FIFTH EDITION

PRINCIPLES and PRACTICE of

KLINE, R. B.
STRUCTURAL EQUATION MODELING
 Principles and Practice of Structural Equation Modeling

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 Methodology in the Social Sciences
David A. Kenny, Founding Editor
Todd D. Little, Series Editor
www.guilford.com/MSS

This series provides applied researchers and students with analysis and research design books that
emphasize the use of methods to answer research questions. Rather than emphasizing statistical
theory, each volume in the series illustrates when a technique should (and should not) be used and
how the output from available software programs should (and should not) be interpreted. Common
pitfalls as well as areas of further development are clearly articulated.

RECENT VOLUMES

MEASUREMENT THEORY AND APPLICATIONS FOR THE SOCIAL SCIENCES

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CONDUCTING PERSONAL NETWORK RESEARCH: A PRACTICAL GUIDE

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QUASI-EXPERIMENTATION: A GUIDE TO DESIGN AND ANALYSIS

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THEORY CONSTRUCTION AND MODEL-BUILDING SKILLS:

A PRACTICAL GUIDE FOR SOCIAL SCIENTISTS, SECOND EDITION
James Jaccard and Jacob Jacoby

LONGITUDINAL STRUCTURAL EQUATION MODELING WITH Mplus:

A LATENT STATE–TRAIT PERSPECTIVE
Christian Geiser

COMPOSITE-BASED STRUCTURAL EQUATION MODELING:

ANALYZING LATENT AND EMERGENT VARIABLES
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PROCESS ANALYSIS: A REGRESSION-BASED APPROACH, THIRD EDITION
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APPLIED MISSING DATA ANALYSIS, SECOND EDITION

Craig K. Enders

PRINCIPLES AND PRACTICE OF STRUCTURAL EQUATION MODELING, FIFTH EDITION

Rex B. Kline

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 Principles and Practice of
Structural Equation Modeling
FIFTH EDITION

Rex B. Kline

Series Editor’s Note by Todd D. Little

THE GUILFORD PRESS

New York  London

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 Copyright © 2023 The Guilford Press
A Division of Guilford Publications, Inc.
370 Seventh Avenue, Suite 1200, New York, NY 10001
www.guilford.com

All rights reserved

No part of this book may be reproduced, translated, stored in a retrieval system, or

transmitted, in any form or by any means, electronic, mechanical, photocopying,
microfilming, recording, or otherwise, without written permission from the publisher.

Printed in the United States of America

This book is printed on acid-free paper.

Last digit is print number: 9 8 7 6 5 4 3 2 1

Library of Congress Cataloging-in-Publication Data is available from the publisher.

ISBN 978-1-4625-5191-0 (paperback) — ISBN 978-1-4625-5200-9 (hardcover)

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 For my family—
Joanna, Julia Anne, and Luke Christopher

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 For me, it is far better to grasp the Universe as it really is
than to persist in delusion, however satisfying and reassuring.
—Carl Sagan (1996)

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 Series Editor’s Note
The new version of Rex Kline’s best-selling (90,000+)
and well-cited book is here! As with earlier editions,
this fifth edition retains all the wonderful features
of his influential earlier editions and he continues to
seamlessly integrate recent advances in structural
equation modeling (SEM). Rex is a true scholar of all
things SEM and has an acclaimed gift for communi-
cating complex statistical concepts in language that all
readers can grasp. The accessible style of writing and
the many pedagogical features of his book (e.g., anno-
tated reading lists, exercises with answers, topic boxes,
the comprehensive companion website) make it a “must
have” for any user or consumer of SEM. It is a resource
that keeps improving and expanding with each new
edition. It is a resource that I recommend first when I
am asked what book do I recommend. This recommen-
dation holds for beginners and experienced users alike.
As a scholar of modern statistical practice and
techniques, Rex has studied all the developments and
advances in the world of SEM generally, as well as
“hot” topics like Pearl’s structural causal modeling.
His coverage of Pearl’s graph theoretic approach to
causal reasoning, as many of the reviewers also note,
is both easy to understand and comprehensive. It’s so
good, he ought to get a prize for best in presentation!
In this new edition, he brings in a third perspective on
SEM, namely, the partial least squares point of view
FMKline5E.indd 7
(i.e., composite SEM). Other additions to this master-
piece of pedagogy include a new chapter on fundamen-
tal regression concepts and psychometric principles
that includes a self-test and primers on these topics plus
significance testing. This chapter alone will become a
core piece of my own SEM courses to ensure students
are ready to learn SEM. Other additions include new
chapters on SEM analyses in small samples and on
mediation analysis, American Psychological Associa-
tion reporting standards, standards for testing measure-
ment invariance, principles of model comparison (both
nested and non-nested), extended confirmatory factor
analysis models (e.g., multitrait–­multimethod models),
and exploratory bifactor models.
Although Rex suggests in his introduction that no
single book can cover all of SEM, his book is about
as thorough as they come. His didactic approach is
refreshing and engaging and the breadth and depth of
material covered is simply impressive. As he notes and
you will feel, Rex is a researcher talking to you as a
fellow researcher, carefully explaining in conceptually
driven terms the logic and principles that underlie the
world of SEM. The wealth of examples provide an entry
for researchers across a broad array of disciplines. This
book will speak to you regardless of your field, disci-
pline, or specific area of expertise.
As always, the support materials that Rex provides
vii
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 viii Series Editor’s Note
are thorough: he provides all the necessary files (data,
syntax, and output) for each of the book’s detailed
examples in simple text files that can be opened with
any basic text editor so that you can reproduce the
analyses in six different software packages! The syn-
tax files are annotated with extensive comments, and
links to related webpages are given. The Appendix
material is a treasure trove of useful building blocks,
from the elements of LISREL notation, to practical
advice, to didactic understanding of complex ideas and
procedures. Rex has assembled real-world examples
of troublesome data, to demonstrate how to handle the
analysis problems that inevitably pop up. These fea-
FMKline5E.indd 8
tures were a mainstay of earlier editions, but they have
now been expanded to cover even more topics. Rex
bookends all this material with an introductory chapter
that truly sets the stage for the journey through the land
of SEM and a concluding chapter that covers very prac-
tical best-practice advice for every step along the way.
Enjoy Rex Kline’s elegant work for a fifth time!
Everything about his classic work is improved and
expanded. It is a new edition that will become well used
by me and my students as well as you and yours.
Todd D. Little
Lubbock, Texas
3/22/2023 5:01:45 PM
 Acknowledgments
It is a myth that a single person writes a book. The truth
is that an author is blessed to work with many talented
people who all together bring the project to a success-
ful conclusion. Listed next are the reviewers of earlier
chapter drafts, whose names were revealed to me only
after the writing was complete, and their original com-
ments were never associated with their names. That is,
I do not know who wrote what, but what I do know is
that their input was invaluable in revising the fifth edi-
tion. Thank you very much to all of you for your time,
insight, and effort to communicate your impressions
about various chapters:
• Stephanie Castro, Department of Management, Col-
lege of Business, Florida Atlantic University
• Kyle Cox, Department of Educational Leadership,
Cato College of Education, University of North Car-
olina at Charlotte
• Ting Dai, Department of Educational Psychology,
College of Education, University of Illinois Chicago
• Naomi Ekas, Department of Psychology, College of
Science and Engineering, Texas Christian University
• Jam Khojasteh, School of Educational Foundations,
Leadership, and Aviation, College of Education and
Human Sciences, Oklahoma State University
FMKline5E.indd 9
• D. Betsy McCoach, Department of Educational
­Psychology, Neag School of Education, University
of Connecticut
• Mijke Rhemtulla, Department of Psychology, Col-
lege of Letters and Science, University of California,
Davis
• Felix Thoemmes, Department of Human Develop-
ment, College of Human Ecology, Cornell University
• Yanyun Yang, Department of Educational Psychol-
ogy and Learning Systems, College of Education,
Florida State University
Special thanks go to Edward Rigdon, of the Depart-
ment of Marketing in the Robinson College of Business
at Georgia State University, and also to Jörg Henseler,
of the Department of Design, Production, and Man-
agement in the Faculty of Engineering Technology at
the University of Twente, Enschede, The Netherlands,
for their reviews of draft chapters about, respectively,
multiple indicators (Chapter 13) and composite SEM
(Chapter 16). I am a long-time admirer of Ed’s thought-
provoking and accessible work on structural equation
modeling and multiple-indicator methods, among
other issues in multivariate data analysis. I became
acquainted with Jörg’s work more recently, and he is
among a new generation of scholars who are mod-
ix
3/22/2023 5:01:45 PM
 x Acknowledgments
ernizing and expanding structural equation modeling
techniques for analyzing composites as proxies for
theoretical concepts for which classical measurement
theory is ill suited. Input from both of these scholars
was extremely helpful.
It was a great privilege to work once again with the
Methodology and Statistics publisher and the Devel-
opmental Psychology and Geography senior editor at
The Guilford Press, C. Deborah Laughton, who is bril-
liant, focused, organized, and supportive all at the same
time. She continues to know exactly the kind of feed-
back an author needs at a particular moment—some-
times before the author themself knows exactly how to
move forward. I am not the first author—nor will I be
the last—to commend her ability to keep everything on
track and in good perspective. It was also a pleasure
to work again with Katherine Sommer, Development
Editor, who screened the original word processing
FMKline5E.indd 10
files, and with William Meyer, Production Editor, who
together with copyeditor Gerry Fahey improved the
presentation and format of the book prior to its print-
ing. The cover was designed by Robin Lenowitz, Assis-
tant Art Director, who created an ­elegant and striking
design for this new edition. And it is again an honor
to be part of the Methodology in the Social Sciences
series edited by Todd D. Little of the Educational Psy-
chology and Leadership Department in the College of
Education at Texas Tech University.
Last, but always first in my heart, once again deep
gratitude to my family—wife, Joanna, and our chil-
dren, Julia and Luke, now beginning their own lives
as adults (they grew up along with previous editions of
this book)—for all their love, support, and patience.
Clearly, with all this support, any limitations in this
new edition are mine alone.
3/22/2023 5:01:45 PM
 Contents

Introduction 1
What’s New / 1
Book Website / 2
Pedagogical Approach / 3
Principles > Software / 3
Symbols and Notation / 3
Enjoy the Ride / 3
Plan of the Book / 3

PART I. CONCEPTS, STANDARDS, AND TOOLS

1 • Promise and Problems 7
Preparing to Learn SEM / 7
Definition of SEM / 9
Basic Data Analyzed in SEM / 9
Family Matters / 10
Pedagogy and SEM Families / 14
Sample Size Requirements / 15
Big Numbers, Low Quality / 16
Limits of This Book / 18
Summary / 18
Learn More / 18

xi

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 xii Contents

2 • Background Concepts and Self‑Test 19

Uneven Background Preparation / 19
Potential Obstacles to Learning about SEM / 20
Significance Testing / 23
Measurement and Psychometrics / 24
Regression Analysis / 25
Summary / 26
Self‑Test / 27
Scoring Criteria / 28

3 • Steps and Reporting 32

Basic Steps / 32
Optional Steps / 38
Reporting Standards / 39
Reporting Example / 41
Summary / 44
Learn More / 44

4 • Data Preparation 46
Forms of the Input Data / 46
Positive Definiteness / 48
Missing Data / 49
Classical (Obsolete) Methods for Incomplete Data / 54
Modern Methods for Incomplete Data / 55
Other Data Screening Issues / 56
Summary / 62
Learn More / 62
Exercises / 63
APPENDIX 4.A. Steps of Multiple Imputation 64

5 • Computer Tools 67
Ease of Use, Not Suspension of Judgment / 67
Human–Computer Interaction / 68
Tips for SEM Programming / 68
Commercial versus Free Computer Tools / 70
R Packages for SEM / 71
Free SEM Software with Graphical User Interfaces / 73
Commercial SEM Computer Tools / 73
SEM Resources for Other Computing Environments / 76
Summary / 76

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 Contents xiii

PART II. SPECIFICATION, ESTIMATION, AND TESTING

6 • Nonparametric Causal Models 79
Graph Vocabulary and Symbolism / 79
Contracted Chains and Confounding / 80
Covariate Selection / 81
Instrumental Variables / 82
Conditional Independencies and Other Types of Bias / 84
Principles for Covariate Selection / 88
d‑Separation and Basis Sets / 89
Graphical Identification Criteria / 92
Detailed Example / 96
Summary / 98
Learn More / 99
Exercises / 99

7 • Parametric Causal Models 100

Model Diagram Symbolism / 100
Diagrams for Contracted Chains and Assumptions / 103
Confounding in Parametric Models / 105
Models with Correlated Causes or Indirect Effects / 106
Recursive, Nonrecursive, and Partially Recursive Models / 109
Detailed Example / 111
Summary / 111
Learn More / 112
Exercises / 112
APPENDIX 7.A. Advanced Topics in Parametric Models 113

8 • Local Estimation and Piecewise SEM 117

Rationale of Local Estimation / 117
Piecewise SEM / 118
Detailed Example / 120
Summary / 130
Learn More / 130
Exercises / 130

9 • Global Estimation and Mean Structures 131

Simultaneous Methods and Error Propagation / 131
Maximum Likelihood Estimation / 132
Default ML / 135
Analyzing Nonnormal Data / 137
Robust ML / 138
FIML for Incomplete Data versus Multiple Imputation / 138
Alternative Estimators for Continuous Outcomes / 140
Fitting Models to Correlation Matrices / 141
Healthy Perspective on Estimators and Global Estimation / 142

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 xiv Contents

Detailed Example / 142

Introduction to Mean Structures / 147
Précis of Global Estimation / 150
Summary / 151
Learn More / 151
Exercises / 151
APPENDIX 9.A. Types of Information Matrices and Computer Options 153
APPENDIX 9.B. Casewise ML Methods for Data Missing Not at Random 155

10 • Model Testing and Indexing 156

Model Testing / 156
Model Chi‑Square / 156
Scaled Chi‑Squares and Robust Standard Errors for Nonnormal Distributions / 161
Model Fit Indexing / 163
RMSEA / 166
CFI / 168
SRMR / 169
Thresholds for Approximate Fit Indexes / 170
Recommended Approach to Fit Evaluation / 172
Global Fit Statistics for the Detailed Example / 173
Power and Precision / 174
Summary / 177
Learn More / 179
Exercises / 179
APPENDIX 10.A. Significance Testing Based on the RMSEA 180

11 • Comparing Models 182

Nested Models / 182
Building and Trimming / 183
Empirical versus Theoretical Respecification / 184
Chi‑Square Difference Test / 184
Modification Indexes and Related Statistics / 187
Intelligent Automated Search Strategies / 188
Model Building for the Detailed Example / 188
Comparing Nonnested Models / 190
Equivalent Models / 194
Coping with Equivalent or Nearly Equivalent Models / 196
Summary / 198
Learn More / 199
Exercises / 199
APPENDIX 11.A. Other Types of Model Relations and Tests 200

12 • Comparing Groups 203

Issues in Multiple‑Group SEM / 204
Detailed Example for a Path Model of Achievement and Delinquency / 205
Tests for Conditional Indirect Effects Over Groups / 211

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 Contents xv

Summary / 212
Learn More / 213
Exercises / 213

PART III. MULTIPLE‑INDICATOR APPROXIMATION OF CONCEPTS

13 • Multiple-Indicator Measurement 217

Concepts, Indicators, and Proxies / 218
Reflective Measurement and Effect Indicators / 219
Causal–Formative Measurement and Causal Indicators / 220
Composite Measurement and Composite Indicators / 221
Mixed‑Model Measurement / 222
Considerations in Selecting a Measurement Model / 223
Cautions on Formative Measurement / 224
Alternative Measurement Models and Approaches / 225
Summary / 227
Learn More / 228

14 • Confirmatory Factor Analysis 229

EFA versus CFA / 229
Suggestions for Selecting Indicators / 231
Basic CFA Models / 232
Other Methods for Scaling Factors / 234
Detailed Example for a Basic CFA Model of Cognitive Abilities / 236
Respecification of CFA Models / 243
Estimation Problems / 246
Equivalent CFA Models / 249
Special Tests with Equality Constraints / 251
Models for Multitrait–Multimethod Data / 252
Second‑Order and Bifactor Models with General Factors / 255
Summary / 258
Learn More / 259
Exercises / 259
APPENDIX 14.A. Identification Rules for Correlated Errors or Multiple Loadings 260

15 • Structural Regression Models 263

Full SR Models / 263
Two‑Step Modeling / 265
Other Modeling Strategies / 268
Detailed Example of Two‑Step Modeling in a High‑Risk Sample / 269
Partial SR Models with Single Indicators / 274
Example for a Partial SR Model / 278
Summary / 281
Learn More / 283
Exercises / 283

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 xvi Contents

16 • Composite Models 284

Modern Composite Analysis in SEM / 285
Disambiguation of Terms / 285
Special Computer Tools / 288
Motivating Example / 289
Alternative Composite Model / 294
Partial Least Squares Path Modeling Algorithm / 297
PLS‑PM Analysis of the Composite Model / 300
Henseler–Ogasawara Specification and ML Analysis / 301
Summary / 304
Learn More / 305
Exercises / 305

PART IV. ADVANCED TECHNIQUES

17 • Analyses in Small Samples 309
Suggestions for Analyzing Common Factor Models / 309
Analysis of a Common Factor Model in a Small Sample / 311
Controlling Measurement Error in Manifest‑Variable Path Models / 315
Adjusted Test Statistics for Small Samples / 316
Bayesian Methods and Regularized SEM / 317
Summary / 318
Learn More / 318
Exercises / 318

18 • Categorical Confirmatory Factor Analysis 319

Basic Estimation Options for Categorical Data / 319
Overview of Continuous/Categorical Variable Methodology / 320
Latent Response Variables and Thresholds / 321
Polychoric Correlations / 321
Measurement Model and Diagram / 323
Methods to Scale Latent Response Variables / 323
Estimators, Adjusted Test Statistics, and Robust Standard Errors / 324
Models with Continuous and Ordinal Indicators / 325
Detailed Example for Items about Self‑Rated Depression / 325
Other Estimation Options for Categorical CFA / 327
Item Response Theory and CFA / 329
Summary / 329
Learn More / 330
Exercises / 330

19 • Nonrecursive Models with Causal Loops 331

Causal Loops / 331
Assumptions of Causal Loops / 333

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 Contents xvii

Identification Requirements / 333

Respecification of Nonrecursive Models That Are Not Identified / 336
Order Condition and Rank Condition / 337
Detailed Example for a Nonrecursive Partial SR Model / 338
Blocked‑Error R2 for Nonrecursive Models / 344
Summary / 345
Learn More / 345
Exercises / 346
APPENDIX 19.A. Evaluation of the Rank Condition 347

20 • Enhanced Mediation Analysis 349

Mediation Analysis in Cross‑Sectional Designs / 350
Effect Sizes for Indirect Effects / 353
Cross‑Lag Panel Designs for Mediation / 356
Conditional Process Analysis / 358
Causal Mediation Analysis Based on Nonparametric Models and Counterfactuals / 360
Reporting Standards for Mediation Studies / 368
Summary / 371
Learn More / 371
Exercises / 371

21 • Latent Growth Curve Models 372

Basic Latent Growth Models / 372
Data Set for Analyzing Basic Growth Models with No Covariates / 374
Example Analyses of Basic Growth Models / 379
Example for a Growth Predictor Model with Time‑Invariant Covariates / 382
Practical Suggestions for Latent Growth Modeling / 385
Extensions of Latent Growth Models / 385
Summary / 389
Learn More / 390
Exercises / 390
APPENDIX 21.A. Unequal Measurement Intervals and Options for Defining the Intercept 391

22 • Measurement Invariance 393

Levels of Invariance / 395
Analysis Decisions / 398
Partial Measurement Invariance / 401
Detailed Example for a Two‑Factor Model of Divergent Thinking / 402
Practical Suggestions for Measurement Invariance Testing / 408
Measurement Invariance Testing in Categorical CFA / 409
Other Statistical Approaches to Estimating Measurement Invariance / 410
Summary / 412
Learn More / 412
Exercises / 413

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xviii Contents

23 x Best Practices in SEM 414

Resources / 414
Bottom Lines and Statistical Beauty / 414
Mightily Distinguish Your Work (Be a Hero) / 415
Family Relations / 416
Specification / 417
Identification / 418
Measures / 419
Sample and Data / 419
Estimation / 420
Respecification / 422
Tabulation / 422
Interpretation / 423
Summary / 424
Learn More / 424

 
Suggested Answers to Exercises 425

  References 441

  Author Index 471

  Subject Index 479

  About the Author 494

The companion website (www.guilford.com/kline-materials) supplies

data, annotated syntax, and output for the book’s examples, in files
that can be opened with any basic text editor, as well as primers on
significance testing, regression, and psychometrics.
 Introduction
It is both a pleasure and honor to introduce the fifth edi-
tion of this book. Like the previous editions, structural
equation modeling (SEM) is presented in an acces-
sible way for readers without strong quantitative back-
grounds. Included in this edition are many new exam-
ples of SEM applications in disciplines that include
health, political science, international studies, cognitive
neuroscience, developmental psychology, sport and
exercise, and psychology, among others. Some exam-
ples were selected due to technical problems in the anal-
ysis, but such examples provide a context for discussing
how to deal with challenges that can and do occur in
SEM, especially in samples that are not large. So not all
applications of SEM described in this book are trouble
free, but neither are actual research problems.
WHAT’S NEW
The many changes in this edition are intended to
enhance the pedagogical presentation and cover recent
developments. The biggest changes are summarized
next:
1. The fourth edition of this book was one of the
first introductory works to incorporate Judea Pearl’s
nonparametric approach to SEM, also called the struc-
IntroKline5E.indd 1
tural causal model (SCM), into the larger SEM fam-
ily that dates to the development of path analysis by
Sewall Wright in the 1920s–1930s and to the publica-
tion of LISREL III in 1976 as the first widely available
computer program for covariance structure analysis,
also called covariance-based SEM. In the same tradi-
tion, this fifth edition includes composite SEM, also
referred to as partial least squares path modeling or
variance-based SEM, as the third full member of the
SEM family. Composite SEM has developed from a
set of methods seen in the 1980s–1990s as more suit-
able for exploratory research that emphasized predic-
tion over explanation to a suite of full-fledged modeling
techniques for exploratory or confirmatory analyses,
including theory testing. Both the SCM and composite
SEM offer unique perspectives on causal modeling that
can benefit researchers more familiar with traditional,
covariance-based SEM. This means that researchers
acquainted with all three members of the SEM family
can test a wider range of hypotheses about measure-
ment and causation. I try to make good on this promise
throughout the fifth edition.
2. Traditional SEM and composite SEM are
described within Edward Rigdon’s concept proxy
framework that links data with theoretical concepts
through proxies, which approximate concepts based on
3/22/2023 4:50:11 PM
2 Introduction
correspondence rules—also called auxiliary theory—
about presumed causal directionality between concepts
and data. This point refers to the distinction between
reflective measurement, where proxies for latent vari-
ables are common factors, and formative measurement,
where proxies for emergent variables are composites of
observed variables. The choice between the two mea-
surement models just mentioned should be based on
theory, not by default due to the researcher’s lack of
awareness about SEM techniques for analyzing com-
posites.
3. There are additional new chapters on SEM analy-
ses in small samples and recent developments in media-
tion analysis. Surveyed works about mediation analysis
concern research designs and definitions of mediated
effects, including natural direct and indirect effects and
interventional direct and indirect effects estimated in
clinical trials, among other topics. There is also cov-
erage of new reporting standards for SEM studies by
the American Psychological Association (APA) and
the technique of piecewise SEM, which is based on
concepts from Pearl’s SCM. There are also extended
tutorials on modern techniques for dealing with miss-
ing data, including multiple imputation and full infor-
mation maximum likelihood (FIML), and also about
instrumental variable methods as a way to deal with
the confounding of target causal effects.
4. The topics of specification and identification ver-
sus analysis were described in separate chapters in the
fourth edition. They are now combined into individual
chapters for each technique described in the fifth edi-
tion. I believe this more closely integrated presentation
helps readers to more quickly and easily develop a sense
of mastery for a particular kind of SEM technique.
5. There is greater emphasis on freely available soft-
ware for SEM analyses in this new edition. For exam-
ple, the R package lavaan package was used in most
analyses described in this book. It is a full-featured
computer program for both basic and advanced SEM
analyses. It has the capability to analyze both common
factors and composites as proxies for theoretical con-
cepts. The syntax in lavaan is both straightforward
and used in some other R packages, including cSEM
for composite SEM, to specify structural equation
models, so it has application beyond lavaan.
Other R packages used for detailed examples in the
fifth edition include semTools, piecewiseSEM, MBESS,
MIIVsem, psych, WebPower, systemfit, sem, bmem,
CauseAndCorrelation, dagitty, and ggm. Together with
the lavaan package, a wide variety of analyses for non-
parametric, parametric, and composite models in SEM
is demonstrated, all with no-cost software. Commercial
software for SEM is still described, including Mplus,
which can feature state-of-the-art analyses before they
appear in other computer tools, but free SEM software
is now nearly as capable as commercial products. Also,
I would guess that free software could be used in the
large majority of published SEM studies.
6. Extended presentations on regression fundamen-
tals, significance testing, and measurement and psy-
chometrics beloved by readers of the fourth edition are
freely available in updated form as primers on the book’s
website. This change was necessary to include the new
material in the fifth edition. The topics just mentioned
are still covered in the new edition but in a more con-
cise way. New to the fifth edition in the main text is
a self-test of knowledge about background concepts in
statistics and measurement. There is a scoring key, too,
so readers can check their understanding of fundamen-
tals. Readers with higher scores could directly proceed
to substantive chapters on SEM analyses, and readers
with lower scores can consult any of the primers on the
website for more information and exercises.
BOOK WEBSITE
The address for the book’s website is https://www.
guilford.com/kline-materials. From the site, you can
freely access the computer files—data, syntax, and
output files—for all detailed examples in this book.
The website promotes a learning-by-doing approach.
The availability of both syntax and data files means
that readers can reproduce the analyses in this book
by using the corresponding R packages. Even without
doing so, readers can still open the output file on their
own computers for a particular analysis and view the
results. This is because all computer files are simple
text files that can be opened with any basic text edi-
tor, such as Notepad (Windows), Emacs (Linux/
UNIX), or TextEdit (macOS), among others. Syn-
tax files are annotated with extensive comments.
Even if readers use a different computer tool, such
as LISREL, it is still worthwhile to review the files
on the website generated in the R environment. This
is because it can be helpful to view the same analy-
sis from somewhat different perspectives. Some of the

exercises for this book involve extensions of the analy-
ses for these examples, so there are plenty of opportuni-
ties for practice with real data sets.
PEDAGOGICAL APPROACH
Something that has not changed in the fifth edition
is pedagogical style: I still speak to readers (through
my author’s voice) as one researcher to another, not as
statistician to the quantitatively naïve. For example, the
instructional language of statisticians is matrix algebra,
which conveys a lot of information in a short amount of
space, but readers must already be versed in linear alge-
bra to understand the message. There are other, more
advanced works about SEM that emphasize matrix
presentations (Bollen, 1989; Kaplan, 2009; Mulaik,
2009b), and these works can be consulted when you
are ready. Instead, fundamental concepts about SEM
are presented here in the language of applied research-
ers: words, tabular summaries, and data graphics, not
matrix equations. I will not shelter you from some of
the more technical aspects of SEM, but I aim to cover
fundamental concepts in accessible ways that promote
continued learning.
PRINCIPLES > SOFTWARE
You may be relieved to know that you are not at a dis-
advantage at present if you have no experience using
an SEM computer tool. This is because the coverage
of topics in this book is not based on the symbolism,
syntax, or user interface associated with a particular
software package. In contrast, there are many books
linked to specific SEM computer programs. They can
be invaluable for users of a particular program, but per-
haps less so for others. Instead, key principles of SEM
that users of any computer tool must understand are
emphasized here. In this way, this book is more like a
guide to writing style than a handbook about how to use
a particular word processor. Besides, becoming profi-
cient with a particular software package is just a matter
of practice. But without strong conceptual knowledge,
the output from a computer tool for statistical analy-
ses—including SEM—may be meaningless or, even
worse, misleading.
IntroKline5E.indd 3
Introduction 3
SYMBOLS AND NOTATION
Advanced works on SEM often rely on the symbols
and notation associated with the original matrix-based
syntax for LISREL, which features a profusion of dou-
bly subscripted lowercase Greek letters for individual
model parameters, uppercase Greek letters for matrices
of parameters for the whole model, and two-letter acro-
nyms in syntax for matrices. For example, the symbols
( x)
λ12 , Λ x, and LX
refer in LISREL notation to, respectively, a specific
loading on an exogenous (explanatory) factor, the
parameter matrix of loadings for all such factors, and
LISREL syntax that designates the matrix (Lambda-
X). Although I use here and there some symbols from
LISREL notation, I do not oblige readers to memorize
LISREL notation to get something out of the book.
This is appropriate because LISREL symbolism can be
confusing unless one has learned the whole system by
rote.
ENJOY THE RIDE
Learning a new set of statistical techniques is not every-
one’s idea of fun. (If doing so is fun for you, that’s okay,
I understand and agree.) But I hope the combination
of accessible language that respects your intelligence,
examples of SEM analyses in various disciplines, free
access to background tutorials (i.e., the primers) and
computer files for detailed examples, and the occa-
sional bit of sage advice offered in this book will help to
make the experience a little easier, perhaps even enjoy-
able. It might also help to think of this book as a kind of
travel guide about language and customs, what to know
and pitfalls to avoid, and what lies just over the horizon
in SEM land.
PLAN OF THE BOOK
Part I introduces fundamental concepts, reporting
standards, preparation of the data, and computer tools.
Chapter 1 lays out both the promise of SEM and wide-
spread problems in its application. Concepts in regres-
sion, significance testing, and psychometrics that are
especially relevant for SEM are reviewed in Chapter
2, which also include the self-test in these areas. Basic
3/22/2023 4:50:11 PM
 4 Introduction
steps in SEM and reporting standards are introduced
in Chapter 3 along with an example from a recent
empirical study. How to prepare the data for analysis in
SEM and options for dealing with common problems,
including missing data, are covered in Chapter 4, and
computer tools for SEM, both commercial and free, are
described in Chapter 5.
Part II deals with the fundamentals of hypothesis
testing in SEM for classical path models, which in the
analysis phase feature a single observed measure for
each theoretical variable, also called single-indicator
measurement. It begins in Chapter 6, which introduces
nonparametric SEM as described by Judea Pearl (i.e.,
the SCM). The SCM is graphical in nature; specifically,
causal hypotheses are represented as directed graphs
where theoretical variables are depicted with no com-
mitment to any distributional assumptions or specific
operational definitions for any variable. Graphs in non-
parametric SEM can be analyzed by special computer
tools without data. This capability allows researchers
to test their ideas before collecting the data. For exam-
ple, the analysis of a directed graph may indicate that
a particular causal effect cannot be estimated unless
additional variables are measured. After the data are
collected, it is a parametric model that is typically
analyzed, and such models and their assumptions are
described in Chapter 7. The technique of piecewise
SEM, which connects the two perspectives, nonpara-
metric and parametric, through novel techniques for
analyzing path models, is covered in Chapter 8.
Chapters 9–12 are perhaps the most important ones
in the book. They concern how to test hypotheses and
evaluate models in complete and transparent ways that
respect both reporting standards for SEM and best
practices. These presentations are intended as counter-
examples to widespread dubious practices that plague
many, if not most, published SEM studies. That is, the
state of SEM practice is generally poor, and one of my
goals is to help readers distinguish their work above
this din of mediocrity. Accordingly, Chapter 9 outlines
methods for simultaneous estimation of parameters in
structural equations models and explains how to ana-
lyze means along with covariances. Chapter 10 deals
with the critical issue of how to properly assess model
fit after estimates of its parameters are in hand. A criti-
cal point is that model fit should be routinely adjudged
from at least two perspectives: global or overall fit, and
local fit at the level of residuals, which in SEM con-
cerns differences between sample and predicted asso-
IntroKline5E.indd 4
ciations for each pair of measured variables. Chapters
11–12 extend these ideas to, respectively, the compari-
son of alternative models all fit to the same data and
the simultaneous analysis of a model over data from
multiple groups, also called multiple-group SEM.
Part III deals with the analysis of models where at
least some theoretical concepts are approximated with
multiple observed variables, or multiple-indicator mea-
surement. Such models are often referred to as “latent
variable models,” but for reasons explained in Chapter
13, our models include only proxies for latent variables,
not latent variables themselves. These proxies are of
two general types: common factors based on reflective
measurement models and composites based on forma-
tive measurement models. The analysis of pure reflec-
tive measurement models in the technique of confirma-
tory factor analysis (CFA) is described in Chapter 14,
and Chapter 15 deals with the analysis of structural
regression (SR) models—also called latent variable
path models—where causal effects between observed
variables or common factors are estimated. Chapter 16
is about composite SEM, which analyzes causal models
with multiple-indicator measurement based on forma-
tive, not reflective, measurement and where proxies for
conceptual variables are composites, not common fac-
tors. Application of the technique of confirmatory com-
posite analysis (CCA), the composite analog to CFA, is
demonstrated.
Part IV is about advanced techniques. How to deal
with SEM analyses in small samples is addressed in
Chapter 17, and Chapter 18 concerns the analysis of
categorical data in CFA. Chapter 19 explains how to
analyze nonrecursive models with causal loops that
involve two or more endogenous (outcome) variables
assumed to influence each other, and Chapter 20 sur-
veys recent developments that enhance, improve, and
extend ways to assess hypotheses of causal media-
tion, or indirect causal effects that involve at least one
intervening variable. The state of mediation analysis
in the literature is problematic, but some of the newer
approaches and methods described in this chapter seem
promising. The analysis of latent growth models for
longitudinal data is the subject of Chapter 21, and the
application of multiple-group CFA to test hypotheses
of measurement invariance is dealt with in Chapter
22. The capstone of the book is the summary of best
practices in SEM in Chapter 23. Also mentioned in this
chapter are common mistakes with the aim of helping
you to avoid them.
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 Part I

Concepts, Standards, and Tools

Pt1Kline5E.indd 5 3/22/2023 3:52:35 PM

Pt1Kline5E.indd 6 3/22/2023 3:52:35 PM
 1

Promise and Problems

This book is your guide to the principles, practices, strengths, limitations, and applications of structural equa-
tion modeling (SEM) for researchers and students without extensive quantitative backgrounds. Accordingly,
the presentation is conceptually rather than mathematically oriented, the use of formulas and symbols is kept
to a minimum, and many examples are offered of the application of SEM to research problems in disciplines
that include psychology, education, health sciences, cognitive assessment, and political science, among oth-
ers. When you finish reading this book, I hope that you will have acquired the skills to begin to use SEM in
your own research in an informed, principled way. Here is my four-point plan to get you there:

1. Review fundamental concepts in regression, hypothesis testing, and measurement beginning in the
next chapter. A self-test of knowledge in each area just mentioned is provided with a scoring key.
Additional resources for review of background concepts are freely available on this book’s website.
2. Convey what should be communicated in complete, transparent, and verifiable reporting of the
results in SEM studies. Formal reporting standards for SEM by the American Psychological Associa-
tion (APA) are both explained and modeled by example.
3. Describe all three major members of the SEM family. Each offers unique perspectives that can help
you in every stage of an SEM study, from planning through operationalization to data collection and
then finally to the analysis of a model that faithfully represents your specific hypotheses.
4. Emphasize best analysis practices and provide warnings about questionable practices that are seen
in too many published SEM studies.

