The title of the OP comes from this documentary and is one of the best truths I've heard from a movie or documentary.
It's so true. People would like to believe a beautiful lie so much they'll deceive themselves and go into denial mode.
I still remember before Armstrong came out and admitted it himself to doping, I got into a huge argument with a friend about how he was guilty, and the friend was certain he was drug free, arguing it's possible he was very genetically gifted.
At the time all his team mates were coming out to testify against him, but my friend stood firmly on Lance Armstrong's side. Then I went on the forums to read what others had to say and about 50% of the people were calling the other side haters.
Then he came out to admit the truth and the ones who believed the lies decided to hate Lance the most. My friend never wanted to touch upon the topic again, and deep down I always wanted to tell him "Ha, I told you so!" but if I did I knew we wouldn't be friends anymore.
Learn to differentiate between the beautiful lie and the ugly truth.