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Limitations of Panel Data:
a. Panel data may not be representative samples since panel members are expected to put in some effort in furnishing data to the research organization some persons chosen in the original sample may refuse to serve on panels. This may distort the representative character of the original sample. To minimize refusals of this type many organization pay some money to panel members. This poses another issuer does this payment attract a particular type of panel member?
b. Panel members may report wrong data. Ordinarily panel members are expected to act with a sense of responsibility and supply accurate information. However this may not be the case when panels are not well maintained. Moreover after the initial attraction of membership of a panel has faded members may lose interest in this task and may not fully cooperate with the research organization. This will affect the quality of information. Sometimes panel members may deliberately give wrong information to show off their status annoyance over periodical reporting or repeated interviews.
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