To summarize, the main goal is to help you produce research that is distinguished by its accuracy, complete-
ness, and quality by following best practices, that is, SEM done right.

PREPARING TO LEARN SEM Know Your Area

Listed next are suggestions for the best ways to get
ready to learn about SEM. I offer these suggestions
in the spirit of giving you a healthy perspective at the
beginning of our task, one that empowers your sense of
being a researcher.
Strong familiarity with the theoretical and empiri-
cal literature in your research area is the single most
important thing you could bring to SEM. This is
because everything—from the specification of your
initial model to modification of that model in subse-

Pt1Kline5E.indd 7 3/22/2023 3:52:35 PM

 8 Concepts, Standards, and Tools
quent reanalyses to interpretation of the results—must
be guided by your domain knowledge. So, you need,
first and foremost, to be a researcher, not a statistician
or a computer nerd. This is true for most kinds of statis-
tical analysis in that the value of the product (numeri-
cal results) depends on the quality of the ideas (your
hypotheses) on which the analysis is based.
Know Your Measures
Kühnel (2001) reminded us that learning about SEM has
the by-product that researchers must address fundamen-
tal issues of measurement. Specifically, analyzing mea-
sures with strong psychometric characteristics, such as
good score reliability and positive evidence for validity, is
essential in SEM. For example, it is impossible to approx-
imate hypothetical constructs without thinking about
how to operationalize and measure those constructs.
When you have just a single measure of a construct, it is
critical for this single indicator to have good psychomet-
ric properties. Similarly, the analysis of measures with
deficient psychometrics could bias the results.
Eyes on the Prize
The point of SEM is to test a theory by specifying
a model that represents predictions of that theory
among plausible constructs measured with appropri-
ate observed variables (Hayduk et al., 2007). If such a
model does not ultimately fit the data, this outcome is
interesting because there is value in reporting models
that challenge or discredit theories. Beginners some-
times mistakenly believe that the point of SEM is to
find a model that fits the data, but this, by itself, is not
impressive. This is because any model, even one that
is grossly wrong (misspecified), can be made to fit the
data by making it more complicated (adding parame-
ters). In fact, if a structural equation model is specified
to be as complex as possible, it will perfectly represent
the data, not only in a particular sample, but also in any
other sample using the same variables.
There is also real scientific value in learning about
just how and why things went wrong with a model
faithfully based on a particular theory. Schreiber (2017)
put it like this:
One component about SEM analyses that is rarely talked
about is when no model is retained. This is an overlooked
area because researchers fear a lack of being able to publish
it. A well written and argued “no model retained” manu-
Pt1Kline5E.indd 8
script is a joy to read. I have reviewed many in my career
and have always argued for publication. If the models and
data are not working well, that is worthy of announcing it
to the world as students and I have done. (p. 642)
This quote is from a dissertation defense where some
committee members were critical of an SEM analysis
where no model was retained. Asked by the committee
chair for a response, Schreiber (personal communica-
tion, December 1, 2020) replied that retaining no model
is a beautiful thing when it is apparent that predictions
based on theory did not work out in practice. In con-
trast, whether or not a scientifically trivial model fits
the data is irrelevant (Millsap, 2007).
Use the Best Research Computer
in the World . . .
Which is the human brain; specifically—yours. At the
end of the analysis in SEM—or any other type of sta-
tistical analysis—it is you as the researcher who must
evaluate the degree of support for the hypotheses,
explain any unexpected findings, relate the results to
those from prior studies, and consider the implications
of the findings for future research. Without your content
expertise, a statistician or computer nerd could help you
to select data analysis tools or write program syntax,
but could not help with the other things just mentioned.
As aptly noted by Pedhazur and Schmelkin (1991), “no
amount of proficiency will do you any good, if you do
not think” (p. 2).
Get a Computer Tool for SEM
Obviously, you need a computer program to conduct
the analysis. In SEM, there are now many choices of
computer tools, many for no cost. Examples of free
computer software include various SEM packages
such as lavaan, semTools, cSEM, and OpenMx for R,
which is an open-source language and environment for
statistical computing and graphics. Other options are
Wnyx, a graphical environment for creating and test-
ing structural equation models, and JASP, an open-
source computer program with a graphical user inter-
face (GUI) and capabilities for both frequentist and
Bayesian statistical procedures. It also has modules for
SEM, including mediation analysis and latent growth
modeling. Commercial options for SEM include Amos,
Adanco, EQS, LISREL, Mplus, and SmartPLS, among
others.
3/22/2023 3:52:35 PM

In the open science spirit of free access to research
tools and resources, greater emphasis in this book is
placed on free computer programs for SEM than on
commercial options. Specifically, the lavaan package
for R is used in most of the detailed analysis examples.
It has both basic and advanced options for a wide range
of SEM analyses, and its capabilities rival those of
commercial software. Several other R packages that
supplement or extend lavaan analyses, such as sem-
Tools, are also used in examples. Syntax, data, and
output files can be freely downloaded from the website
for this book—see the Introduction—which is also an
exemplar of open access.
Join the Community
An electronic mail network called SEMNET is dedi-
cated to SEM.1 It serves as an open forum for discus-
sion and the whole range of issues associated with
SEM. It also provides a place to ask questions about
analyses or more general issues, including philosophi-
cal ones (e.g., the nature of causality or causal infer-
ence). Subscribers to SEMNET come from various
disciplines, and they range from novices to seasoned
veterans, including authors of many works cited in this
book. Sometimes the discussion gets lively (sparks can
fly), but so it goes in scientific discourse. An archive
of prior discussions on SEMNET can be searched for
particular topics. A special interest group for SEM is
available for members of the American Educational
Research Association (AERA).2 There is even a theme
song for SEM, the hilarious Ballad of the Casual Mod-
eler, by David Rogosa (1988).3 You can blame me if the
song gets stuck in your head.
DEFINITION OF SEM
The term structural equation modeling (SEM) refers
to a set of statistical techniques for estimating the mag-
nitudes and directions of presumed causal effects in
quantitative studies based on cross-sectional, longitu-
dinal, experimental, or other kinds of research designs.
Its application can range from more exploratory and
1 https://listserv.ua.edu/cgi-bin/wa?A0=semnet
2 https://www.aera.net/SIG118/Structural-Equation-Modeling-
SIG-118
3 https://web.stanford.edu/class/ed260/ballad.mp3
Pt1Kline5E.indd 9
Promise and Problems 9
data-driven research, where preliminary causal models
are generated, to more confirmatory research, where
one or more extant models based on a priori hypoth-
eses are tested or compared. While the data in SEM
come from measured variables, they can be treated in
the analysis as approximating hypothetical constructs.
Thus, by analyzing manifest variables as indicators for
target constructs, it is also possible to estimate causal
relations among those constructs.
Pearl (2012, 2023) defined SEM as a causal infer-
ence method that takes three inputs (I) and generates
three outputs (O). The inputs are
I-1. A set of causal hypotheses based on theory or
results of empirical studies that are represented
in the structural equation model. The hypotheses
are typically based on assumptions, only some of
which can actually be tested in the data.
I-2. A set of queries or questions about causal rela-
tions among variables of interest such as, what is
the magnitude of the direct causal effect of X on
Y (represented as X → Y), controlling for other
presumed causes of Y? All queries follow from
model specification.
I-3. Most applications of SEM are in observational
studies, or nonexperimental designs, but data
from experimental or quasi-experimental studies
can be analyzed, too—see Breitsohl (2019) for
examples.
The outputs of SEM are
O-1. Quantitative estimates of model parameters for
hypothesized effects including, for example,
X → Y, given the data.
O-2. A set of logical implications of the model that
may not directly correspond to a specific param-
eter but can still be tested in the data. For exam-
ple, a model may imply that variables W and Y
are unrelated after controlling for certain other
variables in the model.
O-3. The degree to which the testable implications of
the model are supported by the data.
BASIC DATA ANALYZED IN SEM
When unstandardized variables are analyzed in SEM,
the basic datum for continuous variables is the covari-
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 10 Concepts, Standards, and Tools
ance, which is defined for observed variables X and Y
as follows:
covXY = rXY SDX SDY (1.1)
where rXY is the Pearson correlation and SDX and SDY
are their standard deviations.4 A covariance estimates
the strength of the linear relation between X and Y in
their original (raw score) units, albeit with a single
number. Because the covariance is an unstandardized
statistic, its value has no fixed lower or upper bound.
For example, covariances of, say, –1,025.45 or 19.77 are
possible, given the scale of the original scores. The sta-
tistic covXY conveys more information than rXY, which
says something about association but in a standardized
metric only. There are times in SEM when it is appro-
priate to analyze standardized rather than unstandard-
ized variables. If so, then rXY is the basic datum for
variables X and Y. Reasons to analyze unstandardized
versus standardized variables in SEM are described at
various points in the book.
Some researchers, especially those who use ANOVA
(analysis of variance) as their main analytical tool, have
the impression that SEM is concerned only with covari-
ances or correlations. This view is too narrow because
means can be analyzed in SEM, too. But what really
distinguishes SEM is that means of latent variables can
also be estimated. In contrast, ANOVA is concerned
with means of observed variables only. It is also pos-
sible to estimate effects in SEM traditionally associated
with ANOVA, including between-group and within-
group (e.g., repeated measures or longitudinal data)
mean contrasts. For example, in SEM one can estimate
the magnitude of group mean differences on latent vari-
ables, which is not feasible in standard ANOVA. Means
are not analyzed in probably most published SEM stud-
ies, but the option to do so provides additional flex-
ibility. Several examples of the analysis of means are
described later in the book.
Just as in regression analysis, it is possible in SEM to
estimate curvilinear relations for continuous variables
or analyze noncontinuous variables, including nominal
or ordered-categorical (ordinal) variables, among other
variations, as either presumed causes or outcomes.
Interactive effects can also be analyzed in SEM. An
outdated view is that only linear effects of continuous
variables that do not interact can be estimated (Bollen
& Pearl, 2013), but the reality is that SEM is extraordi-
4 Thecovariance of a variable with itself is just its variance, such
as cov XX = s X2 .
Pt1Kline5E.indd 10
narily flexible in terms of effects and types of variables
that can be analyzed as presumed causes or outcomes.
There are other differences between SEM and regres-
sion techniques: Associations for observed variables
only are estimated in standard regression analysis, but
relations for latent variables can also be estimated in
SEM. In regression, the roles of predictor and criterion
are theoretically interchangeable. For instance, there is
no special problem in bivariate regression with specify-
ing X as a predictor of Y in one analysis (Y is regressed
on X) and then in a second analysis with regressing X
on Y. There is no such ambiguity in SEM, where the
specification that X affects Y is a causal link that reflects
theory and also depends on other assumptions in the
analysis. Thus, both the semantics and interpretation of
the results in regression versus SEM are distinct (Bol-
len & Pearl, 2013). Yes, there are situations where stan-
dard regression techniques can be used to estimate pre-
sumed causal effects, but the context for SEM is causal
modeling, not mere prediction.
FAMILY MATTERS
The method of SEM consists of three distinct families of
techniques or approaches to causal inference. All origi-
nated in the pioneering work by the geneticist Sewall
Wright. His method of path coefficients (Wright,
1934)—or path analysis as it is now called—featured
the estimation of causal effects based on hypotheses
represented in a statistical model. Wright’s path mod-
els included both observed and latent variables, and in
graphical form they closely resemble today’s model
diagrams in SEM (e.g., Pearl, 2009, p. 415). Presumed
causal effects were estimated in sample data, and pre-
dictions based on the model were compared with pat-
terns of observed associations in samples. In hindsight,
Wright’s innovations were remarkable, and his work
continues to have influence to this day.
Although all three SEM families date to key innova-
tions in the 1970s–1980s, each was further developed
in relatively distinct sets of research disciplines or
areas. Consequently, other than a handful of scholars
knowledgeable of the histories and intricacies in at least
two different SEM families, many researchers trained
in a particular SEM family were only partially aware
of other possibilities or approaches to causal modeling.
But things are changing, in part due to the increasing
influence of multidisciplinary research that includes
several disciplines in an integrated way under the same
3/22/2023 3:52:35 PM

subject or area of study. The promise is that different
viewpoints or methods over disciplines will comple-
ment each other and provide a more comprehensive
understanding of the problem or novel approaches to
dealing with it (Choudhary, 2015).
The three SEM families are listed next and described
afterward:
1. Researchers in psychology and related disci-
plines are probably most familiar with the SEM fam-
ily called covariance structure analysis, covariance
structure modeling, or covariance-based SEM. All
techniques of this type estimate parameters of causal
models made up of observed variables or proxies for
latent variables by minimizing the difference between
the sample covariance matrix and the predicted covari-
ance for the same measured variables, given the model,
which represents hypotheses about how and why model
variables should be related (covary). Latent variables
are approximated with common factors of the type ana-
lyzed in classical factor analysis techniques that date
to the beginning of the 1900s (e.g., Spearman, 1904).
The technique of confirmatory factor analysis (CFA) is
a member of this family. Although this choice reflects
my own background in psychology, I will use the sim-
pler term “traditional SEM” to refer to the covariance-
based SEM family.5
2. The second member of the SEM family is better
known among researchers in disciplines such as market-
ing, organizational research, business research, or infor-
mation systems, among others. It is called variance-
based SEM, composite SEM, or partial least squares
path modeling (PLS-PM). The term “PLS-PM” also
refers to an estimation algorithm based on regression
techniques that underlie many, but all not, applications
of composite SEM. It analyzes composites, or weighted
combinations of observed variables, to approximate
hypothetical constructs. The term “variance-based”
signals that the goal is not strictly to explain the sample
covariance matrix, although this goal can also be pur-
sued in a composite analysis. Instead, these techniques
analyze total variation among observed variables when
estimating causal effects, given the model. The classi-
cal general linear model (GLM) of multivariate statis-
tics that includes multiple regression, MANOVA (i.e.,
5 Yes,what is considered as tradition by a person with a particu-
lar background may be seen as novelty to another person from a
different background. That’s life and multidisciplinary research.
Pt1Kline5E.indd 11
Promise and Problems 11
multivariate ANOVA), and canonical variate analysis
(canonical correlation), among others, analyzes com-
posites, too, but the focus of composite SEM is aimed
more at causal modeling. The technique of confirma-
tory composite analysis (CCA), a member of this fam-
ily, is the composite-based analogue to CFA. The name
“composite SEM” is used from this point forward.
3. The third family member more familiar to
researchers in epidemiology, computer science, and
medicine is the structural causal model (SCM) or
nonparametric SEM, which originated in Judea
Pearl’s work in the 1970s–1980s on Bayesian prob-
ability networks and later extended to the more gen-
eral problem of causal inference (Pearl, 2009). In the
SCM, causal hypotheses are represented in a directed
acyclic graph (DAG) when unidirectional causation is
assumed or in a directed cyclic graph (DCG) when
certain variables are hypothesized to affect each other,
or reciprocal causation. The method is nonparametric
because the specification of a causal graph requires no
commitment to any particular operational definition,
distributional assumption, or specific functional form
of statistical association, such as linear versus curvilin-
ear, for any pair of variables. Unlike model diagrams in
the other two SEM families, which are basically static
entities that require data to be analyzed, there are spe-
cial methods and computer programs for analyzing a
causal graph with no data. This capability permits the
researcher to analyze alternative causal models in the
planning stage of a study. The results of such analyses
can inform the researcher about how to select covari-
ates that control possible confounding of target causal
effects, among other possible ways to deal with the
problem. This approach has also motivated the devel-
opment of novel approaches to mediation analysis that
are described later in the book. From now onward, this
family is called “nonparametric SEM.”
Traditional SEM
This SEM family is a synthesis of two frameworks:
the path analytic method by Wright, based on regres-
sion techniques to estimate causal effects; and the
factor analytic approach to estimate latent variables
from observed or manifest variables. It dates to (1)
the introduction of path analysis to the social sciences
in the 1950s–1960s by Blalock (1961) and others and
(2) the subsequent integration of regression techniques
and factor-analytic methods into a unified framework
3/22/2023 3:52:35 PM
 12 Concepts, Standards, and Tools
in the 1970s–1980s called the JWK model (Bentler,
1980). The acronym refers to the work of three authors:
K. G. Jöreskog, J. W. Keesling, and D. Wiley. The first
widely available computer program to fit casual mod-
els to sample covariance matrices was LISREL III by
Jöreskog and Sörbom (1976), which was the progenitor
for later versions of LISREL and other computer pro-
grams that include Amos, EQS, lavaan, and Mplus,
among others.
This family of traditional SEM techniques is prob-
ably the most widely used. It offers the potential
benefits summarized next (Bagozzi & Yi, 2012): By
integrating regression techniques with factor analytic
methods, it is possible to estimate causal effects for
any c­ ombination of observed or latent variables speci-
fied as ­ presumed causes or outcomes. The explicit
distinction between observed and latent variables can
take direct account of measurement error, or score
unreliability. This characteristic lends a more realistic
sense to the analysis in that researchers in the behav-
ioral sciences often analyze scores that are subject to
measurement error. As mentioned, traditional SEM
supports a range of applications from exploratory to
more confirmatory, depending on the researcher’s
hypotheses and aims. There is a rich variety of mod-
els that can be analyzed for longitudinal data, more so
than in composite SEM.
There are also limitations of traditional SEM: It
requires large samples, which makes it challenging to
apply the method in research areas where it is difficult to
collect large numbers of cases, such as in studies of rare
disorders. Exactly what is meant by “large samples” is
addressed in a later section of this chapter. There are
certain types of hypotheses that are difficult to test in
this SEM family. An example is when hypothetical con-
structs are defined in ways that contradict the estimation
of latent variables with common factors as one would do
in the technique of CFA. In such cases, the composite
SEM family—which uses composites to approximate
concepts, not common factors—may serve as a better
alternative for reasons explained in Chapters 3 and 16.
Other limitations are due to the misuse of traditional
SEM, which is unfortunately widespread. These prob-
lems are not due to the method per se, but I would guess
that many, if not most, published SEM studies have one
flaw so severe that the results may have little or no inter-
pretative significance. This critical issue is also elabo-
rated later in the chapter. See Bollen, Fisher, Lilly, et al.
(2022), who described the 50-year history of traditional
SEM since 1972, reviewing strengths and vulnerabili-
ties, and outlining future directions.
Pt1Kline5E.indd 12
Traditional SEM itself is part of an extended fam-
ily of methods for analyzing latent variable models
that is briefly outlined next; see the sources cited for
more information. For example, latent variables in
­traditional SEM are assumed to be continuous. There
are other techniques for analyzing models with cat-
egorical latent variables. The levels of a categorical
latent variable are called classes, and they represent
a mixture of subpopulations where membership is not
known but is inferred from the data. Thus, a goal of
the analysis is to estimate the nature and number of
latent classes. The technique of latent class analy-
sis can be viewed as a kind of factor analysis but one
where classes are approximated from observed vari-
ables that could be either categorical or continuous.
Lanza and Rhoades (2013) described applications of
latent class analysis to identify subgroups in treatment
outcome studies.
Muthén (2001) described the analysis of mix-
ture models—also called mixture modeling—with
latent variables that may be continuous or categorical.
When both are present in the same model, the analy-
sis is basically traditional SEM but conducted across
inferred subpopulations. The work just cited is part of
the larger ongoing effort to express all latent variable
models within a common mathematical framework
(Bartholomew, 2002). The Mplus computer program is
especially adept at analyzing a variety of latent variable
models. This is because it can analyze all basic kinds of
traditional SEM models and mixture models, too. Both
kinds of analyses just mentioned can also be combined
in Mplus with multilevel modeling—also called linear
mixed modeling or hierarchical linear modeling—
for analyzing data with repeated measurements or that
are organized in hierarchical levels, such as children
with families, where scores within the same level are
probably not independent (Nezlek, 2008). Computer
programs like Mplus blur the distinction between tradi-
tional SEM and techniques such as latent class analysis,
mixture modeling, and multilevel modeling.
Composite SEM
Composite SEM was developed in the 1970s–1980s by
Herman O. A. Wold (1982). It analyzes composites as
proxies for hypothetical variables, not common fac-
tors. Statistical methods for composites are generally
simpler than methods for common factors, and there
are fewer distributional assumptions and other require-
ments for composite methods. This approach was once
described as a “soft modeling” alternative to “heavy-
3/22/2023 3:52:35 PM

weight” traditional SEM with its complex estimation
algorithms, potential for technical problems to scuttle
the analysis, and the need for large samples. In its early
years, the emphasis in composite SEM was on predic-
tion of target constructs by other variables, including
covariates or other composites for different theoretical
variables. Because estimators were based on standard
regression techniques, these methods generally maxi-
mized R2, or the proportion of explained variance, for
outcome variables. In contrast, traditional SEM tech-
niques do not necessarily maximize R2 for individual
outcomes. Thus, composite SEM at the time was gen-
erally thought of as a prediction method versus tradi-
tional SEM, which was seen as emphasizing explana-
tion through maximizing the similarity of sample and
model-implied data matrices.
In addition to the distinction of prediction versus
explanation, authors of works about composite SEM
published roughly in the 1990s–2010s (e.g., Hair et
al., 2012) highlighted these relative advantages: For
the same number of observed variables in the model,
composite SEM generally required smaller sample
sizes than traditional SEM, and the power of signifi-
cance tests was described as generally higher in com-
posite SEM for the same sample size. Its relative lack
of distributional assumptions was rightly touted as an
advantage, as was its more exploratory nature com-
pared with traditional SEM. Drawbacks included its
lack of a direct way to control for measurement error
or test the overall fit of the model to the data, which are
standard practices in traditional SEM. The inability to
assess overall fit in composite SEM limited its role in
testing theories; specifically, it offered no direct way to
determine how well the model as a whole explained the
data. At the time, composite SEM could be described
as “SEM-lite” for testing hypotheses about latent vari-
ables compared with its older brother, traditional SEM.
Oh how times change. Technical and conceptual
advances in composite SEM since about 2010 have
been a turning point, and this is no hype. (I am not big
on hype; keep it real, please.) Just a few key develop-
ments are summarized next; see Henseler (2021) and
Chapter 16 in this book for more detailed accounts: It is
now possible to apply composite SEM across the whole
range of studies from more exploratory to more con-
firmatory. One reason is that new methods allow the
researcher to test the fit of the whole model to the data,
just as in traditional SEM. The same basic stages of
the analysis, from specification of the model through
its analysis and possible modification based on the data,
Pt1Kline5E.indd 13
Promise and Problems 13
can now be followed in both composite SEM and tradi-
tional SEM. Very recent developments (e.g., Schuberth,
2021) extend the capabilities of standard SEM com-
puter programs like lavaan, Mplus, LISREL, and oth-
ers to analyze composite models, which brings to the
analysis all the advantages formerly associated with
traditional SEM. Composite SEM can also test kinds
of hypotheses about measurement that are difficult to
evaluate in traditional SEM, and in such cases com-
posite SEM is the preferred technique. Relatively new
estimators can directly control for measurement error
in composites. All these developments explain why I
think it is important for you to know about this member
of the SEM family, too.
Nonparametric SEM
Pearl (2009) described his graph-theoretic approach,
the SCM, as unifying two frameworks to causal infer-
ence, traditional SEM and the potential outcomes
model (POM), also called the Neyman–Rubin model
after Jerzy Neyman and Donald Rubin (Rubin, 2005).
Briefly, the POM elaborates on the role of counterfac-
tuals in causal inference. A counterfactual is a hypo-
thetical or conditional statement that expresses not
what has happened but what could or might happen
under different circumstances (e.g., “I would not have
been late, if I had correctly set the alarm”). In treat-
ment outcome studies, for example, there are two basic
counterfactuals: (1) what would the outcome of control
cases be, if they were treated; and (2) what would the
outcome of treated cases be, if they were not treated? If
each case was either treated or not treated, these poten-
tial outcomes would not be observed. This means that
the observed data—outcomes for treatment versus con-
trol—is a subset of all possible combinations.
The POM is concerned with conditions under which
causal effects may be estimated from data that do not
include all potential outcomes. In experimental designs,
random assignment helps with the replicability of stud-
ies in terms of the equivalence of treated and control
groups. Thus, any observed difference in outcome can
be attributed to the treatment, provided there is suffi-
cient replication. But things are more complicated in
quasi-experimental or nonexperimental designs where
the assignment mechanism is both nonrandom and
unknown. In this case, the average observed difference
may be a confounded estimator of treatment effects
versus selection factors. In such designs, the POM
distinguishes between equations for the observed data
3/22/2023 3:52:35 PM
 14 Concepts, Standards, and Tools
versus those for causal parameters. This feature helps
to clarify how estimators based on the data may differ
from estimators based on the causal model (MacKin-
non, 2008). The POM has been applied many times in
randomized clinical trials and in mediation analysis, a
topic covered later in this book.
Some authors describe the POM as a more disci-
plined method for causal inference than traditional
SEM (Rubin, 2009), but such claims are problematic for
two reasons (Bollen & Pearl, 2013). First, it is possible
to express counterfactuals in SEM as predicted values
for outcome variables, once we fix values of its causal
variables to constants that represent the conditions in
counterfactual statements (Kenny, 2021). Second, the
POM and SEM are logically equivalent in that a theo-
rem in one framework can be expressed as a theorem in
the other. That the two systems encode causal hypoth-
eses in different ways—in SEM as functional relations
among observed or latent variables and in the POM as
statistical relations among counterfactual (latent) vari-
ables—is just a superficial difference (Pearl, 2009).
Thus, the SCM as outlined by Pearl is a framework
for causal inference that the extends the capabilities of
both traditional SEM and the POM. This is why Hay-
duk et al. (2003) described the SCM as the future of
SEM and also why I introduce it to readers both in this
edition and in the previous (4th) edition of this book.
Grace et al. (2012) described the SCM as the third gen-
eration of SEM. The first generation of SEM dates to
Sewall Wright, who invented path analysis and corre-
sponding path diagrams as the graphical expression of
causal hypotheses. The second generation of SEM is
the synthesis of path analysis and factor analysis in tra-
ditional SEM.6 Earlier I described the possibility in this
approach of analyzing the graphical model before the
data are collected as a way to help plan the study. These
methods can also locate testable implications implied
by the graph. No special software is needed to analyze
the data. This is because testable implications for con-
tinuous variables can be estimated with standard com-
puter tools for statistical analysis, such as IBM SPSS,
with no need for special SEM software. This particular
approach is called piecewise SEM, which is described
in Chapter 8.
6 Muthén (2001) described second-generation SEM as the capa-
bility in traditional SEM to analyze continuous or categorical
outcomes in models with fixed or random effects, such as latent
growth models.
Pt1Kline5E.indd 14
PEDAGOGY AND SEM FAMILIES
Next, I explain my approach to teaching you about
SEM, given the descriptions of the three SEM families
just considered. First, beginning in Chapter 6, I describe
the logic of causal inference for nonparametric struc-
tural equation models where only theoretical variables
are represented in a causal graph. These variables are
not yet operationalized. Of course, theoretical variables
must eventually be measured. There could be a vari-
ety of ways to operationalize a construct. For example,
there is single-indicator measurement, where a single
observed variable is the proxy for the corresponding
construct. Scores on that indicator could be treated
as ordinal data that measure relative standing without
assuming equal intervals or treated as continuous data
if intervals are assumed to be more or less equal, among
other possibilities. An alternative is multiple-indicator
measurement, where a set of ≥ 2 observed variables
is used to approximate the same theoretical variable.
That is, instead of placing all of one’s measurement
eggs in the basket of a single observed variable, scores
from sets of multiple of variables are combined when
approximating theoretical variables.
But exactly how target constructs should be measured
is a decision that should come after working out your
basic causal hypotheses by specifying and analyzing a
causal graph in nonparametric SEM. Concepts about
ways to control confounding and determine whether
it is possible to estimate specific causal effects in the
graph are reviewed. If analysis of the casual graph indi-
cates that a particular effect cannot be estimated, then
something needs to be done, such as adding covariates
to address confounding. If a causal effect can be esti-
mated, analysis of the graph may indicate that more
than one estimate of that effect could be generated in
the data. Such knowledge helps the researcher to plan
the analysis in ways that prevent unpleasant surprises,
such as discovering after collecting the data that cer-
tain hypothesized effects cannot be estimated without
adding variables to the model (for which it might be
too late).
Next, I describe in Chapter 7 the specification of
parametric causal models that correspond to actual
measured variables. To keep things simpler, the mea-
surement approach is single indicator and the corre-
sponding parametric models are manifest variable
path models analyzed in the classical technique of
path analysis, the most senior member of the tradi-
tional SEM family. I outline in Chapters 8–12 the fun-
3/22/2023 3:52:35 PM

