The estimates of Section 4 suggest that the actual rate of corruption is more than double that derived from the usual procedure of naïvely using the responses of survey respondents. However, estimates from subsamples of the Peruvian data and the current discussion—and basic commonsense—strongly suggest that there is a positive correlation between reticence and guilt. Hence, the change from the 18% of the naïve estimates to the 37% of Section 4 is itself probably a misunderestimation of the effect of reticence on the measurement of corruption.

# **7.  Conclusions**

This paper is motivated by the uncontroversial observation that survey respondents may not always respond candidly when asked sensitive questions about their personal behavior. This is true across a broad range of topics, and we specifically focus on the implications of this observation for survey-based data on corruption. Such data, gathered systematically in many different surveys of households and firms, are intensively used in policy analysis and in public discourse about the prevalence of corruption and the success (or failure) of policies to reduce it. While there is widespread agreement that respondent reticence implies downward biases in survey-based estimates of corruption, little is known about the magnitude of these biases. Moreover, it is also well-understood in the surveyresearch literature that standard solutions to address respondent reticence, such as random response questions, have had, at best, mixed success.

In this paper we have proposed a novel methodology for estimating the frequency and consequences of reticent behavior. We develop a statistical model of how responses to sensitive survey questions are influenced by three characteristics of respondents that are not directly observable: whether they are reticent, whether they behave reticently in response to a particular question, and whether they are guilty in the sense of having done the sensitive act in question. We show how the population frequency of these three characteristics can be estimated using a method of moments estimator that exploits information in average responses to a CQ and RRQs as well as the variance of RRQs.

We implement this methodology in the World Bank's Enterprise Survey for Peru and in a sample of 10 Asian economies covered by the Gallup World Poll. In both applications, we find that reticent behavior is common: around two-thirds of firm managers surveyed in Peru exhibit signs of reticent behavior, while in the Gallup World Poll the fraction of individuals exhibiting reticence ranges from 40% in Indonesia to 81% in India. This in turn implies that the simple average of responses to standard questions about corruption substantially underestimates the prevalence of corruption. Our reticenceadjusted estimates of corruption in Peru are twice as high as standard estimates (37% versus 18%), and similarly we see much higher estimates of corruption in the Gallup World Poll after we adjust for reticent behavior. Moreover, corruption estimates are even higher in models that allow for a positive correlation between reticence and guilt, which is indicated strongly by our results.

An immediate implication of our findings is that self-reported survey data on the incidence of corruption substantially underestimate its actual prevalence. More practically, our findings underscore the importance of refining survey techniques to improve the measurement of corruption. This includes 19