Deception and Misreporting in a Social Program

Cesar Martinelli
Susan W. Parker

Abstract

We investigate empirically the extent of misreporting in a poverty-alleviation program in which self-reported information, followed by a household visit, is used to determine eligibility. In the model we propose and estimate, underreporting may be due to a deception motive, and overreporting to an embarrassment motive. We find that underreporting of goods and desirable home characteristics is widespread, and that overreporting is common with respect to goods linked to social status. Larger program benefits encourage underreporting and discourage overreporting. We also estimate the costs of lying and embarrassment for di¤erent goods, and show that the embarrassment cost for lacking a good is proportional to the percentage of households who own the good.