damental principles of estimating model parameters,
evaluating model fit to the data, testing hypotheses
about the model, respecifying the model if its account
of the data is rejected, comparing alternative models fit
to the same data, and analyzing the same model over
multiple groups or conditions. These topics are the core
of traditional SEM. They all generalize to latent vari-
ables models based on multiple-indicator measure-
ment of the kind analyzed in the technique of CFA, but
I want you to understand these fundamentals before we
add the complexities of multiple-indicator measure-
ment to the mix. That is, even if you are most interested
in latent variable modeling, a strong knowledge of path
analysis with observed variables will you help you get
there.
Coverage of latent variable models begins in Chap-
ter 13 with a conceptual treatment of multiple-indicator
measurement. I should caution you that this chapter has
a different structure compared with most other chap-
ters in the book. Specifically, there are no data analysis
examples nor equations. Instead, we deal with concepts
about measurement with multiple indicators that the
researcher should understand before applying specific
analysis techniques. The goal is help you to specify
models where sets of multiple indicators approximate
hypothetical constructs in ways consistent with your
hypotheses.
Described in Chapters 14–15 are, respectively, the
traditional SEM technique of CFA for analyzing mea-
surement models and the analysis of so called latent
variable path models where single or multiple indi-
cators are used to approximate theoretical variables.
These types of models represent the apex in traditional
SEM that can be extended in many ways to test addi-
tional, more advanced hypotheses that are covered
in Chapters 17–22. Chapter 16 is devoted to compos-
ite SEM with an emphasis on explaining the kinds of
hypotheses about measurement that are difficult to test
in traditional SEM but can be evaluated with relative
ease in composite SEM. I do not describe traditional
SEM and composite SEM as competitors; instead, I
emphasize their unique roles and capabilities as com-
plementary approaches.
SAMPLE SIZE REQUIREMENTS
Attempts to adapt SEM techniques to work in smaller
samples are described in Chapter 17, but it is still gener-
ally true that SEM (more so in traditional than in com-
Pt1Kline5E.indd 15
Promise and Problems 15
posite SEM) is a large-sample technique. Implications
of this characteristic are considered throughout the
book, but I can say now that certain types of estimates
in SEM, such as standard errors for effects of latent
variables, may be inaccurate when the sample size is
not large. The risk for technical problems in the analy-
sis is greater, too.
Because sample size is such an important issue, let
us now consider the bottom-line question: What is a
“large enough” sample size in SEM? It is impossible to
give a single answer because the factors that are sum-
marized next can affect sample size requirements:
1. More complex models, or those with more param-
eters, require bigger sample sizes than simpler models
with fewer parameters. This is because models with
more parameters require more estimates, and larger
samples are necessary in order for the computer to esti-
mate the additional parameters with reasonable preci-
sion.
2. In analyses in which all outcome variables are
continuous and normally distributed, all effects are lin-
ear, and there are no interactive effects require smaller
sample sizes. This is in comparison to analyses in which
some outcomes are not continuous or have severely
nonnormal distributions or in which there are curvilin-
ear or interactive effects. Sample size limitations also
curtail the use of estimation methods available in SEM,
some of which need very large samples because of the
assumptions they make—or do not make—about the
data.
3. Larger sample sizes are needed if score reliabil-
ity is relatively low; that is, less precise data require
larger samples in order to offset the potential distorting
effects of measurement error. Latent variable models
can control measurement error better than observed
variable models, so fewer cases may be needed when
there are multiple indicators for constructs of interest.
The amount of missing data also affects sample size
requirements. As expected, higher levels of missing
data require larger sample sizes in order to compensate
for loss of information.
4. There are also special sample size considerations
for particular kinds of structural equation models. In
factor analysis, for example, larger samples may be
needed if there are relatively few indicators per factor,
the factors explain unequal proportions of the variance
across the indicators, some indicators covary appre-
3/22/2023 3:52:36 PM
 16 Concepts, Standards, and Tools
ciably with multiple factors, the number of factors is
increased, or covariances between factors are relatively
low.
Given all of these influences, there is no simple rule
of thumb about sample size that works across all stud-
ies. Also, sample size requirements in SEM can be
considered from at least two different perspectives, (1)
the number of cases required in order for the results to
have adequate statistical precision versus (2) minimum
sample sizes needed in order for significance tests in
SEM to have reasonable power. Recall that power is the
probability of rejecting the null hypothesis in signifi-
cance testing when the alternative hypothesis is true in
the population. Depending on the model and analysis,
sample size requirements needed for power to equal or
exceed, say, .95, can be much greater than those needed
for statistical precision.
Results of a computer simulation (Monte Carlo)
study by Wolf et al. (2013) illustrate the difficulty with
“one-size-fits-all” heuristics about sample size require-
ments in SEM. These authors studied a relatively small
range of structural equation models, including factor
analysis models, manifest-variable versus latent-vari-
able models of mediation, and single-indicator versus
multiple-indicator measurement models. Minimum
sample sizes for both precision and power varied widely
across the different models and extent of missing data.
For example, minimum sample sizes for factor analysis
models ranged from 30 to 460 cases, depending on the
number of factors (1–3), the number of indicators per
factor (3–8), the average correlation between indicators
and factors (.50–.80), the magnitude of factor correla-
tions (.30–.50), and the extent of missing data (2–20%
per indicator).
I describe in Chapter 10 various methods to estimate
target sample sizes in traditional SEM, but here I can
suggest at least a few rough guidelines about sample
size requirements for statistical precision: For latent
variable models where all outcomes are continuous and
normally distributed and where the estimation method
is maximum likelihood—the default method in most
SEM computer tools—Jackson (2003) described the
N:q rule. In this heuristic, Jackson (2003) suggested
that researchers think about minimum sample sizes
in terms of the ratio of the number of cases (N) to the
number of model parameters that require statistical
estimates (q). A recommended sample-size-to-param-
eters ratio would be 20:1. For example, if a total of q
= 10 parameters requires estimates, then a minimum
Pt1Kline5E.indd 16
sample size would be 20q, or N = 200. Less ideal would
be an N:q ratio of 10:1, which for the example just given
for q = 10 would be a minimum sample size of 10q, or
N = 100. As the N:q ratio falls below 10:1 (e.g., N = 50
for q = 10 for a 5:1 ratio), so does the trustworthiness
of the results. The risk for technical problems in the
analysis is also greater.
It is even more difficult to suggest a meaningful
absolute minimum sample size, but it helps to consider
typical sample sizes in SEM studies. A median sample
size may be about 200 cases based on reviews of stud-
ies in different research areas, including operations
management (Shah & Goldstein, 2006) and education
and psychology (MacCallum & Austin, 2000). But
N = 200 may be too small when analyzing a complex
model or outcomes with nonnormal distributions, using
an estimation method other than maximum likelihood,
or finding that there are missing data. With N < 100,
almost any type of SEM may be untenable unless a very
simple model is analyzed, but models so basic may be
uninteresting. Barrett (2007) suggested that reviewers
of journal submissions routinely reject for publication
any SEM analysis where N < 200 unless the popula-
tion studied is restricted in size. This recommendation
is not standard practice, but it highlights the fact that
analyzing small samples in SEM is problematic.
Most published SEM studies are probably based on
samples that are too small. For example, Loehlin and
Beaujean (2017) noted that results of power analyses
in SEM are “frequently sobering” because researchers
often learn that their sample sizes are far too small for
adequate statistical power. Westland (2010) reviewed
a total of 74 SEM studies published in four different
journals on management information systems. He esti-
mated that (1) the average sample size across these
studies, about N = 375, was only 50% of the minimum
size needed to support the conclusions; (2) the median
sample size, about N = 260, was only 38% of the mini-
mum required and also reflected substantial negative
skew in undersampling; and (3) results in about 80% of
all studies were based on insufficient sample sizes. We
will revisit sample size requirements in later chapters,
but many, and probably most, published SEM studies
are based on samples that are too small.
BIG NUMBERS, LOW QUALITY
There is no denying that SEM is increasingly “popular”
among researchers. Thousands of SEM studies have
3/22/2023 3:52:36 PM

been published at an accelerating rate since the 1990s
or so (Hair et al., 2012; Thelwall & Wilson, 2016). The
increasing availability of computer programs, both
commercial and free, has made SEM in its various
forms ever more accessible to applied researchers. It
is not hard to understand the enthusiasm for SEM. As
described by David Kenny in the Series Editor Note in
the second edition of this book, researchers love SEM
because it addresses questions they want answered
and it “thinks” about research problems the way that
researchers do. But there is evidence that many—if
not most—published reports of the application of SEM
have serious flaws as described next.
MacCallum and Austin (2000) reviewed about 500
SEM studies in 16 different psychology research jour-
nals, and they found problems with the reporting in
most cases. For example, in about 50% of the articles,
the reporting of parameter estimates was incomplete
(e.g., unstandardized estimates omitted); in about 25%
the type of data matrix analyzed (e.g., correlation vs.
covariance matrix) was not described; and in about
10% the model specified or the indicators of factors
were not clearly specified. Shah and Goldstein (2006)
reviewed 93 articles in four operations management
research journals. In most articles, they found that it
was hard to determine the model actually tested or the
complete set of observed variables. They also found
that the estimation method used was not mentioned in
about half of the articles, and in 31 out of 143 studies,
the model described in the text did not match the statis-
tical results reported in text or tables.
Zhang et al. (2021) reviewed 144 SEM studies pub-
lished in 12 top organizational and management jour-
nals in 2011–2016. Each article was evaluated against
criteria that included
1. The clarity of the rationale for using SEM over
alternative methods.
2. Whether the statistical models analyzed were
described in sufficient detail.
3. The completeness of the reporting on data integ-
rity, including the rationale for the sample size and
information about distributional assumptions, miss-
ing data, and reliability of the scores analyzed.
4. Whether hypotheses were tested in a clear, specific
order.
5. Whether the statistical results were described in
adequate detail so that readers could evaluate the
trustworthiness of the conclusions.
Pt1Kline5E.indd 17
Promise and Problems 17
Many problems were apparent. For instance, an explicit
justification for using SEM was provided in only
about 40% of the studies; distributional assumptions
were addressed in about 20%; a specific rationale for
the sample size was given in about 30%; and specific
details about the correspondence between model and
data were reported in 20% of reviewed studies. These
results are disheartening, but they are hardly atypical.
Nothing in SEM protects against equivalent models,
which explain the data just as well as the researcher’s
preferred model, but an equivalent model makes dif-
fering causal claims. The problem of equivalent mod-
els is relevant in probably most applications of SEM,
but most authors of SEM studies do not even mention
it (MacCallum & Austin, 2000). Ignoring equivalent
models is a serious kind of confirmation bias whereby
researchers test a single model, give an overly posi-
tive evaluation of the model, and fail to consider other
explanations of the data (Shah & Goldstein, 2006). The
potential for confirmation bias is further strengthened
by the lack of replication, a point considered next.
It is rare when SEM analyses are replicated across
independent samples either by the same researchers
who collected the original data (internal replication)
or by other researchers who did not (external replica-
tion). The need for large samples in SEM complicates
replication, but most of the SEM research literature is
made up of one-shot studies that are never replicated.
It is critical to eventually replicate a structural equation
model if it is ever to represent anything beyond a mere
statistical exercise. Thus, the SEM research literature
is part of the broader replication crisis in psychology
and other disciplines. Kaplan (2009) noted that despite
over 40 years of application of SEM in the behavioral
sciences, it is rare that results from SEM analyses are
used for policy or clinically relevant prediction studies.
The ultimate goal of SEM—or any other type of
method for statistical modeling—should be to attain
what I call statistical beauty, which means that the
final retained model (if any)
1. Has a clear theoretical rationale (i.e., it makes sense).
2. Differentiates between what is known and what is
unknown—that is, what is the model’s range of con-
venience, or limits to its generality?
3. Sets conditions for posing new questions.
That most applications of SEM fall short of these goals
should be taken as an incentive by all of us to do better.
3/22/2023 3:52:36 PM
 18 Concepts, Standards, and Tools
LIMITS OF THIS BOOK
Many advanced applications in SEM are described in
Chapters 17–22, but it is impossible (and undesirable,
too) to cover the whole range of extended or special-
ized analyses in a single volume. Just a few of these
topics are mentioned next with citations for sources
that provide more information. There are special struc-
tural equation models for imaging data, such as func-
tional magnetic resonance imaging (fMRI) (Cooper et
al., 2019), and also for genetic data (Luo et al., 2019).
Bayesian SEM combines the methods of Bayesian esti-
mation with the analysis of structural equations models
(Depaoli, 2021). Bayesian options for SEM are men-
tioned at various points in the book, but their applica-
tion requires strong knowledge of Bayesian statistics.
Two other advanced topics not covered in this book
include multilevel SEM (Castanho Silva et al., 2020)
and the analysis of interactive effects of latent variables
(Cortina et al., 2021), although methods for observed
variables are described in Chapters 12 and 20.
SUMMARY
The SEM families of techniques have their origins
in regression-based analyses of observed variables,
factor-analysis-based evaluations of common factor
models, composite-based analyses of proxies for theo-
retical variables, and methods from computer science
for analyzing causal graphs. Essential features include
the capabilities to analyze causal models before collect-
Pt1Kline5E.indd 18
ing the data, and the potential to distinguish between
observed and latent variables and to test a wide range
of hypotheses about measurement and causation. More
and more researchers are using SEM, but in too many
studies there are serious problems with the way it is
applied or with how analysis results are reported. How
to avoid getting into trouble with SEM is a major theme
in later chapters of this book. The ideas introduced in
this chapter set the stage for review in the next chap-
ter of fundamental principles in statistics that underlie
SEM.
LEARN MORE
Bollen and Pearl (2013) describe myths about traditional
SEM, Hair (2021) outlines the history of composite SEM, and
Wolfle (2003) traces the introduction of path analysis to the
social sciences.
Bollen, K. A., & Pearl, J. (2013). Eight myths about causal-
ity and structural equation models. In S. L. Morgan
(Ed.), Handbook of causal analysis for social research
(pp. 301–328). Springer.
Hair, J. F. (2021). Reflections on SEM: An introspective, idio-
syncratic journey to composite-based structural equation
modeling. SIGMIS Database, 52(SI), 101–113.
Wolfle, L. M. (2003). The introduction of path analysis
to the social sciences, and some emergent themes: An
annotated bibliography. Structural Equation Modeling,
10(1), 1–34.
3/22/2023 3:52:36 PM
 2

Background Concepts and Self‑Test

Newcomers to SEM should have good statistical knowledge in at least three areas: (1) regression analysis;
(2) correct interpretation of results from statistical significance testing including the role of bootstrapping;
and (3) psychometrics, or statistical measures of the properties of scores from psychological tests including
evidence for their reliability or validity. Some estimates in SEM are interpreted exactly as regression coef-
ficients, and these interpretations depend on many of the same assumptions as in regression analysis. The
potential for bias due to omitted predictors that covary with measured predictors or due to measurement
error in predictors or the criterion is similar in both regression and SEM when (1) there is a single observed
measure of each construct, and (2) score reliability is not explicitly represented nor controlled in the analysis.
Results of significance testing both for the whole model and for estimates of its individual parameters are
widely reported in SEM studies, although statistical significance is hardly the sole basis for inference in SEM
for reasons explained throughout the book. It is also true that results in significance testing are widely mis-
understood in perhaps most analyses, including SEM, and you need to know how to avoid making common
mistakes. If predictor or outcome variables are measured with psychological tests, their score reliabilities
should be routinely assessed in the researcher’s sample. Knowledge of psychometrics is also essential when
selecting among alternative measures of the same target concept.
This chapter serves as a check on your understanding of regression fundamentals, significance test-
ing, and psychometrics, and as a gateway to additional resources for self-study. Specifically, after a review
of potential obstacles to a strong command of these topics and a summary of background topics from the
perspective of learning about SEM, a self-test of comprehension with a scoring system is provided. Relatively
low scores (e.g., < 50% correct) in a particular area, such as psychometrics, would signal the need for further
reading. To that end, a total of three supplementary chapters, the Regression Primer, Significance Testing
Primer, and Psychometrics Primer, are freely available on the website for this book. Some advice: Even if you
think that you already know these topics, you should take the self-test. Many readers tell me that they learned
something new after hearing about the issues outlined next.

UNEVEN BACKGROUND States and Canada about training in statistics, measure-

PREPARATION
There is evidence that not all of the background top-
ics just mentioned are adequately covered in graduate
school. For example, Aiken et al. (2008) surveyed just
over 200 psychology doctoral programs in the United
ment, and research methods. They replicated a compa-
rable survey from almost 20 years before on the same
topic. In 2008, the median for training in statistics and
measurement was 1.6 years associated mainly with a
1-year introductory statistics sequence. About 80% of
doctoral programs offered in-depth training in both the

19

Pt1Kline5E.indd 19 3/22/2023 3:52:36 PM

 20 Concepts, Standards, and Tools
“old standards” (e.g., ANOVA) and multiple regres-
sion (MR) with the result that students could generally
perform such analyses themselves (Aiken et al., 2008).
Significance testing in ANOVA, MR, and other tech-
niques would also typically be covered in introductory
graduate statistics courses (Kline, 2020b). But whether
graduate students—or even experienced researchers—
understand significance testing or related concepts,
such as confidence intervals, is questionable, a topic
addressed soon.
Aiken et al. (2008) also described critical gaps in
statistics or measurement training. For instance, only
about 30% of doctoral programs offered in-depth
training in regression diagnostics, or techniques for
assessing whether assumptions are tenable or if there
are scores, such as outliers, with undue influence on the
results. Misunderstanding about assumptions in MR is
common. Examples include being unaware that per-
fect score reliability for predictor variables is assumed,
believing falsely that measurement error necessarily
causes underestimation of individual regression coef-
ficients, and the myth that the requirement for normal
distributions applies to the observed scores instead
of the residuals (Williams et al., 2013). Over 90% of
nearly 900 articles in clinical psychology research jour-
nals reviewed by Ernst and Albers (2017) were unclear
about assumption checks in MR analyses. Another gap
is that logistic regression for dichotomous outcomes is
covered in depth in only about 10% of doctoral pro-
grams (Aiken et al., 2008). This result suggests that
training in other methods for binary data, such as the
probit regression model, or methods for categorical
outcomes with three or more levels, such as ordinal
regression for ordered categories or multinomial logis-
tic regression for unordered categories, is infrequent at
the graduate level.
Another gap is that controversies in significance test-
ing are thoroughly covered in only about 30% of psy-
chology doctoral programs (Aiken et al., 2008). This is
unfortunate because ongoing debate about the proper
role of significance testing, including none, is part of a
larger credibility crisis about psychology research that
includes concerns about replication, reporting, mea-
surement, and the wasting of perhaps most research
funds in some areas (Szucs & Ioannidis, 2017). How to
properly report results from SEM analyses is covered
in the next chapter, but traditional significance test-
ing is seen as lacking in more and more disciplines;
expert and novice researchers alike are unaware of
that decline, which is a serious problem (Kmetz, 2019).
Pt1Kline5E.indd 20
Reasons for this critical assessment include the likeli-
hood that many, if not most, p values reported in the
literature are wrong, the myriad of false beliefs associ-
ated with significance testing, and the concern about p
hacking—see Topic Box 2.1 for elaboration.
Instruction in measurement was available in about
60% of psychology doctoral programs surveyed by
Aiken et al. (2008), but coverage of core topics such
as classical test theory, item response theory (IRT),
and test construction was typically brief with a median
length of just 4.5 weeks for all topics. This is not enough
time to develop any real expertise about measurement.
In fact, I bet that an undergraduate student who has
taken a one-semester (e.g., 3-credit) course in psycho-
metrics knows more about psychological measurement
and test construction than a graduate student without
this background. The meagre amount of doctoral-level
measurement training in 2008 was actually a slight
improvement over results for the same area reported 20
years earlier.
POTENTIAL OBSTACLES TO LEARNING
ABOUT SEM
I do not know whether the results just summarized
about psychology graduate training in statistics, mea-
surement, and research design apply generally to other
disciplines. But in my experience, based on working
with SEM novices from disciplines such as education,
biology, health sciences, operations management, mar-
keting, and commerce, researchers face the following
potential obstacles to learning about SEM:
1. The emphasis in graduate training in regression
techniques is mainly on continuous outcomes, so new
researchers may be relatively unprepared to apply esti-
mators for categorical outcomes in SEM.
2. Overemphasis of statistical significance can blind
researchers to other aspects of the results that are just
as critical, if not even more so, than p values. Antona-
kis (2017) referred to this particular stumbling block
as significosis, or an ordinate focus on statistical sig-
nificance. A related distortion is dichotomania, or the
compulsion to dichotomize continuous p values against
an arbitrary standard, such as p < .05 for results touted
as “significant” versus p ≥ .05 for other results that are
discounted, ignored, or lamented because they are “not
significant.” This binary interpretation is not supported
3/22/2023 3:52:36 PM
 Background Concepts and Self‑Test 21

TOPIC BOX 2.1

Cautionary Tales About Significance Testing:

Inaccuracies, Errors, and Hacking
For two reasons, most p values reported in the research literature could be incorrect:

1. Assumptions of significance testing—­random sampling from population distributions with known

properties (e.g., normality, homoscedasticity) and the absence of all other sources of error other
than sampling error—are generally implausible. Most samples in human studies are ad hoc, or
samples of convenience selected because they happen to be available. Convenience sampling
may have little, if anything, to do with random sampling. Few distributions in real data sets are
normally distributed or homoscedastic, and even slight departures from distributional assumptions
in small, unrepresentative samples can grossly distort p values (Erceg-Hurn & Mirosevich, 2008).
2. There are mistakes in too many journal articles in the reporting of p values. Nuijten et al. (2016)
found that over 50% of reviewed articles published in psychology research journals during the
years 1985–2013 contained at least one incorrect p value, given reported test statistics and
degrees of freedom.

There is ample evidence that most researchers, including those with the highest levels of statistical
training, do not fully understand what p values mean (McShane & Gal, 2016). Psychology professors in
two different surveys endorsed false belief about p values at rates generally no lower than among under-
graduate students (Haller & Krauss, 2002; Oakes, 1986), and about 90% of both groups endorsed at
least one incorrect interpretation. Summarized next are what I call the big five misinterpretations
of p values in significance testing. They are described for the case p < .05 when testing at the .05 level:

1. Most researchers endorse the local Type I error fallacy that the likelihood that the decision just
taken to reject the null hypothesis is a Type I error is less than 5%. This belief is wrong because any
particular decision to reject the null hypothesis is either correct or incorrect, so no probability (other
than 0 or 1.0) is associated with it. Also, it is only with sufficient replication that we could determine
whether or not the decision to reject the null hypothesis in a particular study was correct.
2. Probably most researchers endorse the odds-­against-­chance fallacy, or the false belief that
the probability that a particular result is due to chance (i.e., arose by sampling error alone) is
less than 5%. This belief is wrong because p is calculated by the computer assuming that the null
hypothesis is true, so the probability that sampling error is the only explanation is already taken
to be 1.0. Thus, it is illogical to view p as somehow measuring the likelihood of chance. Besides,
the probability that sample results are affected by error of some kind—­sampling, measurement,
­implementation, or specification error, among others—­is virtually 1.0. From this perspective, basi-
cally all sample results are wrong in that they generate incorrect point estimates of the target
parameter, and significance testing in primary studies does nothing to change this reality (Ioan-
nidis, 2005).
3. Just under half of researchers believe that the probability is less than 5% that the null hypothesis
is true, which is the inverse probability error, also called the fallacy of the transposed
conditional (Ziliak & McCloskey, 2008), and the permanent illusion due to its persistence
over time and disciplines (Gigerenzer & Murray, 1987). This error stems from forgetting that
(continued)

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 22 Concepts, Standards, and Tools

p values are conditional probabilities of data under the null hypothesis, not the other way around.
There are direct methods in Bayesian statistics to estimate conditional probabilities of hypotheses,
but not in classical significance testing.
4. The false belief that 1 – p is the probability of finding another significant result in a future sample
is the replication (replicability) fallacy, which is endorsed by about half of researchers. For
example, if p < .05, then the likelihood of replication is believed to exceed .95 under this myth.
Knowing the probability of replication in hypothetical future samples would be very useful, but the
quantity 1 – p is just the probability of a result or one even less extreme under the null hypothesis.
In general, replication is a matter of experimental design, sampling, and whether some effect
actually exists in the population.
5. The validity (valid research hypothesis) fallacy is the myth that 1 – p is the likelihood
that the alternative hypothesis is true, a false hope endorsed by about half of researchers. As
mentioned, probabilities of hypotheses are not estimated in significance testing, and both p and
its complement, 1 – p, are conditional probabilities of data, not hypotheses.

There are many other cognitive errors about significance testing outcomes. For example, the filter
myth is the false belief that p values sort results into two categories: those “significant” findings that are
not due to chance versus the “not significant” results that are due to chance. This myth is basically an exten-
sion of the odds-­against-­chance fallacy applied to results with higher (not significant) p values. Authors
in just over 50% of nearly 800 published empirical studies reviewed by Amrhein et al. (2019) committed
the zero fallacy—also called the slippery slope of nonsignificance (Cumming & Calin-­Jageman,
2017)—by falsely interpreting the absence of statistical significance as evidence for a zero population
effect size.
The misinterpretations just described plus others—­see the Significance Testing Primer—­can promote
a cognitive style where researchers report low p values with great confidence or even bravado but with
little real comprehension (Lambdin, 2012). The same distortions can also lead to confirmation bias where
statistically significant results are uncritically accepted as proving the researcher’s hypotheses—­see Calin-­
Jageman and Cumming (2019) for examples. False beliefs also pose a challenge to instructors of a first
graduate statistics course: Students’ heads are filled with myth about significance testing that can interfere
with further learning unless those fallacies are identified and remediated (Kline, 2020b).
Confidence intervals are described as ways to summarize results in a more comprehensive way than
is possible in significance testing, and statisticians generally prefer interval estimation over point estima-
tion, or the reporting of results with no margins of error (or error bars in graphical form) (Cumming &
Calin-­Jagerman, 2017). Because significance testing and confidence intervals are based on essentially the
same concepts and assumptions, it is not surprising that similar kinds of errors can affect both. Abelson
(1997) described the law of diffusion of idiocy, which states that every misstep in significant testing
has a counterpart with confidence intervals. There is also evidence that confidence intervals, too, are
widely misinterpreted (Hoekstra et al., 2014). Listed next are some common false beliefs (Morey et al.,
2016):

1. Fundamental confidence fallacy, or the myth that confidence level, such as 95%, indicates
the likelihood (i.e., .95) that the interval contains the value of the target parameter.
2. Precision fallacy, or the misunderstanding that narrower confidence intervals automatically
signal greater precision of knowledge about the parameter.
(continued)

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 Background Concepts and Self‑Test 23

3. Likelihood fallacy, or the untruth that a particular confidence interval includes equally likely
values for the parameter.

