Previous earnings volatility impacts self-reported earnings accuracy in developing countries.
The study looked at mistakes in how people report their earnings in a country called the Federated States of Micronesia. By comparing official data with what people said they earned, they found that past changes in earnings can affect how accurately people report their current earnings. The more their earnings changed in the past, the more likely they were to make mistakes in reporting their current earnings. However, these mistakes became less important over time. By using information from natural disasters that affected people's incomes, the researchers were able to correct some of these mistakes and get more accurate results.