Many studies of human behavior and psychological constructs rely on subjects' willingness to disclose information about themselves. This is problematic for phenotypes that require the disclosure of sensitive information, such as sexual behavior or illicit drug use, which are likely to be underreported. We describe a method for evaluating how sensitive variance component estimates are to underreporting. The method involves estimating, by maximum likelihood, the original population proportions of the response classes, and adjusting them for a set of hypothesized underreporting parameters. If the true values of the underreporting parameters were known, the researcher could estimate the variance components based on these values. Usually, underreporting levels are not known with certainty. However, it is possible to assume a specific value for the underreporting rate, obtain response pattern proportions adjusted for this rate, and then to conduct the analyses on these revised estimates. By repeating the procedure across the range of plausible underreporting values, the researcher can assess how sensitive the variance component estimates are to variation in underreporting. We apply this method to a sample of male-male twin pairs who reported on themselves and their co-twins for illicit drug abuse and dependence (DAD). We show how underreporting influences estimates of additive genetic, common environment, and specific environment variance components (A, C, and E) obtained for DAD in a classical twin design.