The phenomenon of p hacking involves the possibility of presenting any result as “significant”
through decisions, such as covariate selection, transformations of scores, or the treatment of missing data,
that are not always disclosed (Simmons et al., 2011). Most instances of hacking involve lowering p val-
ues so that key results are significant, but p values can also be increased when results that are not sig-
nificant favor the researcher’s goals. Perhaps the most infamous example of hacking to increase p is the
Vioxx calamity, where analyses of data from a clinical trial were manipulated to render nonsignificant an
increased risk of heart attack in the treatment group (Ziliak & McCloskey, 2008). Both p hacking and other
dubious practices that favor the researcher’s hypotheses are probably widespread (John et al., 2012). The
parallel in SEM is model hacking, where significance test results are manipulated to increase the odds
of retaining the model, which represents the researcher’s hypotheses. How to avoid model hacking in SEM
begins with complete and transparent reporting of the results, including explaining the bases for deciding
whether to retain any model.

by what can be trivial differences in continuous p val- SIGNIFICANCE TESTING

ues; that is, a result where p = .04 does not appreciably
differ from another result where p = .06 when testing at
the .05 level.
3. Relatively little formal training in measurement
or psychometrics can put researchers in a difficult
position when selecting measures for their research or
evaluating the quality of data from psychological tests
in their own samples. It can also hinder accurate and
complete reporting about psychometrics.
Whatever researchers lack in their training about
statistics, measurement, or research design when
approaching what is, for them, a new technique such as
SEM can be addressed through self-study or participa-
tion in seminars, summer schools, or other continuing
education experiences. The need to periodically update
one’s data analysis skills is also a normal part of being
a researcher. That is, lifelong learning as self-initiated
education focused on personal or professional devel-
opment is a healthy perspective not just for research-
ers, but for everyone. So let’s get on with knocking the
rust off what you already know or adding to your skill
set. Described next from the perspective of learning
about SEM are special issues in significance testing,
measurement, and regression—see the corresponding
primers for more detailed presentations.
Many effects can be tested for statistical significance in
SEM, ranging from things such as the variance for a sin-
gle variable up to entire models evaluated across mul-
tiple samples. There are four reasons, however, why the
role for significance testing in SEM should be smaller
compared with more standard techniques like ANOVA:
1. The capability to evaluate an entire model at
once brings a higher-level perspective to the analysis.
Although statistical tests of individual effects in the
model may be of interest, at some point the researcher
must make a decision about the whole model: Should
it be rejected?—modified?—if so, how? This deci-
sion should not be based on significance testing alone
because other factors, such as whether statistical results
are meaningful, given the research context and hypoth-
eses, are equally if not more important than statistical
significance. There is also a sense in SEM that the view
of the entire model takes precedence over that of spe-
cific details (individual effects).
2. The technique of SEM generally requires large
samples, but in significance testing, effects with low p
values in very large samples are sometimes of trivial
magnitude. By the same token, virtually all effects that
are not zero could be significant in a sufficiently large
sample. Just the opposite can happen in smaller sam-

Pt1Kline5E.indd 23 3/22/2023 3:52:36 PM

 24 Concepts, Standards, and Tools
ples: Effects of appreciable magnitude that are actually
true in the population may fail to be significant due to
low statistical power.
3. Researchers should be more concerned with esti-
mating effect size and evaluating the substantive signif-
icance of their results than with statistical significance,
which has little to do with scientific or practical impor-
tance. In particular, researchers should not believe that
an effect or association exists just because a result is
significant, especially if an arbitrary threshold, such
as p < .05, is applied to dichotomize continuous p val-
ues. Likewise, researchers should not conclude that an
effect is absent just because it is not significant (Was-
serstein et al., 2019); that is, avoid committing the zero
fallacy—see Topic Box 2.1.
4. Standard errors for the effects of latent vari-
ables are estimated by the computer, and those stan-
dard errors are the denominators of significance tests
for those effects. The value of the standard error could
change if, say, a different estimation method is used or
sometimes even across different software packages for
the same analysis and data. Thus, it can happen that an
effect for a latent variable is “significant” in one analy-
sis but is “not significant” in another analysis with a
different estimator or computer tool. Now, differences
in p values across different computer programs for
the same effect and estimation method are not usually
great, but slight differences in p can make big differ-
ences in significance testing, such as p = .051 versus
.049 for the same effect when testing at the .05 level.
You may be surprised to know there is no require-
ment to dichotomize p values at all. This means that
exact p values are simply reported but are not com-
pared against any bright-line rule or threshold, such as
.05, or any other standard whatsoever. This means that
the stale, musty, and worn-out term “significant” is not
used for results with low p values, so there are no aster-
isks or any other symbol in text or tables that designate
“significant” results just as there is no special demarca-
tion of other effects with higher p values as “not sig-
nificant.” Hurlbert and Lombardi (2009) referred to this
perfectly legitimate reform of traditional significance
testing as neo-Fisherian significance assessments
(NFSA), and it is consistent with the call to researchers
to stop using the term “significant” in point 3 just listed.
You should also know that SEM computer tools gen-
erally print by default standard errors for the estimates
Pt1Kline5E.indd 24
in the unstandardized solution, but standard errors for
standardized estimates might be part of optional out-
put that must be requested by the researcher. Because
the unstandardized and standardized estimates for the
same parameter have their own standard errors, it can
happen that, say, the unstandardized estimate is signifi-
cant but the standardized estimate is not significant at
the same level, or vice versa. This outcome is neither a
computer error nor contradictory because unstandard-
ized and standardized estimates each have their own
distinct sampling distributions. Confusion about this
issue can be minimized by not dichotomizing p values,
such as in NFSA-style reporting of the results.
MEASUREMENT AND PSYCHOMETRICS
Given limited training about measurement in many
graduate programs, it is not surprising that reporting
on psychometrics in the research literature is too often
deficient. This is especially true for reliability coeffi-
cients, which indicate the degree to which test scores
are consistent over variations in testing situations,
times, test administrators or scorers, forms, or selec-
tions of items from the same domain. Lower values of
reliability coefficients indicate less precise scores. If
a reliability coefficient, designated here as rXX, equals
zero, it means that the scores are basically random
numbers, and random numbers measure nothing. The
result rXX = 1.0 indicates flawless consistency, but such
a result in real data would be pretty extraordinary (i.e.,
don’t hold your breath waiting for perfection).
Reporting values of reliability coefficients should be
routine whenever scores from psychological tests are
analyzed, but the reality is unfortunately different. For
example, Vacha-Haase and Thompson (2011) reviewed
nearly 50 meta-analyses of results from about 13,000
primary studies in which test scores were analyzed.
They found that about 55% of authors mentioned noth-
ing about score reliability. In 15% of reviewed studies,
authors merely reported values of reliability coefficients
from other sources, such as test manuals. Inferring
from reliability coefficients derived in other samples,
such as a test’s normative sample, to a different popu-
lation is called reliability induction. Such reasoning
about the generalizability of reliability coefficients
needs explicit justification. But authors of reviewed
studies rarely compared characteristics of their samples
with those from cited studies of score reliability. For
3/22/2023 3:52:36 PM

example, scores from a computer-based task of reaction
time developed in samples of young adults may not be
as precise for elderly adults, who may be unfamiliar
with this method of testing.
A better practice is for researchers to report val-
ues of reliability coefficients in their own samples. It
is critical to do so because reliability is a property
of scores in a particular sample, not an immutable
characteristic of tests. This is because the precision
of scores from the same test varies over samples from
the same population due to sampling error. Variation
in score reliability may be even greater over samples
taken from a population different from the target pop-
ulation for the test. Urbina (2014) used the term rela-
tivity of reliability to emphasize that (1) the quality of
reliability belongs to scores, not tests, and (2) scores
for individual cases are more or less reliable due to
unique characteristics of examinees, such as motiva-
tion or fatigue, and also to examiner qualifications,
such as experience in administering or scoring the
test, and conditions where testing takes place. Some
of these factors are unrelated to the test itself, but they
can still influence the consistency and precision of
scores. Along these lines, researchers should also cite
reliability coefficients in published sources (reliabil-
ity induction) but with comments on the similarities
between samples described in those sources and the
researcher’s sample.
Appelbaum et al. (2018) described revised jour-
nal article reporting standards for quantitative studies
(JARS-Quant) for journals published by the Ameri-
can Psychological Association. Revised guidelines for
reporting on psychometrics (including SEM studies)
call on authors to
1. Report values of reliability coefficients for the
scores analyzed, if possible.
2. Describe the specifics of those reliability coeffi-
cients, such as the length of the retest interval for
test–retest reliabilities, characteristics of scorers
and their training for interrater reliabilities, or the
specific type of internal consistency coefficients for
composite (multi-item) scales.
3. Report the characteristics of external samples if
reporting reliabilities from those samples, such as
original test normative samples.
4. Provide estimates of convergent and discriminant
validity where relevant.
Pt1Kline5E.indd 25
Background Concepts and Self‑Test 25
REGRESSION ANALYSIS
Two topics are addressed next: (1) Effects of measure-
ment error on the results in MR analyses and (2) the
limited usefulness of significance testing when test-
ing hypotheses about incremental validity in the pres-
ence of even moderate amounts of measurement error.
Perfect score reliability (rXX = 1.0) is assumed in MR
for the predictors but not for the criterion, also called
the response, outcome, or dependent variable. This is
because only the criterion has residuals, or differences
between actual and predicted scores on the response
variable. The residuals give random measurement error
a place to “go” for the criterion; that is, error is mani-
fested in the regression residuals. But predictors have
no residuals to “absorb” their measurement error; thus,
it must be assumed that their scores are perfectly con-
sistent.
Measurement error in the criterion only does not
bias unstandardized regression coefficients, if that
error is unrelated to the predictors. But there is down-
ward bias in the standardized coefficients, which also
makes the value of R2 decrease as error in the crite-
rion increases under the same condition (Williams et
al., 2013). Things are more complicated when there is
error in the predictors: Measurement error in a single
predictor that is not shared with any other variable will
attenuate the absolute value of the regression coeffi-
cient for that predictor. But regression coefficients for
the other, error-free predictors can also be affected.
Whether those other coefficients are attenuated, exag-
gerated, or unbiased depends on the values and signs
of (1) correlations between the underlying latent vari-
able imperfectly measured by a predictor and all other
explanatory variables, and (2) the effect of the concep-
tual variable just mentioned on the criterion (Bollen,
1989; Kenny, 1979). Values of these correlations and
their potential distorting effects are rarely known in
practice, so it difficult to anticipate the magnitudes and
directions of this propagation of measurement error
in a single predictor.
The effects of measurement error in multiple predic-
tors are also hard to anticipate because there are two
sources of distortion for each predictor: Attenuation
bias due to error in a particular predictor, plus a term
the value of which is influenced by the degree of unreli-
ability error in other predictors (Kenny, 1979). It is pos-
sible that these two sources of bias could cancel each
other out, but that outcome could be rather unlikely.
3/22/2023 3:52:36 PM
 26 Concepts, Standards, and Tools
Whether bias is positive or negative in a particular coef-
ficient is also generally unknown, but overall distortion
tends to increase as score reliabilities among the pre-
dictors are lower.
Another issue is the presence of measurement error
that is shared over ≥ 2 predictors or with the criterion.
Correlated measurement error can arise when mul-
tiple variables are assessed with a common method,
variables share common informants or stimuli, or the
same variable is measured on ≥ 2 occasions among the
same cases, among other possibilities. The signs and
magnitudes of the error correlations also affect the
degree and direction of bias in regression coefficients
(Bollen, 1989; Williams et al., 2013)—see Trafimow
(2021) for more information and examples. There are
ways to adjust individual regression coefficients for
attenuation, but they assume that measurement error is
not correlated and, as mentioned, measurement error
can attenuate or inflate regression coefficients. Whether
such simple corrections give accurate results in real-
world data is questionable (Williams et. al, 2013).
Incremental validity concerns the relative contribu-
tions of different variables in predicting some criterion.
That contribution is estimated by the regression coeffi-
cients, which statistically control for effects of all other
predictors in the equation. In this way, the coefficients
indicate the relative contribution of each predictor
above and beyond the rest.1 Many researchers interpret
a statistically significant regression coefficient as evi-
dence for the incremental validity of the corresponding
predictor. There are thousands of published regression
studies in which hypotheses about incremental valid-
ity are tested in this way (Hunsley & Meyer, 2003), so
the issue of whether inferences based on p values for
regression coefficients are trustworthy is very relevant.
Based on rational analysis and computer simula-
tion results, Westfall and Yarkoni (2016) demonstrated
that effective Type I error rates for significance tests
of regression coefficients in MR are surprisingly high
even in reasonably large samples (e.g., N = 300) with
at least moderate levels of scores reliability (e.g., rXX
= .80) in analyses with just two predictors. Under the
conditions just stated and assuming that the bivari-
ate correlation of each predictor with the criterion is
1 Other metrics or statistics for measuring incremental validity
include partial correlations, semipartial correlations (also called
part correlations), and sequential increases in R2 when predictors
are added to the equation in a particular order—see Grömping
(2015).
Pt1Kline5E.indd 26
about .50, the error rate in significance testing is just
greater than 65%. In even larger samples, the error
rate can approach 1.0. These counterintuitive results
happen because (1) there is a curvilinear relation such
that Type I error rates generally peak over the range
rXX = .30–.70, and (2) Type I errors also increase with
sample size, holding all else constant. In larger sam-
ples, significance tests have greater power to detect a
true relation between a predictor and the criterion, but
measurement error causes the significance test to con-
flate a common effect of multiple predictors with the
unique contribution for a single predictor (Westfall &
Yarkoni, 2016). Thus, it is possible that inferences in
MR analyses about incremental validity based mainly
on p values are suspect in many, if not most, published
regression studies.
You will learn that a relative strength of SEM over
standard regression techniques is the capability to
explicitly represent in the model the score reliability
for any observed variable or the presence of correlated
measurement errors (if any) for particular pairs of vari-
ables. All other results, including coefficients for puta-
tive causal variables, are estimated given the informa-
tion about psychometrics specified by the researcher.
The potential advantage of SEM for testing hypotheses
about incremental validity is even greater when theo-
retical concepts are specified as measured by multiple
observed variables, or indicators. Thus, hypotheses
about incremental validity are better supported by
methods like SEM that can explicitly model unreli-
ability than in standard regression analysis (Westfall &
Yarkoni, 2016).
SUMMARY
It helps to begin learning about SEM with a good
comprehension of basic concepts in regression, sig-
nificance testing including bootstrapping, and psycho-
metrics. Not all of these topics may be covered with
equal depth in graduate programs, so researchers often
need to supplement their knowledge. There are also
widespread myths about significance testing and psy-
chometrics that can interfere with learning about SEM.
For example, there are many false interpretations of
p values from significance testing that altogether can
make researchers overly confident in their results and
distract them from other aspects of their data, such as
effect size or precision. The black-box view that reli-
ability is a property of tests rather than of scores in a
3/22/2023 3:52:36 PM

particular sample runs counter to the best practice of
reporting psychometrics, including values of score reli-
abilities for the data analyzed. Measurement error in
a single predictor in standard regression analysis can
bias the coefficients for other predictors, too, and its
effects do not always involve attenuation of regression
coefficients, especially if measurement error is shared
over multiple predictors or with the criterion. Presented
next is a self-test of knowledge about concepts in sig-
nificance testing, regression, and psychometrics. After
responding to the questions, score your answers using
the criteria that follow the self-test. Refer to the primers
available on the book’s website for additional informa-
tion about each background topic.
SELF‑TEST
Sorry, no multiple-choice items here. I believe that
essay questions are better able to detect strengths
or weaknesses in knowledge about statistics (Kline,
2020b). Write a concise response to each question. The
number of possible points for each question is indicated
in parentheses, and maximum possible total scores are
listed after the questions for each topic. The scoring cri-
teria for each item are given in the next section.
Significance Testing
1. What is a sampling distribution? (4)
2. For the same continuous variable, interpret SD =
15.00 versus SE = 3.00 (respectively, standard devi-
ation vs. standard error of the mean). (4)
3. What does p = .03 in significance testing mean? (4)
4. What is a in significance testing, and how does it
differ from p? (4)
5. Define power and b in significance testing. (5)
6. List the factors that affect power. (6)
7. State the combination of factors in question 6 that
leads to the highest power. (6)
8. Interpret these results (i.e., each numerical value)
for two independent samples: t(48) = 2.25, p = .029
for a one-tailed hypothesis. (6)
9. Given t = 6.75/3.00 = 2.25 for two independent sam-
ples, interpret the numerator and denominator, and
describe how group size affects each value. (7)
Maximum score = 46
Pt1Kline5E.indd 27
Background Concepts and Self‑Test 27
Regression
Questions 1–4 concern predictors X and W and crite-
rion Y. All variables are continuous. For the same data,
the unstandardized and standardized regression equa-
tions are listed next as, respectively,
Ŷ = 2.15X + 1.30W + 2.34
and
ẑY = .59z X + .34zW
1. Interpret each unstandardized coefficient. (5)
2. Interpret each standardized coefficient. (5)
3. Which variable, X or W, contributes the most to pre-
diction, and why? (3)
4. If X, W, and Y were all measured in a different sam-
ple and new regression analyses conducted, which
estimates—unstandardized or standardized—are
preferred for comparing results for each predictor
over the samples, and why? (4)
5. What is the least squares criterion in standard
ordinary least squares (OLS) regression? What are
advantages and disadvantages? (4)
6. Describe R2 as an estimator of r2, the population
proportion of explained variance. (4)
7. What is a corrected (adjusted, shrunken, shrinkage-
corrected) R2, and what is a potential complication
in its interpretation? (6)
8. What is the problem of overfitting (overparameter-
ization) in regression analysis? (4)
9. Describe the effects of omitting a predictor that
covaries with the criterion above and beyond all the
included (measured) predictors (also called omit-
ted-variable bias or left-out variables error). (5)
Maximum score = 40
Psychometrics
All questions assume classical test theory.
1. What is the difference between reliability and valid-
ity? (4)
2. Give a general interpretation for rXX = .80. (4)
3. Given rXX = 1.0 for test–retest reliability, explain
what is wrong with this statement: Each case
obtained exactly the same score at both occasions.
(3)
3/22/2023 3:52:37 PM
 28 Concepts, Standards, and Tools
4. What is the relation between the (Cronbach’s) alpha
coefficient and the split-half reliability coefficient
for scores from the same test? (6)
5. What does the alpha coefficient measure, that is,
what determines its value? Comment on this state-
ment: Alpha = .90; thus, the items are unidimen-
sional (they measure a single factor). (5)
6. What is required to evaluate alternate-forms reli-
ability? What is a purpose for alternate forms?
What does rXX = .75 mean for immediate versus
delayed administration of the forms? (6)
7. What is the standard error of measurement (SEm)?
How does rXX affect its value? What does SEm = 7.50
mean? What is a practical application of SEm? (6)
8. Why is it a misconception that the value of the Pear-
son correlation rXY always has a range from –1.0 to
1.0? What is a risk of this myth? (4)
9. What is convergent validity versus discriminant
validity, and what is the concern about common
method variance when evaluating either type of
validity? (4)
Maximum score = 42
SCORING CRITERIA
Award 1 point for each underlined definition or phrase
mentioned in your answer. Calculate the total score
for each area and then calculate the proportions of the
maximum possible total score.
Significance Testing
1. A sampling distribution is the probability distribu-
tion for a statistic over many random samples all the
same size (N) and drawn from the same population.
2. The term SD = 15.00 is the square root of the aver-
age squared distance between the scores and the
mean,2 and it estimates the population standard
deviation, s. The quantity SE = 3.00 is the esti-
mated standard deviation in the sampling distribu-
tion of random means each based on N = 25 cases
(i.e., SE = SD/N1/2). Thus, the estimated square root
of the average squared distance between sample
means and the population mean is 3.00.
2A common but incorrect response is that SD is the average abso-
lute distance between the scores and the mean—see Huck (2016).
Pt1Kline5E.indd 28
3. If the null hypothesis is true and all distributional
assumptions are correct, the results in 3% of ran-
dom samples would be as extreme as the sample
result or even more so. Whether this result is “sig-
nificant” is unknown because no criterion level for
statistical significance was stated. In NFSA, there
is no criterion level (i.e., p values are not dichoto-
mized), so the terms “significant” or “not signifi-
cant” do not apply.
4. The quantity a is the criterion level of statistical
significance specified before the data are collected.
It is the conditional probability of rejecting the null
hypothesis over random samples when the null
hypothesis is true, or a Type I error. The value of
p is the conditional probability of a sample result
or one even more extreme assuming that the null
hypothesis is true, sampling is random, and all dis-
tributional assumptions hold.
5. Power is the probability of correctly rejecting the
null hypothesis over random samples when the
alternative hypothesis is true. Its complement, or
1 – power, is b, or the probability of failing to reject
(retaining) the null hypothesis when the alternative
hypothesis is true.3
6. Power is determined by sample size, the magnitude
of the true effect in the population, the level of a,
the reliability of the scores, whether the effect is
between-subjects or within-subjects, and whether
the test statistic is parametric or nonparametric.
7. Bigger samples, a larger population effect size,
lower levels of a (e.g., .05 instead of .01), higher
score reliability, a within-subject effect, and a para-
metric test statistic are all associated with higher
power.
8. The degrees of freedom are 48, which means that
the total sample size is N = 50, but the size of each
group is unknown.4 The mean difference is 2.25
standard errors in magnitude. Assuming random
sampling from two different populations with nor-
mal distributions and equal variances, the probabil-
ity of observing a mean difference as large as 2.25
standard errors or even greater is .029.
9. The group mean difference is 6.75, and its value is
not affected by group size. The standard error of the
3 It is just as correct to say that 1 – b = power.
4 Equal group sizes for the independent-samples t test are not
required.
3/22/2023 3:52:37 PM

mean difference is 3.00, and it estimates the stan-
dard deviation in a sampling distribution of ran-
dom mean differences, where samples in each pair
were selected from two different populations with
normal distributions and equal variances. Its value
is affected by group size: Larger groups lead to
smaller standard errors, keeping all else constant.
Regression
1. All answers for this question refer to the origi-
nal (raw score) metric of each variable: A 1-point
increase in X predicts an increase in Y of 2.15
points, while controlling for W; a 1-point increase
in W predicts an increase in Y of 1.30 points, con-
trolling for X; and the predicted score on Y is 2.34
when X = W = 0.
2. Given an increase in X of 1 standard deviation, the
expected increase in Y is .59 standard deviations,
controlling for W; and Y is predicted to increase by
.34 standard deviations, given an increase in W of
one standard deviation while we are controlling for
X. In the standardized solution, the intercept equals
zero because the mean for all variables is zero.
3. Unstandardized coefficients for X and W—respec-
tively, 2.15 and 1.30—are not directly comparable
unless the two variables have the same raw score
metric. Because both variables do have the same
metric in the standardized solution (i.e., mean = 0,
standard deviation = 1.0), their standardized coef-
ficients can be directly compared: The relative
contribution of predictor X is largest, or about 1.75
that times of W (i.e., 59/.34) in a standard deviation
scale.
4. It is the unstandardized coefficients that are gener-
ally preferred. If two independent samples differ in
their variances for the same measures, the basis for
the standardized estimates is not comparable over
samples.5 Standardized coefficients are better for
comparing the relative contributions of the predic-
5 Here is an example: Suppose that the same multiple-choice test
is administered to each of two different classes. Scores in each
class are reported as the proportion correct, but relative to the
highest raw score in each group, not the total number of items.
Although the proportions in each class are standardized and have
the same range (0–1.0), they are not directly comparable across
the classes if the highest scores in each group are unequal. Only
the raw scores (total number of items correct) would have the
same meaning over classes.
Pt1Kline5E.indd 29
Background Concepts and Self‑Test 29
tors within the same sample—see Grace and Bollen
(2005).
5. The least squares criterion defines a unique solu-
tion for the regression coefficients, including the
intercept, such that the sum of squared residuals is
minimized; that is, S (Y – Ŷ)2 is as small as possible.
This solution is the best possible solution in a par-
ticular sample, one that maximizes the value of R2.
A drawback is capitalization on chance: The “best”
solution in one sample will not be so in a different
sample unless the covariance matrices and means
are identical in both samples.
6. The statistic R2 is a positively biased estimator of r2
(i.e., R2 generally overestimates r2). Bias increases
as the sample size decreases for a fixed number of
predictors or bias increases as predictors are added
for a fixed number of cases. In very large samples,
the expected value of R2 is essentially equal to that
of r2.
7. An adjusted R2 estimates r2 by reducing the value
of R2 as a function of sample size (N) and the num-
ber of predictors (k). In general, there is greater
reduction in smaller samples than in larger samples
just as there is greater reduction as the ratio k/N
increases (e.g., predictors are added while sample
size is constant). Also, there is generally greater
reduction for smaller than for larger values of R2.
It can happen that adjusted R2 values are < 0 (nega-
tive); if so, then it is usually treated as though the
corrected R2 is zero (Cohen et al., 2003).
8. Overfitting refers to a regression equation with
too many predictors relative to the sample size. It
inflates R2 values to the point where they start to
describe random variation more so than any real
relations among variables. Overfitting also reduces
generalizability of the results to another sample,
that is, the results may not replicate because they so
heavily reflect idiosyncratic variation in the origi-
nal sample that is not repeated in other samples. For
example, if N = 100 and there are k = 99 predictors,
then the value of R2 must equal 1.0 because there is
no error variance with so many predictors, and this
is true even if the data are random numbers.
9. Omitting a relevant predictor increases standard
errors for measured predictors, reduces the value
of R2 , and biases the intercept unless the mean on
the omitted predictor is zero. If the omitted variable
is uncorrelated with all measured predictors, the
3/22/2023 3:52:37 PM
 30 Concepts, Standards, and Tools
regression coefficients for the measured predictors
are unbiased; otherwise, their coefficients will be
biased (Mauro, 1990). This bias can be positive or
negative, and it generally increases as correlations
between omitted and included predictors increase.
Psychometrics
1. Reliability concerns the precision or consistency of
scores whereas validity concerns the accuracy of
interpretations for those scores in a particular con-
text of use. Reliability is a prerequisite for valid-
ity—very inconsistent scores measure nothing and
thus have no meaningful interpretation—but reli-
ability does not guarantee validity.6 That is, just
because scores are consistent and repeatable does
not mean that they actually measure the target con-
struct.
2. A total of 1 – .80 = .20, or 20% of the observed
variation in scores is due to the type of random
error measured by the method used to derive the
coefficient (e.g., test–retest, alternate-form, inter-
rater, internal consistency). The remaining 80% is
systematic, or not due to the kind of measurement
error estimated by the coefficient. Some of that
remaining variance could be due to sources of error
not estimated by the coefficient. If so, then addi-
tional reliability studies would be needed (i.e., those
that depend on a different method).
3. Assuming there are individual differences among
cases, the pattern where each case obtains exactly
the same score at each occasion would generate the
outcome rXX = 1.0. But so would any other pattern
where the magnitudes of differences between the
cases are perfectly preserved over the occasions
even though perhaps no case obtained the same
score both times. For example, if the values in
parentheses listed next represent scores from each
case at the first and second occasions, or
(12, 16), (14, 18), (15, 19), (18, 22),
and (20, 24)
then rXX = 1.0. Thus, test–retest coefficients measure
whether individual differences are perfectly main-
tained over the two occasions, not just whether the
scores are the same.
6 Saying that reliability is a necessary but insufficient condition
for validity means the same thing.
Pt1Kline5E.indd 30
4. Both methods are based on a single administration
of the test. Both are measures of internal consis-
tency but at different levels: Alpha measures consis-
tency at the item level, but the split-half coefficient
measures consistency at the level of test halves, or
consistency in total scores over two halves of the
test corrected for overall test length. There is a
single value of the alpha coefficient, but there are
as many possible split-half coefficients as there are
ways to split test items into two halves. If all items
have the same variance, the alpha coefficient equals
the average of all possible split-half coefficients.
5. Alpha measures the combined effect of test length
and the interrelatedness of responses over test
items, which can also be expressed as the ratio of
variability in examinees’ responses across all test
items over the variance of test total scores. Increas-
ing either factor just mentioned will increase the
value of alpha. Coefficient alpha assumes that the
items are unidimensional (homogenous), so a high
value of alpha does not confirm that hypothesis. It
is possible to obtain a relatively high value of alpha
even when the items are multidimensional (Schmitt,
1996; Streiner, 2003; Urbina, 2014).
6. The alternate-forms method requires at least two
different complete versions of the test that should be
comparable in terms of length, difficulty, and con-
tent. The forms are meant to be used interchange-
ably and for the same purpose. In situations where
people are required to take the same test on multiple
occasions, administration of alternate forms may
reduce practice effects. Immediate administration,
1 – .75 = .25, or 25% of observed variation is due
to content sampling error, or idiosyncratic effects
of item wording, participant familiarity with item
content, or inadvertent selection of items from dif-
ferent domains that lead to inconsistent scores over
the forms. Delayed administration, a total of 25%
of the variance, is due to the combined effects of
content sampling error and time sampling error, but
with no additional information, the two sources of
error are confounded.
7. The statistic SEm estimates the standard deviation
of observed scores (X) around a hypothetical true
(error-free) score T, where observed scores have
a random error term, or X = T + E, such that the
average of the error component of the scores, E, is
zero and normally distributed. One context is a dis-
3/22/2023 3:52:37 PM

tribution of many repeated measures from a hypo-
thetical case around their true score, and another
is a distribution of observed scores for all cases in
the population with the same true score. The result
SEm = 7.50 says that the square root of the average
squared distance between the observed scores and
the true score is 7.50. As rXX increases, the value
of SE m decreases, and if rXX = 1.0, then SEm = 0.
The term SEm is used in constructing confidence
intervals for true scores, given observed scores for
individual cases.
8. The value of rXY can be perfect (i.e., –1.0 or 1.0) only
if the distributions of X and Y have exactly the same
shape, their association is strictly linear, and their
score reliabilities are perfect (rXX = rYY = 1.0); other-
wise, the maximum absolute value for rXY is < 1.0.
A risk is that a researcher is unable to accurately
judge the strength of association if they are unaware
of the range of possible values for rXY. For example,
what is thought to be a relatively low value of rXY,
such as .30, may actually be close to its maximum
value, given the score reliabilities for variables X
and Y (Huck, 2016).
Pt1Kline5E.indd 31
Background Concepts and Self‑Test 31
9. Convergent validity involves the hypothesis that
scores from ≥ 2 tests claimed to measure the same
construct should appreciably covary, and discrimi-
nant validity concerns the prediction that scores
from ≥ 2 tests claimed to measure different con-
structs should not appreciably covary. Method vari-
ance is due to use of a particular measurement or
source of information, and common method vari-
ance can inflate validity coefficients for two tests
based on the same method. Thus, it is better to
evaluate convergent or discriminant validity when
no two tests are based on the same measurement
method.
Well, how did you do? Don’t fret if any of your three
scores expressed as a percentage are < 50%. A score
in this range is not uncommon, especially if your sta-
tistics knowledge is rusty—see Kline (2020b). Scores
around 70% suggest at least a basic understanding, so
your review of the corresponding primer could be more
focused on areas of relative weakness. Aced it (> 90%)?
Nice, but don’t get cocky: You should still browse the
primers to check for any missing tidbits in your knowl-
edge.
3/22/2023 3:52:37 PM
 3

Steps and Reporting

Described in this chapter are the basic steps in SEM and journal article reporting standards for SEM analyses
recently published by the American Psychological Association. The first step in SEM, model specification, is
the most important step of all. This statement is true because results from all later steps assume that the model
analyzed is reasonably correct; otherwise, there may be little meaningful interpretation of the results. The
state of reporting in SEM studies is poor—no, that’s too mild—it is actually in a state of crisis. This is because
too little information about model specification, correspondence between model and data, or possible limita-
tions to conclusions is given in many—and, I would guess, unfortunately, most—published SEM studies. With-
out complete reporting, readers are unable to judge whether the findings are trustworthy, including whether
the model actually fits the data, if a model was retained. Helping you to distinguish your own reporting so
that common mistakes and omissions are avoided is thus the major goal of this chapter.

