An advantage of using participant observation is that it provides verstehen, a real and empathic insight into one's subject. It also adds some of the advantages of interviews (especially group interviews) to the advantages of other forms of observation, as the researcher can probe people for explanations or further information.

A disadvantage is that participating undoubtedly changes what is observed. So while it is deemed to produce rich, valid data, this can be undermined by the idea that what is being observed might be very different from what would have occurred without the researcher being present. An example is Geoff Pearson's study of football hooliganism. Pearson himself engaged in violent and aggressive activity; it is impossible to be sure whether other people acted differently as a result of his actions.