Rounded responses to income questions

Summary:

Responses to income questions in surveys are often rounded by the respondents. Though this is widely ignored, rounding can have detrimental effects on the results of a statistical analysis, especially with respect to the consistency of estimates. This paper deals with the analysis of data from the Finnish sub–sample of the European Community Household Panel (ECHP) with respect to factors that influence rounding of personal gross wage and earnings. The finding is that the propensity to observe rounded values can be related to factors like the interview mode, the wage level, and personal characteristics like gender and job type.