BASIC STEPS 3. Select the measures (operationalize the concepts)

Six basic steps comprise most SEM analyses, and in a
perfect world two additional optional steps would be
carried out in every analysis. Review of the basic steps
will help you to understand the relation of specification
to later steps and to recognize the utmost importance
of specification. The basic steps are actually iterative
because problems at a particular step may require a
return to an earlier step. Note that a possible outcome
is the decision to retain no model, which is a legitimate
conclusion to an SEM analysis. Remember that the goal
in SEM is not to retain a model at any cost—it is instead
to a test a theory to the best of the researcher’s ability.
Basic steps are listed next and discussed afterward.
Later chapters elaborate on specific issues at each step
beyond specification for particular SEM techniques:
1. Specify the model.
2. Evaluate whether the model is identified (if not, go
back to step 1).
and collect, prepare, and screen the data.
4. Analyze the model:
a. Evaluate the fit of the model; if it is poor, respec-
ify the model, provided that doing so is justified
by theory (skip to step 5); otherwise, retain no
model (skip to step 6).
b. Assuming that a model is retained, interpret the
parameter estimates.
c. Consider equivalent or near-equivalent models
(skip to step 6).
5. Respecify the model, which is assumed to be identi-
fied (return to step 4).
6. Report the results.
Specification
In SEM, specification involves the representation of
the researcher’s hypotheses as a series of equations or
as a model diagram (or both) that define the expected

32

Pt1Kline5E.indd 32 3/22/2023 3:52:37 PM


relations among observed or unobserved variables.
Depending on the theory, these relations could be
specified as causal or noncausal. The latter (noncausal)
refers to statistical relations that arise due to spurious
associations, such as when two variables are affected
by a common cause, or confounder, but are not caus-
ally related to each other. The model as a whole should
thus represent all the ways the variables are expected to
relate to one another.
Outcome (dependent) variables in SEM are referred
to as endogenous variables, each of which has at
least one presumed cause among other variables in
the model. Endogenous variables usually have error
terms, which represent variation that is not explained
by the causes of those variables. Given the hypotheses,
an endogenous variable could be specified as a cause
of a different endogenous variable. Endogenous vari-
ables as just described are intervening (intermediate)
variables that act as a causal link between other vari-
ables. That is, intermediates are specified as affected
by causally-prior variables, and in turn they affect other
variables further “downstream” in the causal pathway.
For reasons explained in later chapters, an interven-
ing variable is not synonymous with a mediator—also
called a mediating variable—but a mediator is always
an intervening variable. Other causes of some endog-
enous variables in the model are independent variables,
called exogenous variables in SEM, which themselves
are strictly causal. This is because whatever causes
exogenous variables are not represented in the model;
that is, their causes are unknown as far as the model is
concerned.
Whether a variable is endogenous or exogenous is
determined by the theory being tested, not by analysis.
This means that (1) the model is specified before the
data are collected, and the model represents the total
set of hypotheses to be evaluated in the analysis and
(2) the technique of SEM is not generally a method for
causal discovery so that if given a true causal model,
then SEM could be applied to estimate the directions
and magnitudes of causal effects represented in the
model. However, this is not how SEM is typically used:
Instead, a causal model is hypothesized, and the model
is fitted to sample data assuming that it is correct.
Therefore, specification is the most important step.
There are three general contexts for model specifica-
tion in SEM (Jöreskog, 1993). In a strictly confirma-
tory application, the researcher has a single model that
is either retained or rejected based on its correspon-
Pt1Kline5E.indd 33
Steps and Reporting 33
dence to the data, and that’s it. But this scope of model
testing is so narrow that it occurs only on relatively few
occasions. A second, somewhat less restrictive context
involves the testing of alternative models, and it refers
to situations in which ≥ 2 a priori models are available.
Alternative models usually include the same observed
variables but represent different patterns of hypoth-
esized relations among them. This context requires
sufficient bases to specify more than one model, such
as at least two competing theories that make different
predictions for the same variables. Another example is
in relatively new research areas when there is uncer-
tainty about expected patterns of relations. In this more
exploratory case, the researchers might test a range of
models from simpler to more complex instead of com-
paring models based on different theories (MacCallum,
1995). In either case, the particular model with the best
acceptable fit to the data may be retained, but the rest
will be rejected.
Probably the most frequent specification context in
SEM is model generation, where an initial model is
fitted to the data. If model fit is found to be unsatis-
factory, it is respecified usually by adding effects, or
parameters, to the original model, which makes the
model more complex and also generally improves its
fit. But if the initial model has acceptable fit, that model
might be simplified by dropping parameters, or making
the model simpler, which generally worsens fit. In both
scenarios just described, the respecified model is tested
again with the same data. The goal of model generation
is to “discover” a model with three attributes: It makes
theoretical sense, it is reasonably parsimonious, and it
has acceptably close correspondence to the data.
Because the initial model in model generation is
not always retained, I suggest that researchers make,
in the specification step, a list of possible modifica-
tions that would be justified according to theory. This
means to prioritize the hypotheses, representing just
the very most important ones in the model, and leave
the rest for a “backup list,” if needed. This is because
it is often necessary in SEM to respecify models (step
5), and respecification should respect the same prin-
ciples as specification. Preregistration of the analysis
plan would make a strong statement that changes to
the initial model were not made after the examin-
ing the data (Nosek et al., 2018); that is, the basis for
changing model was a priori, not post hoc in order to
get a model—at worst, any arbitrary model—to fit the
data.
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 34 Concepts, Standards, and Tools
Identification
Although graphical models are useful heuristics for
organizing knowledge and representing hypotheses,
they must eventually be translated into a statistical
model that can be analyzed using a computer program.
A statistical model in SEM is a set of simultaneous
equations, where the computer must eventually derive
a single set of estimates that resolve unknown values, or
model parameters, over all equations, given the data.
Statistical models must generally respect certain
rules or restrictions. One requirement is that of iden-
tification, or whether every model parameter can be
expressed as a function of the variances, covariances,
or means in a hypothetical data matrix. Meeting this
requirement means it is possible to find a unique value
for that parameter, given a particular estimation method
and its statistical criteria. But if a parameter is not iden-
tified, any particular value might not be unique. This
means that the researcher could not distinguish true
versus false values for that parameter even with access
to population data (Bollen, 2002).
Mathematical proof for identification generally
involves solving the equations for a parameter in terms
of symbols for elements in a hypothetical data matrix,
and these symbols generally do not refer to specific
numerical values in any given sample. For example,
Dunn (2005) described a symbolic proof of the claim
that least squares estimators of regression coefficients
and intercepts minimize the sum of squared residuals
(i.e., the least squares criterion) in standard regression
analysis. Note that identification is an inherent property
of a parameter in a particular model. This means that
a parameter that is not identified remains so regardless
of both the data matrix and the sample size (N = 100,
1,000, etc.). Attempts to analyze a model with at least
one parameter that is not identified may be fruitless;
therefore, a model that is not identified should be
respecified (return to Step 1). Presented in Topic Box
3.1 is an intuitive account of model identification. You
can use an online simultaneous equations calculator to
work through the examples.1
Structural equation models are often sufficiently
complex that is impractical for applied researchers
without strong backgrounds in linear algebra to inspect
model equations or parameters for identification.
1 https://www.symbolab.com/solver/simultaneous-equations-
calculator
Pt1Kline5E.indd 34
Instead, there are graphical methods and identifica-
tion heuristics, or rules of thumb, that can determine
whether some, but not all, kinds of models are identi-
fied. There are also computer tools that analyze graphi-
cal representations of some, but not all, kinds of path
models for identification (Textor et al., 2021), which is
both convenient and less subject to error compared with
manual application of heuristics. Dealing with identi-
fication is one of the biggest challenges for newcom-
ers to SEM (Kenny & Milan, 2012); accordingly, it is a
recurrent theme throughout this book.
Suppose that a researcher specifies a structural equa-
tion model that is true to a particular theory, but the
resulting model is not identified. In this case, there is
little choice in SEM but to respecify the model so that
it is identified, but respecifying the original model can
be akin to making an intentional specification error
from the perspective of the theory. There are two basic
options: (1) Apply graphical identification methods to
determine which parameters in the original model are
identified, and then estimate only those parameters;
that is, analyze what is possible and skip the rest (i.e.,
the underidentified parameters). This first option means
that the whole model is not analyzed. (2) Respecify the
model by adding variables, such as covariates or instru-
mental variables, so that all parameters are identified
while still respecting the original theory. This second
option is thus a balancing act between identification
and fidelity to theory. But the main point is that identi-
fication should be evaluated while planning the study
and before the data are collected. Otherwise, it may
be difficult—if not impossible—to add variables to the
model to fix an identification problem, if the data are
already collected.
Measure Selection and Data Collection
The various activities for this stage—select good mea-
sures, collect the data, and screen them—are discussed
in the next chapter on data preparation and in the Psy-
chometrics Primer available on the website for this
book.
Analysis
This step involves using an SEM computer program
to conduct the analysis. Computer tools for SEM, both
commercial and those freely available, are described in
Chapter 5. Here is what takes place during this step:
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 Steps and Reporting 35

TOPIC BOX 3.1

Conceptual Explanation of Identification

Consider the following formula

a+b=6 (3.1)

where a and b are unknowns that require estimates. Because there are more unknowns than formulas in
Equation 3.1, it is impossible to find a unique set of estimates. In fact, there are an infinite number of solu-
tions for (a, b), including

(4, 2), (8, –2), and (2.5, 3.5)

and so on. Thus, Equation 3.1 is not identified; specifically, it is underidentified or underdetermined,
which here signals the excess of unknowns over the number of formulas or, respectively, 2 > 1. A similar
thing happens when a computer tries to derive unique estimates for an underidentified set of equations: It
is not possible to do so, and the attempt fails.
The next example shows that having an equal number of unknowns and formulas does not guarantee
identification. Consider the following set of formulas:

a+b=6 (3.2)
3a + 3b = 18

Although Equation 3.2 has 2 unknowns and 2 formulas, it does not have a unique solution. Actually, an
infinite number of solutions satisfy Equation 3.2, such as (4, 2), and so on. This happens due to an inherent
characteristic: The second formula in Equation 3.2 is linearly dependent on the first formula (i.e., multiply
the first formula by the constant 3), so it cannot narrow the range of solutions that satisfy the first formula.
Thus, Equation 3.2 is underidentified because the effective number of formulas is 1, not 2.
Now consider the following set of 2 formulas with 2 unknowns where the second formula is not lin-
early dependent on the first:

a+b=6 (3.3)
2a + b = 10

Equation 3.3 has a unique solution; it is (4, 2), and none other. Thus, Equation 3.3 is just-­identified,
just-­determined, or saturated with equal numbers of unknowns and distinct (i.e., not wholly depen-
dent) formulas, or 2 for each. That unique solution (4, 2) also perfectly reproduces the constants in Equa-
tion 3.3 (6, 10).
Let’s see what happens when there are more formulas than unknowns. Consider the following set of
formulas with 3 equations and 2 unknowns:

a+b=6 (3.4)
2a + b = 10
3a + b = 12
(continued)

Pt1Kline5E.indd 35 3/22/2023 3:52:37 PM

 36 Concepts, Standards, and Tools

There is no single solution that satisfies all three formulas in Equation 3.4. For example, the solution (4, 2)
works only for the first two formulas in Equation 3.4, and the solution (2, 6) works only for the last two
formulas. But there is a way to find a unique solution: Impose a statistical criterion that leads to an overi-
dentified or overdetermined set of equations with more formulas than unknowns. An example for
Equation 3.4 is the least square criterion from regression analysis but with no constant (intercept) in the
prediction equation. Expressed in words:

Find values of a and b in Equation 3.4 that yield total scores such that the sum of squared
differences between the constants 6, 10, and 12 and these total scores is as small as possible.

Applying the criterion just stated to the estimation of a and b yields a solution that not only gives the
smallest possible difference (.67) but that also is unique, or (3, 3.33). This solution does not perfectly
reproduce the constants in Equation 3.4 (6, 10, 12): the total scores generated by the solution just stated
are 6.33, 9.33, and 12.33, but no other solution comes closer, given the least squares criterion applied
in this example.
Definitions of underidentified, just-­identified, and overidentified models in SEM are elaborated on in
later chapters, but some implications can be stated now: An unidentified model has at least one param-
eter that cannot be algebraically expressed as a unique function of the covariances, variances, or means
among the observed variables. Such models may have other parameters that are identified, and these
identified parameters could potentially be estimated with sample data. But a model with ≥ 1 underidenti-
fied parameter(s) cannot be analyzed as a whole unless it is respecified to reduce the excess number of
unknowns (parameters) or certain constraints are imposed by the researcher in the analysis; otherwise,
underidentified models are too complex to be analyzed with available data.
The unique solution for a just-­identified model can perfectly reproduce the data, but that feat is not
very impressive because model and data are equally complex. Any respecification of a just-­identified
model (within requirements about identification) will also perfectly explain the same data even though
such respecifications oftenmake opposing causal claims (i.e., the models are equivalent). Also, a justified-­
identified model will perfectly fit any arbitrary sample data matrix for the same variables. For all these
reasons, (1) just-­identified models are not discomfirmable, and (2) such models usually have little scientific
merit (MacCallum, 1995), but Pearl (2009) discussed some exceptions.
Overidentified models typically do not perfectly explain the data because such models are simpler
than the data. The possibility for imperfect fit makes such models discomfirmable, and a question in the
analysis is whether the degree of model–data discrepancy warrants rejecting the model (i.e., go to the
respecification step). The principle of disconfirmability also implies a preference for models that are
not highly parameterized, or have so many unknowns relative to the data that they can hardly “disagree”
with those data (MacCallum, 1995). Box (1976, p. 792) put it like this. “Just as the ability to devise simple
but evocative models is the signature of the great scientist so overelaboration and overparameterization
is often the mark of mediocrity.” Other aspects of parameter identification in SEM are elaborated in later
chapters.

Pt1Kline5E.indd 36 3/22/2023 3:52:37 PM


1. Evaluate model fit, which means determine how well
the model explains the data. Perhaps more often than
not, an initial model does not fit the data very well.
Not if, but when this happens to you, skip the rest of
this step and consider the question, “Can a respecifi-
cation of the original model be justified, given rel-
evant theory and results of prior empirical studies?”
2. Assuming the answer is “yes” and given satisfac-
tory fit of the respecified model, then interpret the
parameter estimates.
3. Next, consider equivalent or near-equivalent mod-
els. Recall that equivalent models explain the same
data just as well as the researcher’s preferred model
but with a contradictory pattern of causal effects
among the same variables. For a given model,
there may be many—and in some cases infinitely
many—equivalent versions. Thus, the researcher
should explain why their favorite model should not
be rejected in favor of equivalent ones. There may
also be near-equivalent models that fit the same
data nearly as well as the researcher’s preferred
model, but not exactly so. Near-equivalent models
are often just as critical a validity threat as equiva-
lent models, if not even more so.
When testing alternative models, it is not the model
with the best relative fit to the data that would be auto-
matically retained. This is because the best-fitting
model among alternatives may not itself have accept-
able fit to the data when viewed from a more absolute
standard. Also, the researcher in this context should
not be solely concerned with model fit. This is because
the parameter estimates for a candidate model should
also make theoretical sense. As noted by MacCallum
(1995), a model that fits well but generates nonsensi-
cal parameter estimates is of little scientific value. This
principle is also true in strictly confirmatory and model
generation applications of SEM.
Respecification
A researcher usually arrives at this step because the fit
of their initial model is poor. In the context of model
generation, now is the time to refer to that backup list of
theoretically acceptable changes I suggested when you
specified the initial model. If there is no such list—or
if the researcher has exhausted their backup list and yet
the respecified model still has poor fit—it may be bet-
Pt1Kline5E.indd 37
Steps and Reporting 37
ter (and more honest, too) to retain no model (Hayduk,
2014). This is because there are risks to respecifying
models based more on improving fit to the data in a
particular sample than on substantive considerations
(MacCallum, 1995):
1. Data-driven respecification can so greatly capi-
talize on sampling error that any retained model
is unlikely to replicate, especially when complex
models are analyzed in small samples.
2. Estimates of some parameters in purely data-driven
respecified models may have little or no substantive
meaning.
3. Because the model is evaluated based on the same
data used to modify it, any retained model should
be validated with data from a new sample; that is,
evidence for model validation should come from a
different sample. Thus, a respecified model should
not be treated as confirmed without fitting it to new
data.
MacCallum (1995) noted that it would be appropriate
for journal editors to reject manuscripts for SEM stud-
ies based on model generation if the concerns just listed
are not addressed. This advice strikes me as reasonable
in that the direct acknowledgment of study limitations
is part of reporting, which is considered next.
Reporting
The last basic step is an accurate and complete descrip-
tion of the analysis in a written report. The fact that so
many published articles that concern SEM are flawed
in this regard was discussed earlier. These blatant
shortcomings are surprising considering that there have
been, for some time, published guidelines for reporting
SEM results. For example, recent APA standards for
SEM analyses (Appelbaum et al., 2018) described later
in this chapter were based on earlier SEM standards
for the journal Archives of Scientific Psychology by
Hoyle and Isherwood (2013). McDonald and Ho (2002),
Jackson et al. (2009), and Boomsma et al. (2012) dis-
cussed general principles for reporting results in SEM,
and there are works on how to apply SEM in various
disciplines, including travel and tourism, social and
administrative pharmacy, and marketing, among oth-
ers (respectively, Nunkoo et al., 2013; Schreiber, 2008;
Richter et al., 2016).
3/22/2023 3:52:37 PM
 38 Concepts, Standards, and Tools
OPTIONAL STEPS
Two optional steps could be added to the six basic ones
just described (i.e., steps 1–6):
7. Replicate the results.
8. Apply the results.
The requirement for large samples in SEM complicates
replication. This is because it may be difficult enough
to collect a single sample large enough for SEM analy-
ses much less collect twice as many cases or so to also
have a replication sample. Poor reporting of results in
SEM studies may also contribute to the problem: If
the sample, measures, model, and analysis are not all
clearly described, replication efforts could be stymied.
That fact that many, and perhaps most, claims in SEM
studies are made with little evidence for their general-
izability outside the original sample(s) should give us
all pause, though.
A bright spot about replication in SEM concerns the
evaluation of measurement invariance, or whether a set
of indicators measures the same theoretical concepts
over different populations, times, methods of adminis-
tration, and so on. Measurement invariance can be esti-
mated in CFA by testing whether a measurement model
has similar fit over data collected from samples drawn
from different populations, such as women and men,
among other variations described later in this book
(Chapter 22). There are now many CFA studies of mea-
surement invariance (Dong & Dumas, 2020), and most
involve replication over different samples collected by
study authors.
There are fewer examples of replication over dif-
ferent samples collected by different researchers, or
external replication. One is Tunca (2019), who con-
ducted a pre-registered replication of an earlier SEM
study by Hollebeek et al. (2014). The original analysis
involved a statistical model of customer brand engage-
ment conceptualized as three dimensions—cognitive
processing, brand-related affection, and behavioral
interaction—presumed to affect self–brand connection
and brand usage intent (Hollebeek et al., 2014, p. 157).
Tunca (2019) fitted the same model to data from a new
sample. Although some of the original findings were
consistent with the original and replication samples,
evidence for the discriminant validity of customer
brand engagement dimensions was more problematic.
Pt1Kline5E.indd 38
Gender differences in consumer brand engagement
were noted by Tunca (2019) as a possible explanation
for differences in results compared with those reported
by Hollebeek et al. (2014).
Issues concerning the external replication of SEM
studies are summarized next; see Porte (2012) for more
information about general issues in replication: Recall
that unstandardized estimates of the same param-
eter should generally be compared over independent
samples, not standardized results. How to simultane-
ously fit the same structural equation model to the data
from multiple samples is described in Chapter 12. This
process involves specifying equality constraints that
should be imposed on unstandardized estimates for the
same parameter over different samples as a way to test
for group differences. This method (among others) is
used in CFA studies of measurement invariance, and
it could also be applied by a researcher who collects
new data to test the same model from a prior study by a
different researcher. There are formal measures of the
similarity of factor solutions over different samples,
such as the Tucker coefficient of congruence, a stan-
dardized measure of proportionality in factor loadings
over different groups, that can be applied in CFA—see
Moss et al. (2015) for an example.
There are hundreds, probably thousands, of studies
where SEM has been applied to test theories (Thelwall
& Wilson, 2016). One has to look much harder to find
practical applications of SEM, but such studies exist.
For example, the latest revision of the Stanford–Binet
Intelligence Scales, Fifth Edition (Roid, 2003) was
influenced by results of factor analytic studies, includ-
ing CFA findings, about its internal structure (DiSte-
fano & Dombrowski, 2006). Rebueno et al. (2017) used
the technique of path analysis to evaluate the attributes
of a pre-graduate clinical training program in a ran-
domly selected sample of nursing students. Verdam et
al. (2017) described effect sizes that can be computed
in SEM analyses on different types of response shifts
in reported outcomes over time among patients in
treatment. Effect sizes are derived from decomposing
observed change into elements that include three dif-
ferent types of response shift—including (1) change in
patients’ internal standards (recalibration), (2) change
in patients’ values about the importance of particu-
lar outcomes (reprioritization), and (3) change in the
meaning of the outcome to patients (reconceptualiza-
tion)—versus estimated true change in the underlying
construct.
3/22/2023 3:52:38 PM

REPORTING STANDARDS
Reporting standards are envisioned as sets of best prac-
tices established by authority figures, such as experi-
enced researchers, journal editors (who also tend to
be experienced researchers), and methodologists, pre-
sented with a rationale that also allows for discretion in
their application (Cooper, 2011). They are not intended
as requirements, or mandatory practices that must be
adopted by all, but they are also not merely recommen-
dations, or endorsements of good reporting practices
with no obligation to actually carry them out. Instead,
the goal of reporting standards is to improve the quality
of journal articles through clear, accurate, and trans-
parent reporting, while simultaneously not interfering
too much with researcher creativity and the normal
workings of science (Appelbaum et al., 2018). The hope
is that better reporting will help readers to more clearly
understand the bases for claims made in articles and
facilitate study replication.
A drawback to reporting standards is that there is not
always consensus about exactly what to report in cer-
tain research areas. This is true in SEM in which there
is longstanding debate about the adequacy of various
statistics about model fit, especially about the useful-
ness of significance tests of global model fit versus
continuous measures of fit (Vernon & Eysenck, 2007).
When experts in the field disagree, no reporting stan-
dards can resolve the issue. The approach taken in this
book is to (1) address directly the areas of disagreement
beginning especially in Chapter 10 about model testing
and (2) offer what I believe are principled arguments for
best practices, including reporting. I also believe that
the existence of reporting standards for SEM helps to
focus the conversation among both experienced practi-
tioners and students.
The original APA journal article reporting standards
(JARS) did not include SEM analyses (APA Publica-
tions and Communications Board Working Group on
Journal Article Reporting Standards, 2008). Hoyle and
Isherwood (2013) developed SEM reporting standards
for the journal Archives of Scientific Psychology in the
form of questions to be addressed by authors or review-
ers. Their guidelines were reworded as statements,
slightly edited for consistency, and then incorporated
into the revised APA standards, JARS-Quant for quan-
titative studies (Appelbaum et al., 2018). Hundreds
of reporting standards for health-related research are
described on the Enhancing the Quality and Transpar-
Pt1Kline5E.indd 39
Steps and Reporting 39
ency of Health Research (EQUATOR) network, which
offers a searchable database.2
Summarized in Table 3.1 are the APA JARS-Quant
standards for SEM analyses. Authors should explain
the theoretical bases for model specification, includ-
ing directionalities of presumed effects. The analysis
context—for example, whether an initial model will be
respecified (model generation)—should also be stated.
Describe the model in complete detail, including its
parameters, associations between observed and latent
variables, and whether means were analyzed along
with covariances. Verify that the model is identified,
and explicitly tabulate the model degrees of freedom
(df M). How to do so for different kinds of models is
described in later chapters, but this basic reporting is
problematic in too many studies: Cortina et al. (2017)
reviewed nearly 800 models described in 75 published
SEM studies. They found that the information needed
to calculate df M was reported about 75% of the time, but
reported df M was matched by the article information
only 62% of the time. Shah and Goldstein (2006) found
a similar problem: In 31 out of a total of 143 reviewed
articles detailing SEM studies, the model described in
the text failed to match the statistical results presented
in tables or text. Such discrepancies raise questions
about the model described versus the model actually
analyzed.
State whether samples are empirical or generated,
such as in a computer simulation study, and describe
any loss of samples due to technical problems, such as
inadmissible solutions (i.e., illogical estimates) or fail-
ure of iterative estimation to converge—see Table 3.1.
Give the rationale for the sample size, including the
parameters for a power analysis. Power analysis and
other methods to specify target sample size in SEM
are described in Chapter 10. Describe all measures in
detail, including psychometrics, for scores from psy-
chological tests analyzed in the researcher’s sample.
Describe the data screening in complete detail,
including (1) the extent, patterns, and assumptions about
missing data; (2) the status of distributional assump-
tions; (3) whether any other problems, such as outliers,
were detected; and (4) corrective actions taken, if any
(Table 3.1). A strong demonstration of transparency
occurs when both the syntax for the analysis and the
data file are accessible to other researchers. Access to
original data is part of the open-science movement in
2 https://www.equator-network.org/
3/22/2023 3:52:38 PM
 TABLE 3.1. Summary of JARS-Quant Reporting Standards for Structural Equation
Modeling Analyses
Section Topic and description
Abstract If a model is retained, report values of at least two global fit statistics with brief comment on local fit, and
state whether the initial model was respecified.
Introduction Justify directionality assumptions (e.g., X → Y instead of the reverse).
State whether respecification is planned, if the initial model is rejected.
Specification Describe context (i.e., model generation, model comparison, strictly confirmatory).
Give a full account for model specification, including latent variables and indicators (i.e., measurement
model), status of parameters (i.e., free, fixed, or constrained), or how the model or analysis deals with
score non-independence.
Describe the mean structure, if means are analyzed.
Justify error correlations in the model, if present.
Verify that tested models are identified.
Explicitly tabulate numbers of observations, free parameters, and dfM.
Methods State whether data were simulated or collected from actual units of study (i.e., cases).
Describe measures (e.g., taken from a single vs. multiple questionnaires), specify whether they are items or
scales (i.e., total scores), and report psychometrics.
Outline how sample size was determined (e.g., power analysis, accuracy in parameter estimation, resource
limitations), give details for power analysis (e.g., H0, H1, a, effect size).
Indicate whether results or samples were discarded due to nonconvergence or inadmissible solutions.
Data screening Describe data loss patterns (i.e., MCAR, MAR, MNAR) and corrective actions (e.g., single or multiple
and summary imputation, FIML).
State distributional assumptions (e.g., multivariate normality), report evidence that assumptions were met or
describe actions taken to address violations.
Report sufficient summary statistics that allow secondary analysis (e.g., covariance matrix), or make the raw
data file available.
Estimation State the computer tool (including version) used in the analysis and the estimation method used, or make the
syntax available.
Describe default criteria that were changed to obtain a converged solution.
Report whether the solution is admissible (e.g., negative error variances) and describe corrective actions.
Model fit Interpret values of global fit statistics according to evidence-based criteria.
Describe local fit, or the residuals (e.g., standardized, normalized, correlation).
Explain the decision to retain or reject any model.
State criteria for evaluating parameter estimates, including whether results are compared over groups.
If comparing alternative models, state criteria for selecting a preferred model.
Respecification Indicate whether respecifications were a priori or post hoc (i.e., arrived at before or after examining the data).
Give a theoretical rationale for any parameters fixed or freed in respecification.
Estimates Report unstandardized and standardized estimates with standard errors for all free parameters, if possible.
Report standardized and unstandardized indirect effects with standard errors, outline analysis strategy.
Report estimates of interactions with standard errors, describe follow-up analyses.
Discussion Summarize changes to the initial model and rationale, if a model is retained.
Justify the preference for retained models over equivalent models or near equivalent models that explain the
same data just as well or nearly so.

Note. JARS-Quant, journal article reporting standards for quantitative studies; MCAR, missing completely at random; MAR, missing at random;
MNAR, missing not at random; FIML, full information maximum likelihood; dfM, model degrees of freedom. Underlining emphases the most
essential parts for each standard. From “Journal Article Reporting Standards for Quantitative Research in Psychology: The APA Publications and
Communications Board Task Force Report,” by Appelbaum, M., Cooper, H., Kline, R. B., Mayo-Wilson, E., Nezu, A. M., & Rao, S. M. (2018).
Journal article reporting standards for quantitative research in psychology: The APA Publications and Communications Board Task Force report.
American Psychologist, 73(1), 3–25. https://doi.org/10.1037/amp0000191. Copyright © 2018 American Psychological Association. All rights re-
served.

40

Pt1Kline5E.indd 40 3/22/2023 3:52:38 PM


which all components of research, including data, meth-
ods, peer review, and publications, are freely available.
Increasing numbers of journals encourage the sharing
of the data, and some journals award badges to authors
for open-science practices (Chambers, 2018).
A fact of life in SEM is that computer analyses can,
and sometimes do, go wrong. How to deal with vari-
ous technical problems in the analysis are addressed
throughout the book, but the nature of such problems
and corrective steps taken to resolve them should be
reported—see Table 3.1. Reassure readers that the solu-
tion is admissible, that is, the estimates do not include
anomalous results that would invalidate the solution.
Model fit should be described at two different levels,
global and local. Global fit concerns the overall or aver-
age correspondence between the model and the sample
data matrix. Just as averages do not indicate variability,
it can and does happen in SEM that models with appar-
ently satisfactory global fit can have problematic local
fit, which is measured by residuals computed for every
pair of observed variables in the model. Residuals are
the differences between observed (sample) and pre-
dicted (by the model) covariances or correlations, and
as absolute residuals increase, local fit becomes worse
for those pairs of variables. Evidence for problematic
local fit goes against retaining the model.
The analogy in regression analysis is the differ-
ence between R2, or overall explanatory power (global
fit), and regression residuals, or differences between
observed and predicted scores at the case level, not
at the variable level as in SEM. Aberrant patterns of
regression residuals, such as severely nonnormal distri-
butions or heteroscedasticity, indicate a problem even if
the value of R2 is reasonably high—see Fox (2020). Just
as reports about regression analyses without descrip-
tion of the residuals are incomplete, so too are reports
in SEM in which only global fit is described. This is a
common shortcoming in many, if not most, published
SEM studies. For example, only 17 out of 144, or 12%,
of SEM studies published in organizational or manage-
ment research journals reviewed by Zhang et al (2021)
contained information about local fit. The remedy is
straightforward: Present a matrix of residuals in the
article, or at least describe the pattern of residuals in
the article and make the residuals available in supple-
mentary materials. Without the details about local fit,
readers cannot understand the whole picture about
model–data correspondence.
Explain the basis for a decision to either reject or
retain a model. That is, state the statistical criteria,
Pt1Kline5E.indd 41
Steps and Reporting 41
degree of correspondence of empirical estimates with
theoretical predictions, or other reasons for the decision
(Table 3.1). If a model is retained, a common mistake
is to report only the standardized solution. Although
standardized estimates are easier to interpret, they are
generally less useful for comparing results for the same
model and variables but fitted to data in a different sam-
ple, especially if samples, such as men versus women,
differ in their variances (Grace & Bollen, 2005). Thus,
also report the unstandardized solution with stan-
dard errors. If analyzing indirect effects or interaction
effects, then describe the analysis strategy, including
follow-up analyses. Another common mistake is the
failure to acknowledge the existence of equivalent ver-
sions of any retained model with an explanation about
why the researcher’s version would be preferred.
As a reviewer of SEM studies submitted to research
journals, I see many examples of deficient, poor report-
ing, so much so that over the years I developed a set of
boilerplates, or standardized text, that I can adapt to a
particular manuscript. Presented in Topic Box 3.2 are
examples of some of my review templates. I hope that you
can learn a few things about better, more complete report-
ing from these cautionary tales on inadequate reporting.
REPORTING EXAMPLE
Several colleagues and I wrote an SEM study with the
(at the time) upcoming APA reporting standards for
SEM in mind. The study, data, research aim, and model
are introduced next. Do not worry at this you point if
you do not understand everything about the model or
its specification because we focus on issues related to
reporting next. Analysis results for this example are
described in Chapter 15, so you’ll get to see this model
again along with the data described here.
In a sample of 193 patients with first-episode psy-
chosis (FEP) (schizophrenia, schizoaffective disorder)
or recurrent multiple-episode psychosis (MEP), Sauvé
et al. (2019) administered the CogState Schizophrenia
Battery (CSB) (Pietrzak et al., 2009), a computerized
test of cognitive ability intended to measure domains
affected by psychosis (e.g., working memory, attention-
vigilance, social reasoning), and the Scale to Assess
Unawareness of Mental Disorder (SUMD) (Amador
et al., 1993), an interview-based measure of the rela-
tive absence of understanding about one’s own mental
condition, also called lack of illness insight or anosog-
nosia. Higher scores on the SUMD indicate greater
3/22/2023 3:52:38 PM
 42 Concepts, Standards, and Tools

TOPIC BOX 3.2

Review Boilerplates for Common Problems in SEM Manuscripts

I have reviewed hundreds of manuscripts of SEM studies for about 50 different journals or publishers. After
seeing repetitions of similar problems in reporting, I wrote a set of more-or-less standardized comments
that could be adapted to the specifics of a particular work. These boilerplates cover incomplete reporting
about model fit, the interpretation of values of global fit statistics in ways that are not supported by recent
evidence, or the lack of a rationale for retaining a model (see Table 3.1), among other problems. Some of
these comments refer to global fit statistics that are defined in Chapter 10 on model testing and indexing,
but issues in their misuse are raised next:

1. Failure to describe local fit. It is inappropriate to base model evaluation solely on values of global
fit statistics without also considering local fit, or the residuals, which provide additional details
about model fit. It can and does happen that models can generate favorable values of global fit
statistics even though there is evidence for appreciable model–data discrepancy at the level of the
residuals. Recent reporting standards for SEM call on authors to describe both global and local
fit—see Appelbaum et al. (2018), Greiff and Heene (2017), and Vernon and Eysenck (2007) for
more information.
2. Failure to report unstandardized estimates. It is a mistake to omit the reporting of unstandardized
parameter estimates, which is generally the basis for comparing results from the same model and
variables over different samples—­see Grace and Bollen (2005). Please also report the unstan-
dardized estimates with their standard errors.
3. Incorrect model degrees of freedom. The reported value of df M is impossible, given the variables
and effects represented in the model diagram. I suspect something is wrong here, ranging from
a simple typographical error to something more serious, including the analysis of a model that
differs from the model described in the manuscript. Please explicitly tally the numbers of observa-
tions, freely estimated model parameters, and df M. Next, resolve any discrepancies in the presen-
tation.
4. Ignored failed significance tests for the whole model. The model failed the chi-­square test, which
signals covariance evidence against the model, but this outcome is discounted by the incorrect
statement that the chi-­square test is “biased” by sample size. There are two problems here: The
sample size in this study is not large for SEM analyses, and the chi-­square test is affected by sam-
ple size only when the model is incorrect. This problem is compounded by the failure to describe
the residuals, which could indicate poor local fit for certain pairs of variables—­see Hayduk (2014)
and Ropovik (2015).
5. No rationale for the decision to retain a model. Why the respecified model is retained was not
explained. Instead, the author(s) report(s) values of global fit statistics with no interpretation. That
is, how do the author(s) get from these results in the text of the Results section, or

c2 (272) = 587.52, p < .01, CFI = .97, TLI = .946, RMSEA = .057

to the unjustified conclusion that the model has “acceptable” or “excellent” fit? There is no con-
nection, argument, or logic that links the two. It is possible that the model does not actually fit the
data at level of the residuals but, as mentioned, the reader is told nothing about this area.

