworthiness, uprightness, veracity, and virtue. (Notice that the antonyms are few: artifice, cheating, deceit, deception, dishonesty, duplicity, falsehood, fraud, fraudulence, lying and treachery). How many people do you know that actually exhibit these 100%?
My point is this question relies upon context for its effect. Human communication is complex; 90% of it is nonverbal and context is an essential part of it. Communication consists of the words said, tone of voice, body language and also: how these relate to what has been said in the past; what is not said, but is implied; how these are modified by other nonverbal cues such as the environment in which it is said and so forth.For example, if someone says “I love you”, one takes into account who is saying it, their tone of voice and body language, and the context in which it is said. Is it a declaration of passion or a serene reaffirmation; is it public or private; is it insincere and manipulative; does it sound as if they are saying “Please pass the salt” or is it said in a joking tone, when they are annoyed at you?
Conflicts in communication are common and often we ask “What do you mean?” or seek clarification in other ways. This “metacommunication” (i.e. communication about the communication) sometimes, asks for clarification that is impossible. Communication difficulties are common in ordinary life, and often occur when metacommunication and feedback systems are lacking or inadequate or there is not enough time. Some people practice double binds which can be stressful and potentially destructive when one is trapped in a dilemma and punished for finding a way out, but making the effort to find the way out of the trap can lead to emotional growth. For example, when one is commanded to “be spontaneous”. The very command contradicts spontaneity, but it only becomes a double bind when one can neither ignore the command nor comment on the contradiction. Often, the contradiction in communication is not apparent to bystanders unfamiliar with previous communications.Or say, someone says (like Mother to child)”You must love me”. The primary injunction here is the command itself: “you must”; the secondary injunction is the unspoken condition that love is spontaneous, that the child love the mother genuinely, of its own accord.
Or how about “Be genuine” or in this “Be honest”? The idea here is to present your true self to the person. But then the more you try, the phonier you are, and even the “act” of not trying is just another version of trying.
Consider the following psychological theories that affect view of “honesty” among individuals:
1) Choice-supportive bias is a memory bias that makes past choices seem better than they actually were.

Big Brother is Watching you
2) Doublethink is the act of holding two contradictory beliefs simultaneously and fervently believing both. It is related to, but distinct from, hypocrisy and neutrality. Doublethink is a form of trained, willful intellectual blindness to contradictions in a belief system. Doublethink differs from ordinary hypocrisy in that the “doublethinking” person deliberately had to forget the contradiction between his two opposing beliefs — and then deliberately forget that he had forgotten the contradiction. He then had to forget the forgetting of the forgetting, and so on; this intentional forgetting, once begun, continues indefinitely. George Orwell’s dystopian novel Nineteen Eighty-Four, describes it as “controlled insanity”.
3) Self-perception theory is a competing theory of attitude change. It asserts that we develop our attitudes by observing our behavior and concluding what attitudes must have caused them. The theory is counterintuitive in nature, as the conventional wisdom is that attitudes come prior to behaviors. Furthermore, the theory suggests that a person induces attitudes without accessing internal cognition and mood states. He/She reasons his/her own overt behaviors rationally in the same way he/she attempts to explain others’ behaviors.