Self-reported income data: are people telling the truth?

FERNANDO ANTONIO IGNACIO GONZÁLEZ

Journal of Financial Crime

Emerald Group Holdings Ltd.

Lugar: Amsterdam; Año: 2020 vol. 27 p. 1349 - 1359

1359-0790

Purpose: This paper aims to detect anomalous data in income reports of Argentina, including personal income ? from a sample of households ? and statements of public officials. Design/methodology/approach: A widely known technique in forensic accounting ? such as Benford?s Law ? is used. The Chi-square test and the absolute mean deviation are used for verification. The databases consulted include the income declared by households in the Permanent Household Survey ? for the 2003-2017 period ? and the capital declarations of high-ranking public officials ? for the period 1999-2017. Findings: The results suggest that income reported in the Encuesta Permanente de Hogares do not follow a Benford´s distribution, and the degree of conformity with this decreases significantly between 2007 and 2015 ? coincident with the intervention period of the Instituto Nacional de Estadísticas y Censos. Patrimonial statements of public officials present an acceptable level of compliance with Benford?s law, especially among those of the legislative branch (in more than 90% of cases) although to a lesser extent among officials of the executive branch. Practical implications: The results suggest that income reports from the Permanent Household Survey, for the period 2007-2015, should be used with reservations because of their possible manipulation. Originality/value: During the intervention of the official statistics institute in Argentina (2007-2015), the idea of lack of credibility of its reports has been disseminated. To date, however, there is no empirical evidence to support it related to income.