Pt1Kline5E.indd 42 3/22/2023 3:52:38 PM

 Steps and Reporting 43

anosognosia. The main goal of Sauvé et al. (2019) was
to estimate the association between level of general
cognitive ability and symptom unawareness where both
concepts were modeled as latent variables. The context
is model generation.
Presented in Figure 3.1 is the final model retained by
Sauvé et al. (2019). A total of six tasks from the CSB
are represented as indicators of a general cognitive
ability factor. Each measured variable is represented in
the figure with a rectangle, a standard graphical con-
vention in SEM. The lines with single arrowheads that
point from the cognitive ability factor to the indicators
signal the assumption of reflective measurement, or the
hypothesis that general ability as a theoretical variable
affects task performance. The factor as a theoretical—
and thus unmeasured—variable is represented in the
figure with an oval, another oft-seen graphical symbol.
Each indicator has an error term designated in the fig-
ure by a line with a single arrowhead oriented at a 45°
angle that points to that indicator, and the error term
represents the unique variation in each indicator, such
as that due to measurement error, not explained by their
common ability factor.
The errors for two pairs of indicators are connected
by the symbol for a covariation, or curved lines with
arrowheads at each end. These symbols represent cor-
related errors, or the hypothesis that the correspond-
ing indicators share something unique to that pair. For
instance, the International Shopping List Test is a list
of items read aloud to examinees. Two scores from this
task were analyzed, immediate versus delayed recall of
list items or, respectively ISL and ISLR in Figure 3.1.
Because they come from the same task, indicators ISL
and ISLR may covary even after controlling for their
common ability factor. This same could be true for the
two scores from the Groton Maze Chase Test, GML
and GMR (see Figure 3.1).
The SUMD is represented in Figure 3.1 as the single
indicator of a symptom unawareness factor. This speci-
fication acknowledges that (1) an observed variable is
not identical to a theoretical concept and (2) scores on
the SUMD are assumed to be affected by measurement
error (i.e., the score reliability coefficient is < 1.0). The
constant in the figure that appears next to the symbol for
the error term of the SUMD, .360, is a value related to
empirical reliability coefficients reported in the litera-
ture for this measure; how the particular value of “.360”
was computed for the SUMD is explained in Chapter
15. The line with the single arrowhead that connects
the factors in the figure represents the presumed causal

ISL .360

ISLR SUMD
1
1
GML
Cognitive Symptom
Unaware
GMR

OCL

CPAL

FIGURE 3.1. Final model of cognitive capacity and symptom unawareness. ISL, International Shopping List; ISLR, Interna-
tional Shopping List Immediate Recall; GML, Groton Maze Learning task; GMR: Groton Maze Learning task Delayed Recall;
OCL, One-Card Learning task; CPAL, Continuous Paired Associate Learning task; SUMD, Scale to Assess Unawareness of
Mental Disorder. From “Cognitive Capacity Similarly Predicts Insight into Symptoms in First- and Multiple-Episode Psychosis,”
by G. Sauvé et al., 2019, Schizophrenia Research, 206, p. 239. Copyright © 2019 Elsevier B.V. Adapted with permission.

Pt1Kline5E.indd 43 3/22/2023 3:52:38 PM

 44 Concepts, Standards, and Tools
effect of cognitive ability on symptom unawareness. Its
value is estimated controlling for measurement error
not only in the SUMD variable but also in all six indi-
cators of the cognitive ability factor. The outcome vari-
able in this analysis, the symptom unawareness factor,
itself has an error term called a disturbance that repre-
sents variation not explained by cognitive ability—see
Figure 3.1.
The features of reporting in Sauvé et al. (2019) that
respected SEM reporting standards are listed next.
Some of these details are reported in the main text;
others are available in the supplementary materials for
the article:
1. The methodology for preparing the data for analy-
sis under the assumption of normality is described,
including normalizing transformations applied to
scores from individual cognitive tasks. Distribu-
tional characteristics are verified.
2. The rules by which the initial single-factor mea-
surement model for cognitive capacity was respeci-
fied are stated. Briefly, each indicator was required
to share at least 30% of its variance with the com-
mon factor, and it is predicted that error terms for
two scores from the same task, such as immediate
versus delayed recall of the same stimuli (e.g., ISL,
ISLR in Figure 3.1), might covary.
3. The syntax, data, and complete output files for all
SEM analyses in lavaan are available to readers.
Thus, readers can reproduce the original analyses
or fit models to the same data not considered by
Sauvé et al. (2019).
6. The fact that all solutions are admissible is reported.
Model fit is described at both the global and local
levels. Full matrices of residuals are available so
readers have full access to complete information
about fit.
5. Unstandardized estimates with standard errors are
reported for all model parameters, and standard-
ized estimates are reported, too.
6. An equivalent model is directly acknowledged.
Other aspects of reporting by Sauvé et al. (2019) are
not ideal. For example, we did not preregister the analy-
sis plan. The model degrees of freedom are not explic-
itly tabulated (they are df M = 12 for Figure 3.1), and
the sample size was not determined based on a priori
considerations, such as power analysis. The sample size
Pt1Kline5E.indd 44
is relatively small for SEM, N = 193, but the population
base rate of psychotic disorders is relatively low, about
1–2% or so, so even this sample size is reasonably large
among comparable studies of insight in psychotic dis-
orders (e.g., Phahladira et al., 2019). Briefly, the results
indicated that cognitive capacity explains about 6%
of the variation in symptom unawareness and that, as
expected, lower levels of cognitive ability predict less
illness awareness. Follow-up regression analyses indi-
cated that the relation between cognitive capacity and
symptom unawareness did not vary appreciably over
patients with first-time versus multiple-episode psycho-
sis.
SUMMARY
Specification is the most important step in SEM because
the quality of the ideas that underlie the model affects
all subsequent steps, including the analysis phase. Mod-
els should be evaluated for identification, or for whether
model parameters can be expressed as functions of the
elements in a data matrix, in the study planning stage.
This is because adding variables to the model is one
way to rectify underidentified causal effects, but doing
so may be difficult if the data are already collected.
The context of model generation is the most common
in SEM studies, and respecification should be guided
by the same principles as the specification of the origi-
nal model. This means that changes to an initial model
require substantive justification; otherwise, a risk is that
respecification will generate a model that fits the data in
a particular sample but does not replicate. The state of
reporting in too many SEM studies is deficient such that
readers are not given enough information about model
specification, respecification, or fit to the data to fully
comprehend the findings. For example, both global fit
and local fit, or the residuals, should be described in
written reports. The existence of reporting standards
for SEM analyses should help authors to write better,
more complete summaries of SEM analyses. The next
chapter covers preparation of the data.
LEARN MORE
Recommendations for reporting SEM results as part of JARS-
Quant reporting standards by the APA are described in
Appelbaum et al. (2018), the classic work by MacCallum
(1995) about model specification offers helpful advice, and
3/22/2023 3:52:38 PM

Schreiber (2008) describes the information that should be
reported in SEM analyses in clear, accessible terms.
Appelbaum, M., Cooper, H., Kline, R. B., Mayo-Wilson, E.,
Nezu, A. M., & Rao, S. M. (2018). Journal article report-
ing standards for quantitative research in psychology:
The APA Publications and Communications Board Task
Force report. American Psychologist, 73(1), 3–25.
Pt1Kline5E.indd 45
Steps and Reporting 45
MacCallum, R. C. (1995). Model specification: Procedures,
strategies, and related issues. In R. H. Hoyle (Ed.), Struc-
tural equation modeling: Concepts, issues, and applica-
tions (pp. 16–36). Sage.
Schreiber, J. B. (2008). Core reporting practices in struc-
tural equation modeling. Research in Social and Admin-
istrative Pharmacy, 4(2), 83–97.
3/22/2023 3:52:38 PM
 4

Data Preparation

Besides good ideas (hypotheses), effective SEM practice requires careful data preparation and screening.
Just as in other types of multivariate analyses, data preparation is critical in SEM for three reasons: First,
it is easy to make a mistake entering data into computer files. Second, some estimation methods in SEM
make specific distributional assumptions about the data. These assumptions must be taken seriously because
violation of them could result in bias. Third, data-related problems can make SEM computer tools fail to
yield a logical solution. A researcher who has not carefully screened the data could mistakenly believe
that the model is at fault, and confusion ensues. How to deal with missing data is a problem in many, if not
most, empirical studies. Classical (i.e., obsolete) methods for handling incomplete data sets are contrasted
with modern techniques such as multiple imputation, for which a tutorial is offered for readers who are less
familiar with the method. Other data screening issues addressed in this chapter include outliers, extreme
collinearity, and distributional characteristics. We begin with review of basic options for inputting data to
SEM computer tools.

FORMS OF THE INPUT DATA
Most primary researchers—those who conduct origi-
nal studies—analyze raw data files, but sometimes the
raw data themselves are not required. For example,
when analyzing continuous outcomes with methods
that assume normal distributions, a matrix of summary
statistics can be input to an SEM computer tool instead
of the raw data. In fact, you can replicate most of the
analyses described in this book using the matrix sum-
maries that accompany them. This is a great way to
learn because you can make mistakes using someone’s
data before analyzing your own. Some journal articles
about the results of SEM analyses contain enough
information, such as correlations, standard deviations,
and means, to create a matrix summary, which can then
be submitted to a computer program for analysis. Thus,
readers of these works can, with no access to the raw
data, replicate the original analyses or estimate alterna-
tive models not considered in the original work (i.e.,
conduct a secondary analysis).
Most SEM computer tools accept either a raw data
file or a matrix summary. If raw data are analyzed, the
computer will create its own matrix, which is then ana-
lyzed. Consider the issues listed next when choosing
between raw data and a matrix summary as program
input:
1. Certain kinds of analyses require raw data files.
One situation is when distributions for continuous out-
comes are severely nonnormal and the data are ana-
lyzed with a method that assumes normality, but stan-
dard errors and model test statistics are computed that
adjust for nonnormality. A second situation involves
missing data. Both classical and modern techniques for
missing data require the analysis of raw data files. The

46

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 Data Preparation 47

third case is when outcome variables are categorical, TABLE 4.1. Raw Data and Matrix Summaries
either unordered (nominal) or ordered (ordinal). Such in Lower Diagonal Form
outcomes can be analyzed in SEM, but raw data files X W Y
are generally needed.
Raw scores
2. Matrix input offers a potential economy over raw
3 65 24
data files. Suppose that 1,000 cases are measured on 10 8 50 20
continuous variables. The data file may be 1,000 lines 10 40 22
(or more) in length, but a matrix summary for the same 15 70 32
data might be only 10 lines long. 19 75 27
3. Sometimes a researcher might “make up” a data
Covariances
matrix using theory or results from a meta-analysis,
so there were never raw data, only a matrix summary. 38.5000
42.5000 212.5000
Submitting a made-up data matrix to an SEM com-
17.5000 51.2500 22.0000
puter tool is a way to diagnose certain kinds of techni-
cal problems that can occur when analyzing a complex Correlations, standard deviations
model. This idea is elaborated later in the book.
1.0000
.4699 1.0000
If means are not analyzed, there are two basic sum- .6013   .7496 1.0000
maries of raw data for continuous variables—covari- 6.2048 14.5774 4.6904
ance matrices and correlation matrices with standard
deviations. For instance, listed in the top part of Table Note. MX = 11.0000, MW = 60.0000, MY = 25.0000.
4.1 are scores on three continuous variables for five
cases. Presented in the lower part of the table are the
two summary matrices just mentioned in lower diago- researcher submits just a correlation matrix for analy-
nal form, where only unique values are reported in the sis. There are special methods for analyzing correlation
lower left-hand side of the matrix. Both the covariance matrices without standard deviations, but they are not
matrix and the correlation matrix with standard devia- available in all software. Thus, it is generally safer to
tions in the table encapsulate all covariance informa- analyze a covariance matrix (or a correlation matrix
tion in the raw data. Computer tools for SEM generally with standard deviations). The pitfalls of analyzing cor-
accept for input lower diagonal matrices as alternatives relation versus covariance matrices are the reason why
to full ones, with redundant entries above and below you must state in written reports the specific kind of
the diagonal, and can “assemble” a covariance matrix data matrix analyzed and the estimation method used.
given just the correlations and standard deviations. Matrix summaries of raw data must consist of
Four-decimal accuracy is recommended for matrix covariances and means whenever means are analyzed.
input to minimize rounding error. Exercise 1 asks you For example, either the correlation matrix with stan-
to reproduce the covariance matrix from the correla- dard deviations or the covariance matrix in Table 4.1
tions and standard deviations in Table 4.1. would be submitted with an extra row for the means of
It may be problematic to submit just a correlation all three variables, if means are analyzed. Even if your
matrix with no standard deviations for analysis, specify analyses do not concern means, you should neverthe-
that all standard deviations equal 1.0 (which standard- less report the means of all continuous variables. You
izes the variables), or convert raw scores to normal may not be interested in analyzing means, but someone
deviates (z scores) and then submit the data file of stan- else might be. Always report sufficient descriptive sta-
dardized scores. This is because most SEM estimation tistics (including means) so others can reproduce your
methods assume the analysis of unstandardized vari- results. If the analysis requires raw data, make those
ables. If the variables are standardized, then the results data available to readers, such as including the data
can be incorrect, including wrong values for standard file in the supplemental materials for a journal article.
errors or model test statistics. Some SEM computer Some journals host data files for articles in databases
tools issue warning messages or terminate the run if the that are accessible to all readers.

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 48 Concepts, Standards, and Tools
POSITIVE DEFINITENESS
The data matrix that you submit—or the one calculated
by the computer from your raw data—should be posi-
tive definite (PD), which is required for most estima-
tion methods. A data matrix that lacks this character-
istic is nonpositive definite (NPD); therefore, attempts
to analyze such a matrix would probably fail. A PD
data matrix has the properties summarized next:
1. The matrix is nonsingular, which means that it has
an inverse. A matrix with no inverse is singular.
2. All eigenvalues for the matrix are positive (> 0),
which says that the matrix determinant is also posi-
tive.
3. There are no out-of-bounds correlations or covari-
ances.
In most kinds of multivariate analyses (SEM
included), the computer needs to derive the inverse of
the data matrix as part of its linear algebra operations. If
the matrix is singular, these operations fail. If v equals
the number of observed variables, the computer should
also be able to generate v linear combinations of the
variables that (1) are pairwise uncorrelated (orthogo-
nal) and (2) reproduce all the covariance information in
the original data matrix. The v weighted combinations
are called eigenvectors, and the amount of variance
explained in the original data matrix by each eigenvec-
tor is its corresponding eigenvalue.1 It is impossible to
derive more eigenvectors than the number of observed
variables because no information remains once all v
eigenvectors are extracted from the data matrix.
If all v eigenvalues are > 0, the matrix determinant
will be positive, too. The determinant is the serial
product (the first times the second times the third, and
so on) of the eigenvalues. If all eigenvalues are posi-
tive, the determinant is a kind of matrix variance, or
the volume of the multivariate space “mapped” by the
observed variables.2 If any eigenvalue equals zero, then
(1) the data matrix has no inverse (it is singular), (2) the
1 Inprincipal components analysis, a type of exploratory factor
analysis where the factors are linear combinations of observed
variables (principal components), eigenvectors correspond to
principal components and eigenvalues are the variances of those
components.
2 Thereis a good illustration at https://en.wikipedia.org/wiki/
Determinant
Pt1Kline5E.indd 48
determinant equals zero, and (3) there is some pattern
of perfect collinearity that involves two variables (e.g.,
rXY = 1.0) or ≥ 3 variables in a more complex pattern
(e.g., RY•XW = 1.0). Perfect collinearity means that the
denominators of some calculations will be zero, which
results in “illegal” (undefined) fractions in computer
analysis (estimation fails). Near-perfect collinearity,
such as rXY = .97, manifested as near-zero eigenvalues
or determinants, can cause the same problem.
Negative eigenvalues (< 0) may indicate a data
matrix element—a correlation or covariance—that
is out of bounds. It is mathematically impossible for
such an element to occur if all elements were calculated
from the same cases with no missing data. For exam-
ple, the value of rXY, the Pearson correlation between
two continuous variables, is limited by the correlations
between these two variables and a third variable W. It
must fall within the range defined next:
2
(rXW × rWY ) ± (1 − rXW 2
)(1 − rWY ) (4.1)
For example, given a value of rXW = .60 and of rWY = .40,
the value of rXY must fall within the range
.24 ± .73, or from –.49 to .97
Any other value for rXY would be out of bounds. Equa-
tion 4.1 specifies a kind of triangle inequality for val-
ues of correlations among three variables. In a geomet-
ric triangle, the length of a given side must be less than
the sum of the lengths of the other two sides but greater
than the difference between the lengths of the two sides.
In a PD data matrix, the maximum absolute value
of covXY, the covariance between two continuous vari-
ables X and Y, must respect the limits defined next:
22 22
XY ≤ s XX × sYY
max cov XY (4.2)
2 2
where s X and sY are, respectively, the sample variances.
In other words, the maximum absolute value for the
covariance between two variables is less than or equal
to the square root of the product of their variances. For
example, given
2 2
covXY = 13.00, s X = 12.00, and sY = 10.00
The covariance between X and Y is out of bounds
because
13.00 > 12.00 × 10.00 =
10.95
3/22/2023 3:52:39 PM

which violates Equation 4.2. The value of rXY is also
out of bounds because it equals 1.19, given these vari-
ances and covariance. Exercise 2 asks you to verify
this fact.
Because the matrix determinant is the serial prod-
uct of the eigenvalues, the determinant will be nega-
tive if some odd number of eigenvalues (1 or 3 or 5,
etc.) is negative. A matrix with a negative determinant
may have an inverse, but the whole matrix is neverthe-
less NPD, perhaps due to out-of-bounds correlations or
covariances. See Topic Box 4.1 for more information
about causes of NPD data matrices and possible solu-
tions.
Before analyzing either raw data or a matrix sum-
mary, the original data file should be screened for the
problems considered next. Some of these difficulties are
causes of NPD data matrices, and most are also con-
cerns in data screening for other kinds of multivariate
statistical analyses—see Tabachnick and Fidell (2019).
If scores from psychological tests are to be analyzed,
the reliabilities of those scores should be estimated
in the researcher’s samples—see the Psychometrics
Primer on this book’s website.
MISSING DATA
The topic of how to deal with missing observations is
complex, and entire books are devoted to it (Enders,
2010; Graham, 2012; Rubin & Little, 2020). There are
also articles or chapters about dealing with incomplete
data in SEM (Enders, 2013, 2023; Jia & Wu, 2019),
which is fortunate because it is not possible here to
give a comprehensive account. The goal instead is to
describe obsolete versus modern options and explain
their relevance in SEM.
Ideally, researchers would always work with com-
plete data sets; otherwise, prevention is the best strat-
egy. For example, questionnaire items that are clear and
unambiguous may prevent missing responses, and com-
pleted forms should be reviewed for missing responses
before participants submit a computer-administered
survey. Little et al. (2012) offered suggestions for reduc-
ing missing data in clinical trials, including routine
follow-up after treatment discontinuation, allowing for
flexible treatment that accommodates side effects or
differences in efficacy, offers of monetary value or other
incentives for completeness of records, and targeting an
underserved population, which provides an incentive to
remain in the study.
Pt1Kline5E.indd 49
Data Preparation 49
In the real world, missing values occur in many, if
not most, data sets, despite best efforts at prevention.
A few missing values, such as < 5% in the total data
set, may be of little concern. This is because selection
among alternative methods to deal with missing data
tends to make little difference when rates of missing
data are low (Schafer, 1999). Higher rates of data loss
present greater challenges, especially if the data loss
mechanism is not random (or at least predictable).
There is no critical rate of missing data that signals a
severe problem, but as that rate exceeds about 10% or
so, there is an increasing likelihood of bias. In this case,
the choice of method can affect the results. Best prac-
tices involve the steps listed next (Johnson & Young,
2011; Little et al., 2012):
1. Report the extent of missing data with a tabular
summary or diagram, such as a participant flow.
Describe procedures used to prevent or mitigate
data loss.
2. Diagnose missing data patterns, which are related
to assumptions about data loss mechanisms. Note
that different variables in the same data set can be
affected by different data loss mechanisms.
3. Use a modern, principled statistical method for ana-
lyzing incomplete data, one that takes full advan-
tage of the structure in the data and does not rely on
implausible assumptions.
4. Acknowledge the reality that certain assumptions
about data loss are untestable unless new data are
collected.
5. Conduct a sensitivity analysis, where the extant
incomplete data are reanalyzed using a different
method. If the results differ appreciably from the
original findings, they are not considered robust
compared to alternative assumptions about missing
data.
Data Loss Mechanisms
and Missingness Graphs
Rubin (1976) described three basic data loss mecha-
nisms. The least troublesome in terms of bias—and
perhaps also the most unlikely in real data sets—is
missing completely at random (MCAR). This means
that missingness (i.e., missing yes or no) on a variable
is unrelated to (1) all other variables in the data set and
(2) the variable itself with no missing observations.
The second point just stated means that the propensity
3/22/2023 3:52:39 PM
 50 Concepts, Standards, and Tools

TOPIC BOX 4.1

Causes of Nonpositive Definite Data Matrices and Solutions

The causes of NPD data matrices described by Wothke (1993) are listed next. Some causes can be
detected through data screening:

1. Extreme bivariate or multivariate collinearity among observed variables.

2. The presence of outliers that force the values of correlations to be extremely high.
3. Sample correlations or covariances that barely fall within the limits defined by Equations 4.1 and
4.2 but nevertheless cause the analysis to fail with a warning or error message about an NPD
matrix.
4. Pairwise deletion of missing data.
5. Making a typing mistake when transcribing a data matrix from one source, such as a table in
a journal article, to another, such as a syntax file for computer analysis, can result in an NPD
data matrix. For example, if the value of a covariance in the original matrix is 15.00, then typing
150.00 in the transcribed matrix could generate an NPD matrix.
6. Plain old sampling error can generate NPD data matrices, especially in small or unrepresentative
samples.
7. Sometimes matrices of estimated Pearson correlations, such as polyserial or polychoric correla-
tions derived for observed variables that are not continuous, can be NPD.

Here are some tips for diagnosing whether a data matrix is PD before submitting it for analysis to an
SEM computer tool: Copy the full matrix (with redundant entries above and below the diagonal) into a text
(ASCII) editor, such as Microsoft Windows Notepad. Next, point your Internet browser to a free, online
matrix calculator (many are available) and then copy the data matrix into the proper window on the cal-
culating page. Finally, select options on the calculating page to derive the eigenvalues, eigenvectors, and
determinant. Look for results that indicate an NPD matrix, such as near-zero, zero, or negative eigenvalues.
A useful matrix and vector calculator is available at https://www.symbolab.com/solver/matrix-calculator.
An alternative is to analyze the matrix in R using its native matrix algebra functions (i.e., no special pack-
age is needed). An example follows.
Suppose that the covariances among variables X, W, and Y, respectively, are

1.00 .30 .65

.30 2.00 1.15
.65 1.15 .90

The R syntax that turns scientific notation off, defines and displays the covariance matrix just listed, and
generates the eigenvalues and eigenvectors, the determinant, and the inverse (if any) is given here. The last
command converts the covariance matrix to a correlation matrix:
(continued)

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 Data Preparation 51

options(scipen = 999)
a <- matrix(c(1,.3,.65,.3, 2, 1.15,.65, 1.15,.9),
nrow = 3, byrow = TRUE)
a
eigen(a)
det(a)
solve(a)
cov2cor(a)

The eigenvalues generated using the R code just listed for the covariance matrix are

(2.918, .982, 0)

The third eigenvalue is zero, so the covariance matrix has no inverse and the determinant equals 0. Let us
inspect the weights for the third eigenvector, which for X, W, and Y, respectively, are

(–.408, –.408, .816)

Some online matrix calculators report the eigenvector weights as

(–1, –1, 2) or (–.5, –.5, 1)

but the values just listed are proportional to the weights computed in R. None of these weights equals zero,
so all three variables are involved in perfect collinearity. The pattern for these data is

RY•XW = RW•XY = RX•YW = 1.0

To verify this pattern, you should calculate the multiple correlations just listed from the bivariate correlations
for X, W, and Y, respectively, computed in R and presented next in lower diagonal form—see the Regres-
sion Primer on this book’s website for the equations:

1.0
.2121 1.0
.6852 .8572 1.0

The LISREL program offers an option for ridge adjustment, which multiples the diagonal elements in a
covariance matrix by a constant > 1.0 until negative eigenvalues disappear (the matrix becomes PD). These
adjustments increase the variances until they are large enough to exceed any out-of-­bounds covariance
element in the off-­diagonal part of the matrix. This technique “fixes up” a data matrix so that the necessary
algebraic operations can be performed (Wothke, 1993), but parameter estimates, standard errors, and fit
statistics are biased after ridge adjustment. A better solution is to try to solve the problem of nonpositive
definiteness through data screening. There are other contexts where you may encounter NPD matrices in
SEM, but these generally concern (1) matrices of parameter estimates for your model or (2) matrices of
correlations or covariances predicted from your model. A problem is indicated if any of these matrices is
NPD. We will deal with these contexts in later chapters.

