Theoretical amplitude and phase spectra for P and SH body waves are computed for dislocation sources imbedded in an elastic half space to determine the effect of neglecting the free surface in earthquake spectral studies. Depending on source orientation, depth, and time function, errors in moment and corner frequency determinations may be arbitrarily large. Interference of the direct and reflected phases produces peaked amplitude spectra with pronounced spectral minima. These minima could be erroneously identified as source dimension or directivity effects. Stress drop, source dimension, and other related results obtained from body wave spectral studies of shallow earthquakes become ambiguous or misleading if the free surface effect is ignored.