How does polygraph test work? Is it accurate in detecting lies?

Polygraph is a scientific term for what is popularly known as lie detector. It is an instrument used in criminal investigations to find out if the person being prosecuted is telling the truth. Many employers, too, use lie detectors during job interviews to check veracity of job applicants’ answers to the interview questions.
Polygraph test involves attaching multiple (hence the prefix poly) sensors (usually four to six) on a subject’s body to measure physiological functions like breathing, pulse rate, blood pressure, perspiration etc while the subject is ran through a series of questions. Some polygraph tests record bodily movements such as movement of hands and legs. These sensors send signals to a computer which records them as a horizontally moving graph (see, picture below). The idea behind polygraph test is this: Lying puts stress on the person lying. And this stress is detected though physiological functions, e.g. increased breathing and pulse rate, high blood pressure, sweating,.. At a point where any of these stress signals is detected in the subject the graph would capture that as a spike.
Polygraph Test
An examiner in a polygraph test starts with very simple questions (“What is your name?”, “Do you reside at..?”,..) and moves on to slightly stress inducing questions such as those involving personal details. This is necessary to establish the baseline of physiological responses in the subject, because different people experience different level of stress while answering a particular type of question. By running this routine of escalating questioning the examiner would know what is the normal level of stress experienced by the subject being examined, which is then compared with the unusual spikes in the polygraph.
Accuracy of polygraph tests is still a subject of debate as the opinions are widely divided. There are ways in which polygraph can be “fooled”. These involve 1) using of drugs while under the test to neutralize emotions, 2) biofeedback training, 3) “nail-in-the-shoe” technique in which the subject would press his foot against a sharp nail hidden in the shoe to cause pain which would skew the polygraph results, etc. Not to mention that polygraph test is completely ineffective on psychopaths (people with inability to feel emotions). Polygraph’s accuracy also varies by the type of equipment used and proficiency level and subjectivity of the examiner. When conducted without manipulation on the subject’s part, polygraph tests are fairly accurate. According to American Polygraph Association (APA) the accuracy rate of polygraph tests is 80-90%.
Here is a real world example of effectiveness of polygraph test: A private investigator in the US, named Scott Lewis (of Scott Lewis Private Investigation), took a polygraph test to test its accuracy. The test was conducted by Neil Myres who runs the company called Forensic Polygraph Services. Myres asked Lewis to choose a number between 1 to 7, and then he would ask him, one-by-one, whether the number chosen is 1, or 2, or 3, and so on. Lewis was asked to say “no” each time. This means he would be lying to one of the questions. It was a simple test, involving inconsequential questions. Lewis expected to pass the test as he did not think the questions would be stressful. Moreover, he already knew the questions. However, he was surprised by the results of the test. The number he had mentally chosen was 5. He saw on the graph paper that as Myres asked if it was the number 4 the graph showed an upward movement; and it peaked on the fifth question when he was asked if it was the number 5 and Lewis had to lie.

Additional reading:
Polygraph (Wikipedia)

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