There are mental and physical consequences, but we should strive to live more truthfully, regardless, to best understand reality.
It has been estimated that the average American tells 11 lies per week. Is this bad for us? Suppose we knew that a lie would never be detected, nor would we be punished. Suppose we had some means of ensuring that the lie would never cause us any physical or psychological harm through loss of sleep or the like. Suppose even that telling the lie would actually redound to our benefit, at least in the sense that it would secure us the pleasure, status, wealth, or power that those fudging the truth commonly seek. Under these circumstances, would it still make sense to tell the truth? Or would lying becoming the prudent course of action?
In his 2005 runaway philosophy best seller, On Bullshit, Princeton University's Harry Frankfurt distinguishes between lying and what he called "bullshit." Though liars do not tell the truth, they care about it, while the bullshitter does not even care about the truth and seeks merely to impress. Liars tell deliberate untruths, while bullshitters merely do not admit when they do not know something. This is a particularly pervasive form of untruth in my own orbits, medicine and academia, where people wish others to believe that we know more than we do. So instead of saying, "I don't know," we make things up, merely giving the appearance of knowledge while actually saying nothing.