I think the USGA maintains that a player who enters his scores accurately and accordingly, playing by the rules of course, will either play to his handicap or maybe better than his handicap on-average 30-40% of the time. In my 20 years of competitive golf, I believe this to be fairly accurate, at least as it pertains to me. So basically the handicap overall doesn't represent the level one should always play to, but rather the player's true potential.
Where the problems occur is when a player manipulates his handicap. You have the traditional sandbagger, who sports a 10 handicap but only because he doesn't post his really good scores. Each year, about a month or so before the member/member or member/guest tournaments roll around at my club, there are a couple of guys who don't necessarily mind shooting 5-6 strokes higher than their norm in the friendly matches, because they're wanting their handicaps to inflate a few points for the upcoming tournaments. Then we have one guy who just refuses to post his really good rounds. In fact - he was warned about this a year ago, and got caught doing it again just a few weeks ago. He shot 75 that day, then went inside and posted his score for an 82. It was brought to the head pro's attention, he investigated his scoring history in the handicap computer, caught him redhanded. He was informed that afternoon that his handicap would be adjusted 2 strokes lower, and if it happened again - he would be banned from competing in club-sanctioned events altogether. But for whatever reason, and despite all of the members knowing his history of gaming the system (cheating, really) - they still allow him to play in their weekday morning money games.
Then you have the lesser of the two evils - the vanity cappers - who either enter lower scores than what they really shot or only post their good rounds. For the most part I don't mind vanity cappers, because I know I really don't have to worry too much about those guys when I'm playing against them in tournaments, because obviously they can't play to their handicaps anyway. But where this can and sometimes does become a problem is when you have one of those guys in your regular group, and you play a team event and suddenly he's your partner. You know ahead of time that it's all on you... you're not getting any help from him whatsoever. And it's not really about the money, we don't wager big bucks. Most of the time the most a player will lose is 8-10 bucks. But the competitive aspect of enjoying a fair match and competing to win - that's more important than the money really.
I had a situation like this last season. I was managing a group of roughly 12 guys, and two of the guys hardly ever played to their handicap. We're talking maybe one time in 15 rounds they would play to their handicap, and the rest of the time they were 6-8 shots higher than their handicap. Well, that 30-40% of the time the USGA talks about applies to them too, and like I said - it's fairly accurate. So I knew something was going on. And they're nice guys, but their egos just won't allow their handicaps to exceed a certain range, as if they somehow get their rocks off telling their buddies at work that they're 12 handicaps, when really they can't break 90 most rounds.
Anyway... when I would do the pairings for the teams each weekend, whoever I paired those two guys with - they were pretty much assured that they weren't gonna win, because obviously they couldn't play to their handicaps, and it's two-man teams.
Now we're all friends, none of us are really as good as we think we are. I can just as easily shoot 84 some days as I can 75 other days, and we're all like that to some degree. But these two guys were, for all intents and purposes, noncompetitive in our group. And they were noncompetitive because they weren't posting accurate scores, or posting only their better rounds. I know this because I did my own little investigation of both of their handicap histories on the handicap computer, and right away I knew what was going on.
But being the group leader, I was left with no other choice but to confront them about it. And that wasn't easy, because I knew they were gonna take it personally. And sure enough - both of them took it personally. And it was at that point that I had to think about the other 10 guys in my group. Sorry, fellas. If you can't play by the rules - you can't play with us.
After doing the group leader things for two seasons, I finally called it quits after last year. It was beginning to be too much work, too many personality conflicts, too many issues. I found three other guys to play with this season and I must say that it has been much less stressful and much more enjoyable.