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 52 Concepts, Standards, and Tools
for an observation to be missing does not depend on a
case’s true status on that variable. Thus, there is no sys-
tematic process anywhere that would make some data
more likely to be missing than other data. If so, then
the observed incomplete data are just a random sample
of scores that the researcher would have analyzed if the
data were complete (Enders, 2010). Results based on
the complete cases only should not be biased, although
power of significance tests may be reduced due to a
smaller effective sample size.
Data are missing at random (MAR) when missing-
ness is (1) correlated with other variables in the data set,
but (2) does not depend on the level of the variable itself
with no missing observations. This means that data are
actually missing conditionally at random, or after con-
trolling for values of other measured variables. Sup-
pose that men are less likely to report on their health
status in a particular area than women, but there is no
real difference in health between men with no missing
data versus men who opted not to disclose. After con-
trolling for gender, the data loss pattern is random. The
dependence of missingness solely on other observed
variables explains why Mohan and Pearl (2021) used
the term v-MAR, where “v” stands for “observed
variables.” Information lost due to an MAR process is
potentially recoverable through imputation in which
missing scores are replaced by values predicted from
other variables in the data set. Options for imputation
are described momentarily, but statistical methods suit-
able for the MAR data loss pattern can also be applied
when the pattern is MCAR. The reverse is not true,
though: Methods that assume MCAR are not generally
appropriate when the missing data mechanism is MAR.
The third pattern is missing not at random (MNAR),
also known as nonignorable missing data, where the
probability of missingness is related to the true level
of the variable itself even after controlling for other
variables in the data set. That is, there is a structure
to the missing data, and it cannot be treated as though
it were random. Unlike the MAR pattern, which is a
recoverable process, the MNAR pattern is not because
it is latent (not directly measured) (Little, 2013). An
example of an MNAR missing data pattern is when
men who fail to answer questions about their health
status are more likely to be ill than men with no miss-
ing responses on the same variable. Another is when
respondents with either very low or very high incomes
are less likely to answer questions about their income.
Thus, the challenge presented by the MNAR pattern is
Pt1Kline5E.indd 52
that the missing values depend on information that is
not directly available in the analysis. Thus, (1) results
based on the complete cases only can be severely biased
when the data loss pattern is MNAR, and (2) the choice
of methods to deal with the missing data can make a
big difference in the results. Some of this bias may be
reduced if other measured variables happen to covary
with unmeasured causes of data loss, but whether this is
true in a particular sample is typically unknown.
Mohan and Pearl (2021) described missingness
graphs or m-graphs that visually represent the data
loss mechanisms just outlined. An m-graph is a spe-
cial type of directed acyclic graph (DAG) in which uni-
directional causal effects are represented with arrows
that point from presumed causes to their outcomes.
Presented in Figure 4.1(a) is causal DAG for variables
with no missing data, where Xo and Wo are specified
as uncorrelated causes of Yo. Figures 4.1(b)–4.1(d) are
m-graphs in which Ym is an incomplete variable with
missing scores for some, but not all, cases. Variable R
in the m-graphs is the missingness mechanism that
determines whether a particular score is missing or not
missing on the observed variable Y*, which is a proxy
for Ym. The relation among Yo, R, and Y* can be sum-
marized as follows:
Y if R = 0
Y* =  0 (4.3)
if R = 1
m
where m means “missing.” That is, when R = 0, the true
value for Y is observed, but when R = 1 that value is
hidden (not observed).
In Figure 4.1(b), the data loss mechanism is MCAR
because missingness occurs with no relation to any vari-
able whether it is completely measured (Xo, Wo) or par-
tially measured (Ym). The independencies just stated are
represented in Figure 4.1(b) by the absence of arrows
that point to R from all other variables. The MAR pat-
tern is depicted in Figure 4.1(c), where missingness is
specified as being caused by the fully observed variable
Wo but not by the incomplete variable Ym. For example,
if variable Wo in the figure is gender, then the whole
m-graph says that although the likelihood of missing
data varies by gender, there is no systematic difference
between responders and nonresponders on the partially
measured variable after controlling for gender. The
m-graph in Figure 4.1(d) represents an MNAR pattern,
where missingness is caused by the partially measured
variable itself (i.e., Ym → R), and controlling for any
3/22/2023 3:52:39 PM
 Data Preparation 53

(a) Complete (b) MCAR (c) MAR (d) MNAR

Xo Wo Xo Wo Xo Wo Xo Wo

Yo Ym R Ym R Ym R

Y* Y* Y*

FIGURE 4.1. No missing data (a). Missingness graphs (m-graphs) under conditions of missing completely at random (MCAR)
(b), missing at random (MAR) (c), and missing not at random (MNAR) (d). Variables Xo, Wo, and Yo are observed in all cases;
Ym has missing data for some cases; Y* is the proxy variable that is actually measured; and R is the missingness mechanism.
If R = 0, then Y* = Yo, but if R = 1, then Y* = missing. From “Graphical Models for Processing Missing Data,” by K. Mohan
and J. Pearl (2021), Journal of the American Statistical Association, 116(534), p. 1025. Copyright © 2021 by Taylor & Francis.
Adapted with permission.

fully measured variable, Xo or Wo, can neither break nor
disrupt this association.
Diagnosing Missing Data
It is not easy in practice to determine whether the data
loss mechanism is random or systematic, especially
when each variable is measured once. One reason is
that all three data loss mechanisms—MCAR, MAR,
and MNAR—can be involved in causing case attri-
tion or nonresponse, and their relative influence can
change over variables in the same data set. Another
reason is that while there is a way to determine
whether the assumption of MCAR is reasonable,
there is no specific test that provides direct evidence
of either MAR or MNAR if the hypothesis of MCAR
is rejected. The only way to distinguish MAR and
MNAR data loss mechanisms is to measure the miss-
ing data. For example, if survey nonrespondents are
later followed up by phone to get the missing infor-
mation, then respondents and nonrespondents in the
first round can now be compared. If these two groups
differ appreciably on the recovered data, there is evi-
dence for MNAR; otherwise, the hypothesis of MAR
may be viable. Whenever the recovery of missing data
is impractical, analysis of the original incomplete data
is the only option.
Little (1988) described a multivariate significance
test for the hypothesis of MCAR. It compares cases
with observed versus missing observations on all other
variables in the data set while controlling for their
intercorrelations. In the bivariate case, where missing
data are confined to a single variable and the other vari-
able is continuous, the Little MCAR Test reduces to
an independent-samples t test. Assuming normal distri-
butions and homoscedasticity, the test statistic for the
Little MCAR Test is distributed over large samples as
a central chi-square statistic. A significant result (e.g.,
p < .05 when testing at the .05 level) means that the null
hypothesis of MCAR is rejected; that is, the data loss
pattern is either MAR or MNAR. A problem with the
test is that its power can be low in small samples (i.e.,
the null hypothesis of MCAR is retained too often), and
it can flag trivial departures from MCAR as significant
in large samples.
Estimating effects sizes in comparisons of com-
plete versus incomplete cases over other variables can
help the researcher to interpret results from the Little
MCAR Test. One tactic involves creating a binary
(dummy) variable, where a score of “1” indicates a
missing observation and a score of “0” means not miss-
ing (complete). Next, the means for the two groups just
defined are compared to other variables that are con-
tinuous. Magnitudes of univariate group mean differ-
ences can be estimated using either standardized mean
differences, d, or point-biserial correlations, rpb (Kline,
2013a, chap. 5). In large samples, a significant Little
MCAR Test result when magnitudes of group differ-
ences on other variables are considered trivial would
bolster the hypothesis of MCAR. The opposite pattern

Pt1Kline5E.indd 53 3/22/2023 3:52:39 PM

 54 Concepts, Standards, and Tools
in a small sample—a nonsignificant Little MCAR Test
when magnitudes of group differences on other vari-
ables are meaningful—would provide evidence against
the hypothesis of MCAR.
Observing differences between complete versus
incomplete cases on other variables is helpful for a
method that imputes scores for the incomplete cases
when predicting from those other variables, assuming
the data loss pattern is MAR (Figure 4.1(c)). A strat-
egy that anticipates this pattern is to measure auxiliary
variables that may not be of theoretical interest except
they are expected to be potential causes or correlates
of missingness on other variables. For example, family
socioeconomic status (SES) could be a potential aux-
iliary variable in a longitudinal study, if it is expected
that lower SES families are more likely to drop out of
the study. Including family SES in the analysis may
help to reduce bias due to differential attrition related
to this variable. An auxiliary variable could also be one
that simply covaries appreciably with variables that
have missing observations or with their causes whether
or not they are related to the missingness mechanism.
Suppose that information on family SES is not avail-
able, but addresses for places of residence are mea-
sured. If place of residence, or neighborhood, is related
to SES, then including residence in the analysis may
recover some of the information about SES as a miss-
ing data mechanism, thus reducing bias related to SES.
Auxiliary variables require care in their selection.
For example, including too many such variables in
small samples can decrease precision and create down-
ward bias in estimates of regression coefficients, espe-
cially if absolute correlations between auxiliary and
other variables are < .10 (Hardt et al., 2012). Enders
(2010) recommended that auxiliary variables should
have absolute correlations of about .40 with incomplete
variables, although that particular value is not a golden
rule. Ideally, there should be no missing observations
on auxiliary variables; otherwise, their potential role in
recovering information due to data loss on other vari-
ables is diminished (Dong & Peng, 2013). Thoemmes
and Rose (2014) described situations where auxiliary
variables might actually increase bias. One case is
when the auxiliary variable is an outcome of a partially
measured variable and where controlling for the aux-
iliary variable induces a spurious association between
the missing mechanism and the partially measured
variable, although Rubin (2009) speculated that the
pattern just described would be rare in real data sets.
Pt1Kline5E.indd 54
CLASSICAL (OBSOLETE) METHODS
FOR INCOMPLETE DATA
Classical techniques for handling missing data are
simple to understand and easy to implement in statisti-
cal software, but they are increasingly seen as obsolete
because such methods
1. Assume that the data loss mechanism is MCAR,
and results with these methods can be seriously
biased when this rather improbable assumption
does not hold.
2. Take little or no advantage of structure in the data
when investigating missing data patterns.
3. Basically ignore or minimize the problem by allow-
ing an incomplete data file to be produced.
Classical methods are briefly described next so that
readers can better understand their limitations, but I
can’t recommend their use. Now, to be fair, if the rate
of missing data is very low (e.g., 1%), then it doesn’t
really matter whether classical or more modern tech-
niques are used because the results will be similar. But
as the rate of data loss increases, the trustworthiness of
classical methods decreases, especially if the data loss
pattern is not MCAR.
There are two broad categories of classical tech-
niques: available case methods, which analyze avail-
able data through removal of incomplete cases from
the analysis, and single-imputation methods, which
replace each missing score with a single calculated
(imputed) score. Available case methods include list-
wise deletion in which cases with missing scores on
any variable are excluded from all analyses. The effec-
tive sample size with listwise deletion includes only
cases with complete records, and this number can be
much smaller than the original sample size if miss-
ing observations are scattered across many records.
An advantage is that all analyses are conducted with
the same cases. This is not so with pairwise deletion
in which cases are excluded only if they have missing
values on variables involved in a particular analysis.
Suppose that N = 300 for an incomplete data set. If
250 cases have no missing scores on variables X and Y,
then the effective sample size for covXY is this number.
If fewer or more cases have valid scores on X and W,
however, the effective sample size for covXW will not
be 250. This property of pairwise deletion can give
3/22/2023 3:52:39 PM

rise to NPD data matrices, which is demonstrated in
Exercise 3.
Mean substitution, where the overall sample (grand)
mean replaces any missing score on that variable, is
the simplest single-imputation method. A variation is
group-mean substitution, where the missing score is
replaced by a group mean on that variable, such as the
mean for men when the record for a male participant is
incomplete. Neither method takes account of the infor-
mation about the individual case except group member-
ship for group-mean substitution. Another problem is
that mean substitution distorts the score distribution by
reducing variability. This happens because the imputed
score equals the mean, so they contribute nothing to
sum of squares (numerator) of the variance while
increasing the degrees of freedom (denominator); that
is, variance decreases after imputation. Consequently,
covariances are weakened and error variances can be
underestimated (Liu, 2016).
Regression substitution is a bit more sophisticated
because each missing score is replaced by a predicted
score from regression analyses based on variables with
no missing data. The method uses more information
than mean substitution, but it assumes that incom-
plete variables can be predicted reasonably well from
other variables in the data set. Error variance is still
underestimated in this method because (1) the imputed
score for cases having the same values on the predic-
tors is a constant, and (2) sampling error affects pre-
dicted scores, too, and this uncertainty is not estimated
in single-imputation methods. A variation is to add a
randomly sampled error term from the normal distri-
bution or other user-specified distribution in stochastic
regression imputation.
Other single-imputation methods include
1. Last observation carried forward (LOCF), where
in clinical trials the last observation is the most
recent score for participants who drop out of the
study.
2. Pattern matching, in which the computer replaces
a missing observation from a case with the most
similar profile on other variables.
3. Random hot-deck imputation (RHDI), which
separates complete from incomplete cases, sorts
both sets so that cases with similar profiles on back-
ground variables are grouped together; randomly
interleaves the incomplete and complete cases; and
Pt1Kline5E.indd 55
Data Preparation 55
replaces missing scores with those on the same
variable from the nearest complete record.
All the methods just listed have limitations: Pattern
matching and RHDI require large samples. The LOCF
method assumes that patients in treatment generally
improve and that the last measurement before dropout
is a conservative estimate of eventual outcome. But if
patients drop out because they are becoming more ill
despite treatment or even die, the LOCF approach can
grossly overestimate treatment efficacy (Liu, 2016).
MODERN METHODS
FOR INCOMPLETE DATA
Modern techniques for handling missing data include
multiple imputation (MI), which generates multiple
predicted scores for each missing observation, and a
special version of full information maximum likeli-
hood (FIML) estimation for incomplete data files that
neither imputes missing observations nor deletes cases.
Both methods assume that the data loss mechanism
is MAR, which is less strict than the assumption of
MCAR by classical techniques. Depending on the SEM
computer tool or procedure, one or both of the modern
methods just mentioned will be available. How the spe-
cial FIML option deals with missing data is described
in Chapter 9.
The technique of MI uses variables of theoretical
interest and optional auxiliary variables to generate for
each missing observation a set of k ≥ 2 imputed scores
from predictive distributions that model the data loss
mechanism. The result is a total of k data sets, each
with a unique imputed value for any missing observa-
tion. Next, all k imputed data sets are analyzed with
standard statistical techniques, such as fitting the same
structural equation model to each generated data set.
Finally, the resulting k different estimates of each model
parameter are pooled, and the corresponding standard
errors reflect sampling error due both to case selection
and imputation, and these standard errors are typically
larger than those from single imputation. The three
basic steps of MI just summarized are described in more
detail in Appendix 4.1. Readers already very familiar
with MI can skip this appendix; otherwise, the presen-
tation there is somewhat technical, but it is worth the
effort to learn more about this modern and statistically
principled approach to dealing with incomplete data
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 56 Concepts, Standards, and Tools
files under the assumption of MAR data loss patterns.
The technique has widespread application in SEM and
in many other kinds of statistical analyses, too.
OTHER DATA SCREENING ISSUES
Considered next are ways to deal with extreme collin-
earity, outliers, violation of distributional assumptions,
and very heteroscedastic data matrices.
Extreme Collinearity
Extreme collinearity—also called extreme multi-
collinearity—refers to high levels of interdependence
among predictors of the same outcome. It can lead to
inflation of standard errors, instability in the results
such that small changes in sample covariance patterns
can generate very different solutions, or analysis fail-
ure due to linear dependence. Extreme bivariate col-
linearity can occur because what appear to be separate
variables really measure the same thing. Suppose that
X measures accuracy and W measures speed for the
same task. If rXW = .97, for example, then X and W are
redundant notwithstanding their different labels (i.e.,
accuracy is speed, and vice versa). Either one could be
included in the same regression equation, but not both.
Although there is no gold standard, it seems to me that
absolute bivariate correlations > .90 signal a potential
problem, but others have suggested even lower thresh-
olds, such as .80 (Abu-Bader, 2010).
Researchers can inadvertently cause extreme col-
linearity when total scores (composites) and their
constituents are analyzed together. Suppose that a life
quality questionnaire has five individual scales and a
total score that is summed across all scales. Although
the bivariate correlation between the total score and
each of the individual scales may not be very high, the
multiple correlation between the total score and the five
scale scores must equal 1.0 when there is no missing
data, which is multivariate collinearity in the extreme.
A straightforward method to detect extreme col-
linearity among three or more continuous variables
is based on the variance inflation factor (VIF). It is
often available in regression diagnostic procedures of
computer programs for general statistical analyses. It
is computed as
1 that “999” means the observation is missing.
VIF = (4.4)
1 − R 2j
Pt1Kline5E.indd 56
where R 2j is the proportion of variance in the jth pre-
dictor explained by all other predictors. Tolerance is
1 – R 2j , or the proportion of variance that is unique, or
not explained by other predictors, so VIF is the recipro-
cal of tolerance, and vice versa. Thompson et al. (2017)
described how to calculate VIF in secondary analyses
given just a correlation matrix with no raw data.
Values for the VIF range from 1.0, which indicates
all predictor variance is unique, to increasingly positive
values with no theoretical upper bound, which indicates
higher and higher levels of collinearity. Again, there
is no gold standard but some authors have suggested
that VIF > 10.0 signals possible extreme collinearity
(Chatterjee & Price, 1991). This threshold corresponds
to R 2j > .90 and tolerance < .10. Others have expressed
skepticism about whether any single threshold for the
VIF (10.0, 20.0, or even higher) that ignores other
factors, such as sample size, is meaningful (O’Brien,
2007). Thompson et al. (2017) reminded us that any
cutting point applied to the VIF should not be treated
as a hard dichotomy in the sense that, for instance, one
falsely believes that VIF = 9.9 versus VIF = 10.1 makes
a practical difference.
Outliers
Outliers are scores that are very different from the rest.
A univariate outlier is a score on a single variable that
falls outside the expected population values (Mowbray
et al., 2019). There is no single definition of a univariate
outlier for continuous variables. For example, Tabach-
nick and Fidell (2019) suggested that scores that are
more than 3.29 standard deviations above or below
the mean are possible outliers. Expressed in terms of
normal deviates, | z | > 3.29 describes this guideline.
Elsewhere I suggested the more conservative heuristic
of | z | > 3.0 (Kline, 2020a), but there is no magic cutoff
point. A limitation is that outlier detection based on nor-
mal deviates is not robust against extreme scores—see
Topic Box 4.2 for a description of an alternative method.
More important than any particular numerical
threshold for detecting univariate outliers is that the
researcher investigates extreme scores, which can arise
due to
1. Mistakes in data entry or coding, such as typing
“95” instead of “15” for a score or failing to specify
2. Intentional distortion or careless reporting, such as
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 Data Preparation 57

when research participants respond randomly to
questionnaire items as a covert way to be uncoop-
erative or lie in response to questions about socially
undesirable behaviors such as cheating or drug use.
3. Administration of measures in ways that violate
standardization, such as giving examinees hints
that are not part of task instructions.
4. Selection of samples that are unrepresentative of
the target population or under faulty distributional
assumptions.
5. Natural variation within a population, or an extreme
score belongs to a case selected from a different
population (Osborne, 2013).
The last point just mentioned assumes that an
extreme score is correct (e.g., it is not invalid). If it
can be determined that a case with univariate outli-
ers is not from the same population, such as a gradu-
ate student who completes a survey while auditing an
undergraduate class, then it is best to remove that case.
It is more difficult when extreme scores come from the
target population; that is, although infrequent, such
scores arise naturally, so removing them could affect
the generalizability of the results. The basic options are
(1) do nothing; (2) remove the outlier from the analy-
sis; or (3) minimize its influence through substitution,
such as converting extreme scores to a value that equals
the closest scores not considered extreme (e.g., within
3.0 standard deviations from the mean); or (4) apply a
monotonic transform that pulls extreme scores closer to
the center of the distribution. Another option is a sensi-
tivity analysis in which results based on different deci-
sions about extreme scores are explicitly compared.

TOPIC BOX 4.2

Robust Univariate Outlier Detection

Suppose that scores for five cases are 19, 25, 28, 32, and 10,000. The last score (10,000) is obviously
an outlier, but it so distorts the mean and standard deviation that even the more conservative | z | > 3.00
rule fails, also called masking:
10,000 − 2,020.80
M = 2,020.80 SD = 4,460.51
= and z = 1.79
4, 460.51
A more robust decision rule for detecting univariate outliers is

| X − Mdn |
> 2.24 (4.5)
1.4826 (MAD)
where Mdn designates the median—­which is more robust against outliers than the mean—and MAD is the
median absolute deviation of all scores from the median. The product of MAD and the scaling factor
1.4826 is an unbiased estimator of s in a normal distribution. The whole ratio is the distance between a
score and the median expressed in robust standard deviation units. The constant 2.24 is the square root of
the approximate 97.5th percentile in a central chi-­square distribution with a single degree of freedom. A
potential outlier thus has a value on Equation 4.5 that exceeds 2.24.
For the five scores in this example, Mdn = 28.00, and the absolute values of median deviations are,
respectively, 9.00, 3.00, 0, 4.00, and 9,972.00. The median of the deviations just listed is MAD = 4.00,
and so for X = 10,000 we calculate

9,972.00
= 1,681.51
1.4826 (4.00)
which clearly exceeds 2.24 and thus detects the score of 10,000 as an outlier. See Rousseeuw and Hubert
(2018) for additional methods of robust outlier detection.

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 58 Concepts, Standards, and Tools
A multivariate outlier has extreme scores on ≥ 2
variables or an atypical pattern of scores. For example,
a case may have scores between 2–3 standard devia-
tions above the mean on all variables. Although no
individual score might be considered extreme, the case
could be a multivariate outlier if this pattern is unusual.
Here are some options for detecting multivariate outli-
ers with no univariate outliers:
1. Some SEM computer tools, such as IBM SPSS
Amos and EQS, list cases that contribute the most
to multivariate nonnormality, and such cases may
be multivariate outliers.
2. Calculate for each case its squared Mahalonbis dis-
tance, D 2, which indicates the distance in variance
units between the profile of scores and the vector of
sample means, or centroids, adjusting for correla-
tions among the variables. In large samples, D2 is
distributed as a central chi-square with degrees of
freedom equal to the number of variables. A rela-
tively high value of D 2 and low p value may lead
to the rejection of the null hypothesis that the case
comes from the same population as the rest. A con-
servative level of statistical significance is usually
recommended for this test, such as .001. Leys et al.
(2018) described a robust version of the multivariate
test just mentioned.
Visual methods to detect univariate outliers include
the inspection of histograms or box plots (Mowbray
et al., 2019). In both types of displays, extreme scores
are represented as further away from the main body
of scores, or the rest of the distribution. Tukey (1977)
developed box plots, also called box-and-whisker
plots, as a way to graphically display the spread of the
data throughout their whole range. The outer parts of
the “box” are defined by the hinges, which correspond
approximately to the first quartile (Q1), or the 25th
percentile, and the third quartile (Q3), or the 75th per-
centile. The second quartile (Q2), or the median (50th
percentile), is represented by a line in the box that is
parallel to two hinges. The whiskers are lines that con-
nect the hinges with the lowest and highest scores that
do not exceed 1.5 times the positive difference between
the hinges (i.e., approximately 1.5 times the interquar-
tile range, or Q3 – Q1). Any scores that fall outside of
the limits just stated—the lower and upper fences—are
represented as outliers. Exercise 4 asks you to generate
a boxplot for a small data set with an extreme score.
Pt1Kline5E.indd 58
Majewska (2015) described graphical displays for mul-
tivariate outliers based on robust D2 statistics. Because
interpretation of graphical displays can be rather sub-
jective, they are not substitutes for numerical methods.
Distributions
The default method in most SEM computer tools is a
form of ML estimation for either complete raw data
files or summary matrices (e.g., Table 4.1) that assumes
multivariate normality, also called multinormality,
for continuous outcome (endogenous) variables. This
means that
1. All the univariate frequency distributions are nor-
mal.
2. All joint distributions of any pair of variables are
bivariate normal; that is, each variable is normally
distributed for each value of every other variable.
3. All bivariate scatterplots are linear with homo­
scedastic residuals.
Other variations on the definition of multivariate nor-
mality in SEM are described in Chapter 9 on global
estimation methods. Because it is often impractical to
examine all joint frequency distributions, it can be dif-
ficult to assess all aspects of multivariate normality.
Fortunately, many instances of multivariate nonnor-
mality can be detected through evaluation of univariate
frequency distributions. This is because univariate nor-
mality is necessary but insufficient to guarantee multi-
variate normality (Pituch & Stevens, 2016).
Early SEM computer programs had few estimators
other than default ML, but the situation today is very
different: Most SEM computer programs now offer
multiple estimators that accommodate different kinds
of outcome variables, such as continuous, ordinal,
binary, count, or censored variables, with various types
of distributions, such as normal or nonnormal distri-
butions for continuous outcomes and Poisson distribu-
tions for count variables, and so on.3 A robust option for
ML estimation for continuous outcomes with nonnor-
mal distributions is described in Chapter 9, and other
3A count variable is the number of times a discrete event happens
over a period of time, such as the number of hospitalizations over
the past 5 years. In a Poisson distribution, the mean and variance
are equal. A censored variable is one for which values occur out-
side the range of measurement, such as a scale that registers the
value of weight between 1 and 300 pounds only.
3/22/2023 3:52:39 PM

options for noncontinuous outcomes are covered later
in the book. Thus, normality assumptions are less criti-
cal in modern SEM. Instead, the challenge is for the
researcher to select an appropriate estimator, given
the distributional characteristics of their data.
But there are still occasions in SEM when data
should be screened for multivariate normality. One is
when using the default ML method. Note that raw data
are required to evaluate multivariate normality. If just a
covariance matrix is submitted for analysis with default
ML, it must be assumed that the original distributions
for continuous outcomes are multivariate normal.
Other occasions arise when using a method of MI that
assumes multivariate normality or when applying the
original Little MCAR Test. Quantitative measures of
nonnormality are described next, with the assumption
that readers already know how to inspect scatterplots,
distributions of regression residuals, or other kinds of
graphical displays or numerical summaries used with
bivariate linearity and homoscedasticity; otherwise,
see Cohen et al. (2003, chap. 4).
Significance tests intended to detect multivariate
nonnormality, such as Mardia’s (1970) test, or detect
univariate nonnormality, such as the Kolmogorov-
Smirnov (K-S) test, among others (Oppong et al., 2016),
have limited usefulness. One reason is that slight depar-
tures from normality could be significant in large sam-
ples, and power in small samples may be low, so larger
departures could be missed. An alternative for assessing
univariate normality are quantitative measures of skew-
ness and excess kurtosis, the two ways a distribution can
be nonnormal, and they can occur either separately or
together in the same variable. A normal distribution has
zero skewness and excess kurtosis.
Skewness is the degree of asymmetry in a probabil-
ity distribution. It is defined as the third standardized
moment, which in the population is
m
g1 = 33 (4.6)
s The term mesokurtic refers to distributions with zero
where s is the population standard deviation and m3 is
the third central moment, a particular instance of the
rth moment defined as
mr =
∑ ( X − m)r (4.7)
N that could be printed by software for general statisti-
where m is the population mean and r is an integer ≥ 1.
In Equation 4.7, r = 3 for the third moment. In symmet-
rical distributions, the sum of deviations raised to the
third power for scores above the mean will balance the
Pt1Kline5E.indd 59
Data Preparation 59
sum of deviations raised to the same power for scores
below the mean, so m3 = g1 = 0 in a normal curve. In
unimodal distributions where most of the scores are
below the mean such that the distribution has a longer
right tail than the left tail, then m3 > 0 and g1 > 0, which
indicates positive skew. But if most scores are above
the mean such that the left tail is longer than the right
tail, then m3 < 0 and g1 < 0, which indicates negative
skew.
In unimodal distributions, kurtosis concerns the
combined weight of the both tails relative to the center
of the distribution. Thus, kurtosis measures the rela-
tive presence of outliers in both tails of the distributions
compared with a normal distribution. It is the fourth
standardized moment, which in the population distri-
bution is
m
g 2 = 44 (4.8)
s
where m4 is the fourth moment about the mean,
defined by Equation 4.7 for r = 4. The expected value
for g2 in a normal distribution is 3.0. Excess kurtosis
is defined as
g2 – 3 (4.9)
so that its value equals 0 in a normal distribution. Thus,
positive excess kurtosis, or
g2 – 3 > 0
means that the tails of the distribution are heavier rela-
tive to a normal curve, and such distributions are called
leptokurtic. Negative excess kurtosis, or
g2 – 3 < 0
means just the opposite (lighter tails), and distribu-
tions with this characteristic are called platykurtic.
excess kurtosis, such as the normal curve. All refer-
ences to “kurtosis” from this point concern excess kur-
tosis. Skewed distributions are generally leptokurtic.
Joanes and Gill (1998) described the three sample
estimators for skew and kurtosis listed in Table 4.2
cal analyses. Statistics g1 for skew and g2 are based on
sample moments and standard deviations computed
as S with N in the denominator. Other statistics in the
table feature adjustments for small sample size in the
3/22/2023 3:52:40 PM
 60 Concepts, Standards, and Tools

computation of sample standard deviations as s with
N – 1 in the denominator (e.g., b1, b2) or in calculations
for central moments (e.g., G1, G 2). In normal popula-
tion distributions, all three skewness statistics in Table
4.2 are unbiased, but only G 2 for kurtosis is unbiased
in such distributions. Also shown in the table are the
relative values of error variances for each statistic in
normal distributions. Estimators G1 for skew and G 2
for kurtosis tend to have the greatest expected variation
over random samples, but differences among their val-
ues and error variances narrow for samples sizes > 100.
In very small samples, though, differences among these
estimators can be striking, including results for kurto-
sis that are both positive and negative in the same vari-
able—see Cain et al. (2017) for more information.
Just as there are no golden rules for detecting outliers,
there are also no universal absolute values for skewness
or kurtosis statistics that indicate severe nonnormal-
ity. Finney and DiStefano (2013) noted that absolute
univariate skewness and kurtosis values greater than,
respectively, 2.0 and 7.0, have been described as indi-
cating severe nonnormality in some computer simula-
tion studies, but exceptions are easy to find. For exam-
ple, Lei and Lomax (2005) treated absolute skewness
and kurtosis values > 2.30 as indicating severe nonnor-
mality. The point is that there is no magic demarca-
tion between trivial and appreciable nonnormality that
will fit all models and data sets, but the assumption of
normality becomes increasingly less plausible as there
is more and more skewness or kurtosis. Exercise 5
addresses a common misinterpretation in this area. Sig-
nificance testing where skewness or kurtosis statistics
are divided by their standard errors is another method,
but it is problematic for reasons already stated (e.g., low
power in small samples).
Normalizing transformations (normalization), or
monotonic arithmetic operations that compress some
parts of a distribution more than others while preserv-
ing rank order so that the transformed scores are more
normally distributed, are an option, but you should
think about the variables of interest. Some variables,
including reaction times, reports of alcohol or drug use,

TABLE 4.2. Estimators of Skewness and Kurtosis and Relative

Error Variances for Normal Samples
Statistic Equation Unbiased Error variance rank
Skewness
g1 m3 Yes 2
S3

G1 N ( N − 1) Yes 1
g1
N −2

b1 m3 Yes 3
s3

Kurtosis
g2 m4 No 3
−3
S4

G2 N −1 Yes 1
(( N + 1)g2 + 6)
( N − 2)( N − 3)

b2 m4 No 2
−3
s4
Note. Error variances are ranked from highest to lowest; m3 = S (X – M)3/N; m4 = S (X – M)4/N;
and S and s are the sample standard deviations computed with, respectively, N or N – 1 in the
denominator.

Pt1Kline5E.indd 60 3/22/2023 3:52:40 PM

 Data Preparation 61

and health care costs, are expected to have nonnormal
distributions (Bono et al., 2017). Normalizing an inher-
ently nonnormal variable could mean that the target
variable is not actually studied. Another consideration
is whether the metric of the original variable is mean-
ingful, such as postoperative survival time in years.
Transformation means that the original meaningful
metric is lost, which could be a sacrifice. Described in
Topic Box 4.3 are types of normalizing transformations
that might work—there is no guarantee—with practical
suggestions for using them. Exercise 6 asks you to find
a normalizing transformation for a small data set.

TOPIC BOX 4.3

Normalizing Transformations
Three kinds of normalizing transformations are described next with suggestions for their use:

1. Positive skewness. Before applying these transformations, add a constant to the scores so that
the lowest modified score is 1.0. A basic operation is the square root transformation, or X1/2,
which works by compressing differences between scores in the upper end of the distribution
more than the differences between lower scores. Logarithmic transformations are another option.
A logarithm is a power (exponent) to which a base number must be raised to get the original
number, such as 102 = 100, so the logarithm of 100 in base 10 is 2. Distributions with extremely
high scores may require a transformation with a higher base, such as log10 X, but a lower base
may suffice for less extreme cases, such as the natural base e (approximately 2.7183) for the
transformation loge X = ln X. The inverse function 1/X is an option for even more severe skewness.
Because inverting scores reverses their order, (1) reflect (reverse) the original scores (multiply them
by –1.0) and (2) add a constant to the reflected scores so that the maximum score is at least 1.0
before taking the inverse.
2. Negative skewness. All the transformations just mentioned also work for negative skewness when
they are applied as follows: First, reflect the scores, and then add a constant so that the lowest
score equals 1.0. Next, apply the transformation, and reflect the scores again to restore their
original order.
3. Other types of nonnormality. Odd-root functions (e.g., X1/3) and sine functions tend to bring in
outliers from both tails of the distribution toward the mean. Odd-­powered polynomial functions,
such as X3, may help for negative kurtosis. If the scores are proportions, the arcsine square root
transformation, or arcsin X1/2, may help to normalize the distribution.

There are other types of normalizing functions, and this is one of their problems: It can be difficult to
find a transformation that works with a particular distribution. The Box–Cox transformations (Box &
Cox, 1964) may require less trial and error. The most common form is defined next for positive scores only:
X l −1
(l )  , if l ≠ 0;
X = l (4.10)
 log X , if l =0.

where the exponent l is a constant that normalizes the scores. Computer software for Box–Cox transforma-
tions attempts to find the optimal value of l for a particular distribution. There are other variations of the
Box–Cox transformation, some of which can be applied in regression analyses to deal with heteroscedas-
ticity (Osborne, 2013).

