While the idea may have an approbatory sense of prudence or diplomacy, the phrase is often either used euphemistically to denote dissimulation (misleading by withholding pertinent information) or else used ironically to mean outright lying.
[1] The Oxford Dictionary of Modern Quotations[2] and Kenneth Rose[3] trace the idea to Edmund Burke, the first of whose Letters on a Regicide Peace, written in 1795 and published in 1796, included:[4][5] Falsehood and delusion are allowed in no case whatever: But, as in the exercise of all the virtues, there is an œconomy of truth.
[15] Alan Durant of Middlesex University describes the phrase prior to 1986 as having "extremely restricted currency" and as a rule used in allusion to either Burke or Twain.
In 1992, when Alan Clark was questioned at the Old Bailey by Geoffrey Robertson in an Arms-to-Iraq case, he accounted for the discrepancies between his testimony and statements he had made previously.
His response became notorious:[19][20] Alan Durant was an expert witness in a 1992 libel suit brought by a man who had been described as "economical with the truth".