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.