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 62 Concepts, Standards, and Tools
Relative Variances
In an ill-scaled covariance matrix, the ratio of the
largest to the smallest variance is greater than, say,
100.0. Most estimation methods in SEM are iterative,
which means that initial estimates are derived by the
computer and then modified through subsequent cycles
of calculation. The goal is to derive better estimates
at each stage, estimates that progressively improve
the fit between model and data. When improvements
from step to step become sufficiently small (i.e., they
fall below the convergence criterion), iteration stops
because the solution is stable. But if the estimates do
not settle down to stable values, the process may fail.
One cause is variances that are very different: When
the computer adjusts the estimates from one step to the
next in an iterative method, the sizes of these changes
may be huge for variables with small variances but
trivial for variances with large variances. The whole
process may head toward worse rather than better fit.
To prevent the problem just described, variables with
extremely low or high variances can be rescaled by
multiplying their scores by a constant, which changes
the variance by a factor that equals the squared con-
stant. For example,
s X2 = 12.0 and sY2 = .12
so their variances differ by a factor of 100.0. Using the
constant .10, we can rescale X as follows:
2
s.10 X = .10 × 12.0 = .12
2 LEARN MORE
so now variables .10X and Y have the same variance, or
.12. Next, we rescale Y so that it has the same variance
as X, or 12.0, by applying the constant 10.0, or
2
s10.0Y = 102 × .12 = 12.0
Multiplying a variable by a constant is a linear transfor-
mation that changes its average and variance but not its
correlation with other variables. This is because linear
transformations do not alter relative distances between
scores. An example with real data follows.
Roth et al. (1989) administered measures of exercise,
hardiness (resiliency, tough mindedness; referred to as
“hardy” from this point), fitness, stress, and level of ill-
ness in a sample of 373 university students. Table 4.3
provides a summary matrix of these data. The largest
and smallest variances in this matrix (see the table) dif-
Pt1Kline5E.indd 62
fer by a factor of > 27,000, so the covariance matrix is
ill-scaled. I have seen older SEM computer tools fail to
analyze this matrix due to this characteristic. To pre-
vent this problem, I multiplied the original variables by
the constants listed in the table (including 1.0; i.e., no
change) in order to make their variances more uniform.
Among the rescaled variances, the largest variance is
only about 13 times greater than the smallest variance.
The rescaled matrix is not ill-scaled.
SUMMARY
The 80/20 rule of data analysis is a variation on the
Pareto principle, named after the Italian economist Vil-
fredo Pareto, that 80% of a nation’s wealth is owned by
20% of the people. In the context of data analysis, it
means that researchers should invest more time (i.e., at
least four times as much) screening and preparing their
data than actually conducting the substantive analy-
ses. Data screening in SEM includes the evaluation of
missing data patterns and extent; detection of outliers,
extreme collinearity, and whether data matrices are ill-
scaled; assessment of whether distributional assump-
tions for particular estimators are consistent with the
data; and complete reporting in written summaries of
the results on how particular problems were dealt with
in the analysis. Making the data file available to other
researchers is a strong statement of transparency.
Dong and Peng (2013) offer clear and accessible descrip-
tions of techniques for missing data, Manly and Wells (2015)
describe best practices for reporting about the use of MI,
and van Ginkel et al. (2020) review common misunderstand-
ings about MI.
Dong, Y., & Peng, C.-Y. J. (2013). Principled missing data
methods for researchers. SpringerPlus, 2(1), Article 222.
Manly, C. A., & Wells, R. S. (2015). Reporting the use of
multiple imputation for missing data in higher educa-
tion research. Research in Higher Education, 56(4),
397–409.
van Ginkel, J. R., Linting, M., Rippe, R. C. A., & van der
Voort, A. (2020). Rebutting existing misconceptions
about multiple imputation as a method for handling
missing data. Journal of Personality Assessment, 102(3).
297–308.
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 Data Preparation 63

TABLE 4.3 Example of an Ill-Scaled Data Matrix

Variable 1 2 3 4 5
1. Exercise —
2. Hardy –.03 —
3. Fitness .39 .07 —
4. Stress –.05 –.23 –.13 —
5. Illness –.08 –.16 –.29 .34 —

Original M 40.90 0.00 67.10 4.80 716.70

Original s2 4,422.25 14.44 338.56 44.89 390,375.04

Constant 1.00 10.00 1.00 5.00 .10

Rescaled M 40.90 0.00 67.10 24.00 71.67

Rescaled s2 4,422.25 1,440.00 338.56 1,122.25 3,903.75

Rescaled SD 66.50 38.00 18.40 33.50 62.48

Note. These data (correlations, means, and variances) are from Roth et al. (1989); N = 373. Note that
low scores on the hardy measure used by these authors indicate greater hardiness. To avoid confusion
due to negative correlations, the signs of the correlations that involve the hardy measure were reversed
before they were recorded in this table.

EXERCISES

1. Reproduce the covariance matrix in the middle of Locate in your figure values for the extreme of the
Table 4.1 from the correlations and standard devia- lower whisker, lower hinge (H1), median, upper
tions at the bottom of the table. hinge (H2), extreme for the upper whisker, and any
outlier beyond 1.5 × (H2 – H1) from its respective
2. Given covXY = 13.00, s X = 12.00, and sY = 10.00,
2 2 hinge:
show that the corresponding correlation is out of
bounds. Score Frequency Score Frequency
10 5 15 5
11 15 16 4
3. Listed next as (X, W, Y) with missing observations 12 14 17 1
indicated by “—” are scores for 7 cases: 13 13 27 1
(42, 13, 8), (34, 12, 10), (22, —, 12), (—, 8, 14) 14 5
(24, 7, 16), (16, 10, —), (30, 10, —)
5. A researcher finds for a continuous variable that
Compute the covariance matrix for these data using
skewness is 1.97 and kurtosis is 6.90, and concludes
pairwise deletion. Show that the resulting covari-
that the distribution is normal. Comment.
ance matrix is NPD and also that the corresponding
correlation matrix has an out-of-bounds value.
6. Find a normalizing transformation for the data in
Exercise 4. Do not remove the outlier.
4. Generate a box plot for the N = 63 scores listed next.

Pt1Kline5E.indd 63 3/22/2023 3:52:40 PM

 64 Concepts, Standards, and Tools
Appendix 4.A
Steps of Multiple Imputation
The three basic steps in MI—the imputation step, the
analysis (estimation) step, and the pooling (combina-
tion) step—and corresponding decisions required at
each point are summarized next. It is not possible in
this overview to give detailed descriptions about sta-
tistical options, especially in the imputation step, but
see Allison (2012), Dong and Peng (2013), van Buuren
(2018), or van Ginkel et al. (2020) for more informa-
tion.
STEP 1. IMPUTATION
The imputation step involves the analysis of the vari-
ables that make up the imputation model and also
the method by which random variation is modeled
and incorporated in generating imputed scores. That
method should match the level of measurement for
incomplete variables (e.g., continuous vs. categorical),
whether data loss is univariate or multivariate (occurs
on a single vs. multiple variables), and whether the pat-
tern is monotone or general. Monotone missing data
means that variables can be ordered and data loss at
a particular point means that all subsequent observa-
tions are missing. Dropout in a longitudinal study is an
example of monotone data loss; any other pattern is a
general (nonmonotone) missing data.
An option for univariate data loss is the regres-
sion method, which is based on linear regression and
assumes multivariate normal distributions for continu-
ous variables. It works by regressing an incomplete
variable on other variables with complete data. Next,
imputed regression coefficients are selected from the
sampling distributions for the coefficients in the first
analysis, and imputed scores are generated from the
values of the imputed coefficients and a random error
term. These steps are repeated for k times, the num-
ber of imputed data sets. A variation is the predic-
tive mean matching method, which does not require
normality and imputes values “borrowed” from other
records called donor cases. This method generates pre-
dicted scores for all cases, including those with com-
plete data, and randomly selects as an imputed score
Pt1Kline5E.indd 64
from among cases with observed scores similar to the
predicted score for an incomplete case. The number of
complete cases in the donor set can be specified by the
researcher with about 5–10 cases as a typical range. In
small samples, though, 10 cases in the donor set may
include too many dissimilar records, especially for few
predictors (Allison, 2015).
A method for multivariate data loss is fully condi-
tional specification, also called multivariate imputa-
tion by chained equations (MICE) and sequential
regression multivariate imputation. It generates a
series of conditional models, one for each incomplete
variable in the data set, and the method requires speci-
fication of the imputation model for each incomplete
variable. Because the method is based on the separate
distributions of each incomplete variable, it can be
applied to continuous variables with nonnormal dis-
tributions or to variables that are not continuous, such
as ordinal data. Initial imputed values are randomly
selected from the observed data, and these values are
subsequently improved for each incomplete variable
through iterative selection from conditional distribu-
tions estimated by the observed and imputed scores.
The whole process then cycles through all incomplete
variables. The method is flexible but can converge to
incompatible conditional models depending on the
order of the univariate imputation steps (van Buuren,
2018).
Another multivariate method for arbitrary data loss
patterns is based on the Markov Chain Monte Carlo
(MCMC) approach that randomly samples from theo-
retical probability distributions, in this case from pre-
dictive distributions for the missing data, and these
draws become the imputed scores. A Markov Chain is
a probability model in which the likelihood of an event
depends only on the state of the previous event. That
is, the probability of a future event can be estimated
just as well from the current state of the event as when
knowing the full history of events. A “chain” thus con-
cerns multiple simulated random draws from the same
distribution.
In the application of the MCMC method in MI, it
is assumed that the underlying complete data follow a
multivariate normal distribution, and the computer sim-
ulates draws from such distributions over an iterative
sequence of paired steps called the I-step (imputation,
but not meaning the first step in MI) and the P-step
(posterior). At the I-step, imputed scores are drawn for
each incomplete case from the predictive distribution
in the current iteration. Next, in the P-step, the param-
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eters of the predictive distribution are updated by draws
from the posterior distribution. The “chain” consists of
I-step/P-step pairs over iterations. Some implementa-
tions allow for a burn-in period, or default number
of iterations (e.g., 200) before the first set of imputed
values is drawn. One rationale for this option is to dis-
sipate the effects of the distribution from the prior itera-
tion that may differ appreciably from those of the target
distribution, but burn-in is not an inherent feature of
the MCMC method, and there are other methods to
find good starting points for drawing imputed scores
(Geyer, 2011).
The MCMC method is generally robust against mul-
tivariate nonnormality in large samples (Demirtas et
al., 2008), but its use can be problematic with categori-
cal variables. For example, the practice of imputing
values based on normal distributions and then rounding
to the nearest integer or to the nearest plausible value
can yield very biased results for categorical variables
(Allison, 2012). The chained equations method (MICE
algorithm) described earlier is an alternative. Another
possibility is to use a method for the imputation step
based on logistic, loglinear, or other statistical model
for categorical variables—see Audigier et al. (2017) for
more information and examples.
Yet another multivariate method for arbitrary miss-
ing data patterns is the expectation–maximization
(EM) algorithm, which is a general purpose itera-
tive procedure to find ML estimates for parameters
that involve latent variables. In the context of MI, the
method alternates between the E-step (expectation),
in which missing scores are imputed from predicted
distributions for the missing data, and the M-step
(maximization), where parameters for the distribution
of both the missing and observed data, such as means
and covariances, are estimated using ML before the
cycle repeats over the E- and M-steps until there are k
imputed scores for each missing observation. Because
the EM algorithm is a general method, it can be used
outside of MI to directly estimate parameters for latent
variables without imputing scores for individual cases
(Dempster et al., 1977). Estimation of standard errors
may be more accurate in the FIML method for incom-
plete data sets that is described in Chapter 9 (Dong &
Peng, 2013).
Besides the algorithm, the researcher must also
specify the number of scores to be imputed for each
missing observation, or k. Suggestions in older works
were roughly k = 3–10 based on the relative efficiency
of imputing these numbers of times against a theoreti-
Pt1Kline5E.indd 65
Data Preparation 65
cal infinite number of imputations (Patrician, 2002).
Greater numbers of imputations, such as k = 100–200,
are recommended in more recent works (Graham et al.,
2007; Little, 2013) based on statistical power and the
fraction of missing information (FMI), which is not
the rate of missing data. The FMI is instead the propor-
tion of variation in parameter estimates due to nonre-
sponse. That is, it quantifies the amount of parameter
information lost to nonresponse (Lang & Little, 2018),
so in this way the FMI is analogous to an R2 statistic for
missing data (Enders, 2010). For example, if FMI = .03
for a particular parameter, then the loss of efficiency
due to missing data is 3%; that is, the estimate based
on incomplete data is 97% as efficient compared to
what it would have been with no missing data (Sava-
lei & Rhemtulla, 2012). Wagner (2010) suggested that
researchers should consistently report the value of the
FMI when analyzing incomplete data sets.
The FMI is a function of k and the ratio of the
between-imputation variance over the total variance,
or the sum of between-imputation variance and the
within-imputation variance. The within-imputation
variance is the average error variance associated with
parameter estimates within all imputed data sets. Con-
ceptually, it estimates what the error variance would be
if there were no missing scores. The between-imputa-
tion variance is the variation in estimates over the k
imputations. As more information is lost due to missing
data, the between variance will increase, but when the
data set includes good predictors of the variables with
missing data, both the between variance and the FMI
are expected to decrease (Wagner, 2010). In general, the
greater the covariances among the observed variables,
the lower the value of the FMI (Little, 2013). Dong and
Peng (2013, p. 5) described equations for computing the
FMI, and some computer procedures for MI print the
value of this statistic in the output.
STEP 2. ANALYSIS
After k complete data sets are generated in the impu-
tation step, next comes the analysis step, which con-
cerns the analysis model. Parameters are estimated for
effects of substantive interest in each of the k imputed
data sets. Ideally, the variables in the imputation model
would be the same as those in the analysis model except
for auxiliary variables (if any). But as the imputation
and analysis models are based on increasingly smaller
sets of overlapping variables, then results from the
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 66 Concepts, Standards, and Tools
imputation step may not be very meaningful in the
analysis step.
The imputation model should also be general enough
in terms of assumptions about distributions or func-
tional relations to reflect the data in the analysis model.
Suppose that normality is assumed for a variable in the
imputation model, but the actual distribution is severely
nonnormal. Results in the analysis model based on
means and covariances, such as regression coefficients,
may not be grossly inaccurate, but estimates of p val-
ues or bounds for confidence interval could be severely
distorted (Schafer, 1999). Enders (2010) offers sugges-
tions for representing interactive effects of continuous
or categorical variables in both models.
STEP 3. COMBINATION
Results from the analysis step from each of the k
imputed data sets are synthesized in the combination
(pooling) step. The final parameter estimate is the
average over the k results for that parameter, and its
standard error is estimated based on both the within-
and between-imputation variances. You should also be
aware of the issues listed next:
1. There is no unique set of results in MI: This is
because imputed scores are generated through
simulated random sampling. Thus, results for the
Pt1Kline5E.indd 66
same model and incomplete data file can and will
change each time the procedure is repeated unless a
random seed that determines the starting point for
generating random numbers is specified.
2. Indeterminacy also applies to the data: The research-
er’s model is analyzed in k imputed data sets, so
there is no definitive summary data matrix. Thus,
the results could not be reproduced in a secondary
analysis conducted with a single data matrix (all k
matrices would be required). But the researcher can
still make available the original raw data file.
3. There is little doubt that MI generates better esti-
mates than classical techniques in reasonably large
samples when the data loss pattern is MAR instead
of MCAR (Schafer & Graham, 2002): It might also
reduce bias compared with classical techniques
when data loss patterns are both MAR and MNAR,
if variables can be added that measure the miss-
ing data mechanism, but there is no guarantee (van
Ginkel et al., 2020).
There are special statistical techniques for analyzing
MNAR data (Rubin & Little, 2020), but they are not yet
widely used and are more difficult to apply than meth-
ods that assume MAR. Methods for MNAR data loss
mechanisms are becoming available in SEM computer
tools such as Mplus. Galimard et al. (2016) described
adaptations of MI for MNAR mechanisms.
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 5

Computer Tools

Two categories of computer tools for traditional SEM are described in this chapter: freely available software
and commercial software. Free software includes packages for conducting SEM analyses in the R comput-
ing environment (e.g., lavaan, semTools) and stand-alone computer tools with a graphical user interface
(GUI) that require no larger software environment (e.g., JASP, Wnyx). Free computer tools have become
increasingly capable to the point where they can replace commercial tools for basically all but the very most
advanced kinds of analyses. Modern SEM computer programs—both free and commercial—are generally
easier to use than their predecessors. But greater user-friendliness of contemporary SEM computer tools
should not lull the researcher into thinking that SEM is easy or requires minimal conceptual understanding.
Features of computer programs can change quickly with new versions, so check the sources listed next for
the most up-to-date descriptions. Computer tools for nonparametric SEM are described in Chapter 6, and
Chapter 16 covers software options for composite SEM. In a work describing the ideas of the Canadian
communication theorist Herbert Marshall McLuhan, Culkin (1967, p. 70) wrote, “We shape our tools and
thereafter they shape us.” I hope that computer use sharpens, rather than dulls, your ability to think critically
about SEM.

EASE OF USE, NOT SUSPENSION by drawing it in onscreen using geometric symbols

OF JUDGMENT
The first widely available SEM computer tool was
LISREL III (Jöreskog & Sörbom, 1976). At the time,
LISREL and related applications were not easy to use
because they required the generation of rather arcane
code, and were available only on mainframe comput-
ers with stark command-line user interfaces. The abun-
dance of relatively inexpensive, yet capable, personal
computers greatly changed things. Statistical software
with a GUI is generally easier to use than their char-
acter-based counterparts. Indeed, user-friendliness in
modern SEM computer tools is a near-revolution com-
pared with older programs.
Most SEM computer tools still permit the user to
write code in that application’s native syntax. Some
programs offer the alternative of specifying the model
such as boxes, circles, and lines with arrowheads on
one or both ends. Next, the program automatically
translates the model graphic into lines of code, which
are then executed. Thus, (1) the user need not know
very much (if anything) about how to write syntax in
order to run an SEM analysis, and (2) the role for tech-
nical programming skills is reduced. For researchers
who understand the basic concepts of SEM, this devel-
opment can only be a plus—anything the reduces the
drudgery and gets one to the results quicker is a benefit.
But there are potential drawbacks to push-button
modeling. For example, no- or low-effort program-
ming could encourage the use of SEM in uninformed
or careless ways. This is why it is more important than
ever to be familiar with the conceptual and statistical
bases of SEM. Computer programs, however easy to
use, should only be the tools of your knowledge and

67

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 68 Concepts, Standards, and Tools
not its master. Steiger (2001) noted that emphasis on
ease of use of statistical computer tools can give begin-
ners the impression that SEM is easy, but the reality is
that things can and do go wrong in SEM. Beginners
often quickly realize that analyses fail because of tech-
nical problems, including a terminated program run
with cryptic error messages or uninterpretable output.
These things happen because (1) actual research prob-
lems can be quite technical, and the availability of user-
friendly software does not change this fact. Also, (2)
computer tools are not perfect and, thus, are incapable
of detecting or preventing all failure conditions. That
is the reason why this book places so much emphasis
on conceptual knowledge instead of teaching you how
to use a particular computer tool: In order to deal with
problems in the analysis when—not if—they occur,
you must understand what went wrong and why.
HUMAN–COMPUTER INTERACTION
There are three basic ways to interact with SEM com-
puter tools:
1. Batch processing, where the user writes syntax
that specifies the model, data, analysis, and output.
Next, the syntax is executed through some form of
a “run” command.
2. Drawing editor, where the user draws the model on
screen. When the diagram is finished, the analysis
is run in the GUI.
3. Templates or menus, where the model and analy-
sis are specified as the user clicks with the mouse
on interface elements such as text fields, pull-down
menus, or radio buttons.
Batch mode is for users who know the syntax for a
particular SEM computer tool. In contrast, knowledge
of syntax is generally unnecessary when using a draw-
ing editor or templates. But even here some knowledge
of syntax can help. In LISREL, for example, both its
drawing editor and template-based mode of interac-
tion automatically write syntax in a window that must
be run by the user. That syntax can be edited, and
sometimes a problem in model specification is appar-
ent in the syntax, which the user can correct, if they
understand the syntax. In contrast, the drawing edi-
tor in IBM SPSS Amos analyzes the model and data
without generating editable (or even viewable) syntax
Pt1Kline5E.indd 68
(Arbuckle, 2021), although Amos does offer a separate
syntax editor. Although drawing editors are popular
with beginners, there are potential drawbacks—see
Topic Box 5.1.
TIPS FOR SEM PROGRAMMING
Listed next are suggestions for using SEM computer
tools; see also Little (2013, pp. 25–27):
1. Learn from the examples of others. Annotated syn-
tax, data, and output files for all detailed analyses
can be downloaded from the book’s website. Read-
ers can open these files on their own computers
without installing any special software. There are
additional online resources with syntax examples
for lavaan,1 Mplus,2 LISREL,3 and other SEM
computer tools.
2. Annotate your syntax files. Comments are usu-
ally designated by special symbols, such as *, #,
or !, that are ignored by the computer. Use com-
ments to describe the specified model, data, and
requested output. Explain the creation of any new
variable. Such information is useful for colleagues
or students who did not conduct the analysis, but
who need to understand it. Annotation also helps
researchers to know just what they did in a particu-
lar analysis days, weeks, months, or even years ago.
Without sufficient comments, one quickly forgets.
3. Keep it simple. Sometimes beginners try to analyze
models that are too complicated, and such analyses
are more likely to fail. With more syntax or screen
space in a drawing editor for a complex model,
there are also more opportunities for making mis-
takes. It can also be hard to tell whether a very com-
plex model is identified. If the researcher does not
know that their model is not really identified, the
failure of the analysis may be wrongly attributed to
a syntax error or problem with the data.
4. Build it up. Start instead with a simpler model that
you know is identified. Try to get the analysis of
the initial model to successfully run. Then build up
1 https://www.lavaan.ugent.be/tutorial/index.html
2 https://www.statmodel.com/ugexcerpts.shtml
3 https://ssicentral.com/index.php/products/lisrel/lisrel-
examples/
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 Computer Tools 69

TOPIC BOX 5.1

Graphical Isn’t Always Better

The potential drawbacks of graphical editors in SEM computer tools are outlined next. They explain why
some researchers switch from a drawing editor when first learning about SEM to working in batch mode
as they gain experience:

1. It can be tedious to draw onscreen a complex model with many variables, such as numerous
repeated measures variables in a longitudinal design or dozens of items on a questionnaire in a
factor analysis. This is because the screen quickly fills up with graphical elements. The resulting
visual clutter can make it difficult to keep track of what you are doing.
2. Specifying analyses where models are simultaneously fitted to data from two or more samples can
be difficult. This is because it may be necessary to look through different screens or windows in
order to find information about data or model specification for each sample.
3. It is easier to annotate the analysis by putting comments in a syntax file compared with working
in a graphical editor, which may not support user-­supplied comments. It is so easy to lose track of
what you have done in an analysis without detailed comments. Thus, using a drawing editor that
does not allow annotations can engender carelessness in record keeping (Little, 2013).
4. Debugging a syntax file after a failed analysis is generally simpler than doing so in a graphical
editor, which may require clicking on multiple graphical elements to inspect specifications in sepa-
rate dialogs boxes or windows. In contrast, everything that specifies the analysis (i.e., commands)
can be viewed in a single place when editing a syntax file.
5. The format of files generated in graphical editors is typically proprietary, which means that they
generally cannot be opened or edited with a different computer tool. In contrast, syntax files are
usually text (ASCII) files that can be opened or edited in any basic text editor, including word
processors. Thus, sharing an analysis with other researchers is generally easier with syntax files.
Including syntax files in supplemental materials for journal articles supports both transparency in
reporting and accessibility for readers.
6. Certain kinds of advanced analyses or options may be available in syntax only. One reason is
that although model diagrams for more basic SEM analyses are more or less standard, this is
less true for more advanced applications such as multilevel analyses, for which there is no single
graphical standard (Curran & Bauer, 2007).
7. There is evidence that graphical user interfaces can help novices who are not trained in informa-
tion technology or in computer science to learn and perform basic tasks faster and in fewer steps.
But graphical interfaces can also impede or slow down expert users compared with text-based
interfaces, and just because an interface is graphical does not guarantee ease of use or reduced
cognitive load (Chen & Zhang, 2007).
8. It seems that it would be easy to generate a publication-­quality diagram in an SEM drawing edi-
tor, but this is not exactly true. Drawing editors may use a fixed symbol set that does not include
special symbols that you want to appear in the diagram. There may be limited options for adjust-
ing the appearance of this diagram (e.g., changing font or line widths). Graphs generated by
drawing editors may be rendered in relatively low resolution that is fine for the computer monitor
but not for display in a printed (paper or virtual) document. There are R packages that can gener-
(continued)

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 70 Concepts, Standards, and Tools

ate high-­quality model diagrams, including semPlot (Epskamp, 2022), but they can be frustrating
to use: The diagram is specified in syntax, but the diagram generated by executing that syntax
cannot be directly edited, so if something is wrong, then it is back to the syntax (repeat).

Another option is a professional diagramming and graphics computer tool, such as Microsoft Visio,
that features templates and tools for drawing predefined shapes, such as circles, squares, or lines with
optional arrowheads on one or both ends. A drawback is that professional graphics software can be
relatively expensive, although there are free alternatives like LibreOffice Draw with generally more modest
capabilities. But using comprehensive drawing software to create diagrams of structural equation models
can seem like overkill. This is because only a small fraction of the program functionalities is used to create
model diagrams, which are composed of just a few kinds of graphical elements.
Here is a trade secret I’ll share with you: All model diagrams in this book were created using nothing
other than Microsoft Word Shapes (rectangles, ovals, text boxes, etc.) that are grouped together. Maybe
I am biased, but I think these diagrams are not too shoddy. Sometimes you can do a lot with a simple but
flexible tool. Yes, it takes a lot of time to make a publication-­quality model diagram in Word—or in any
graphical computer tool—but once you make a few examples, you can reuse graphical elements, such as
those for common factors and indicators, in future diagrams. Mai et al. (2022) described semdiag, a free,
open source web application for drawing model diagrams in SEM. An online version of semdiag is avail-
able at https://semdiag.psychstat.org/ There is also a free, open-­source diagramming application that can
be used online through a web browser or as a downloaded application for Windows, Apple (macOS),
Linux, or Google Chrome OS platform computers available at https://www.diagrams.net/

the model by adding parameters that reflect your
hypotheses until the target model is eventually
specified. If the analysis fails after adding a par-
ticular parameter, the reason may be identification.
5. Comment out instead of delete. In analyses where
models are progressively simplified (trimmed)
instead of built, the researcher can comment out
part of the syntax, or deactivate it, by designating
those commands as comments in the next analysis.
This method preserves the original code as a record
of the changes.
6. Lend the computer a hand. Sometimes iterative
estimation fails because the computer needs better
starting values, or initial estimates of model param-
eters, to find a converged solution. Most SEM com-
puter tools generate their own starting values, but
computer-derived values do not always lead to con-
verged solutions. Fortunately, SEM computer tools
generally allow users to specify starting values that
override computer defaults. Suggestions for speci-
fying starting values for different types of models
are offered later in the book.
COMMERCIAL VERSUS FREE
COMPUTER TOOLS
I am often asked, what is the best software package
for SEM? My answer has two parts: (1) There is no
single “best” package because there are now many
capable options available. (2) What is available to you
at the lowest cost? For example, many universities have
site licenses that permit researchers and students to
use commercial SEM computer tools free of charge.
Advantages of commercial SEM programs include reg-
ular updates, user support including a single point of
contact for problems, and complete program manuals
and documentation, sometimes with numerous analysis
examples and data sets.
Commercial applications are less advantageous for
users without institutional or grant funds for software.
As with other specialized software for multivariate sta-
tistical analyses, costs to purchase or license SEM com-
puter tools can be rather expensive and can range from
several hundred to over $1,000 a year or more, although
discounts may be offered for academic users. There are
also researchers who simply prefer using free or open-

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 Computer Tools 71

source software. Open source means that software
development is decentralized by making the source
code available so that individual users can modify the
software and redistribute or publish their version back
to the community. Most, but not all, open-source soft-
ware is free, and just because a computer tool is free
does not mean that it is also open source.
Among researchers in the behavioral sciences, the
best-known computing environment for data manage-
ment, statistical analysis, and graphics that is both free
and open source is R (R Core Team, 2022). A basic
installation of R has many of the same capabilities for
statistical analysis as commercial products such as
SPSS or SAS/STAT, and thousands of free packages
extend its range even further. This includes several
packages for SEM, some of which can analyze a wide
range of structural equation models with capabilities
similar to those of commercial software. This is espe-
cially true for lavaan, described momentarily. Its
extensive capabilities are why I used lavaan in most
detailed analysis examples described in this book.
There are potential obstacles to using the noncom-
mercial software programs just mentioned. One is doc-
umentation. Although there are articles, chapters, or
even entire books written for applied researchers who
use lavaan for SEM, standard R package documenta-
tion is written in a technical way that assumes knowl-
edge of object-oriented programming. Specifically,
the typical “manual” for an R package consists of an
alphabetical listing of functions with terse references to
objects, methods, and data types. Such documents can
be pretty cryptic for researchers without strong pro-
gramming skills. It is also true that numerical output
in R is not always “pretty,” that is, the output is format-
ted in ways that are not easy to read at first glance. An
example is scientific notation in which very small or
very large numbers are represented in a simpler form
(e.g., 1.0E-4 for the number .0001). For researchers
unwilling to deal with these challenges, a commercial
tool may be a better option, if cost is no issue.
R PACKAGES FOR SEM
Listed in Table 5.1 are major R packages for SEM anal-
yses with citations and descriptions. All packages in

TABLE 5.1. Major R Packages for SEM

Name Citation Description
General model fitting
sem Fox et al. (2022) Basic but broad capabilities for analyzing structural
equation models

lavaan Rosseel et al. LAtent VAriable ANalysis, estimates a wide range of

(2023) models with capabilities that rival commercial tools

OpenMx Boker et al. Matrix processor and numerical optimizer that can be
(2022) used with multicore computers or networked computers

piecewiseSEM Lefcheck (2020) Single-equation estimation of path models with global fits
test based on predicted conditional independencies

Utilities and tools

semTools Jorgensen et al. Extends lavaan capabilities, includes utilities for power
(2022) analysis and other special types of analyses

systemfit Henningsen & Estimates simultaneous linear equations with ordinary

Hamann (2022) least squares and instrumental variable methods

bmem Zhang & Wang Estimators and bootstrapped confidence intervals for
(2022) indirect effects with incomplete data

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 72 Concepts, Standards, and Tools
the table except OpenMx were used in analyses for this
book. The sem package was probably the very first for
analyzing a wide range of structural equation models,
but there are no plans for major development beyond
its current form.4 It is still quite usable, though, and
it offers a range of estimators, including instrumental
variable methods. The sem package can also be inte-
grated with external R packages for multiple imputa-
tion (MI), bootstrapping, and estimating polychoric
correlations, which further extend its capabilities (Fox
et al., 2022).
The lavaan package for SEM (see Table 5.1) has
extensive analysis capabilities and has been updated
several times since it was first released in 2011. The
lavaan package has estimators for continuous, binary,
and ordinal data, and there are capabilities for item
response theory (IRT), latent class, mixture model-
ing, and multilevel analyses. Modern options for han-
dling missing data include full information maximum
likelihood (FIML) and MI, but use of an external R
package, such as semTools, is required for the latter.
Resources for using lavaan include books (Beaujean,
2014; Gana & Broc, 2019), journal articles (Andersen,
2022; Svetina et al., 2020), a website,5 and a discussion
group.6
The OpenMx package is a powerful matrix proces-
sor and numerical optimization tool with capabilities
for analyzing structural equation models, multilevel
models, mixture models, and models of genetic relat-
edness—see Table 5.1. Models can be interactively
built one step at a time, which allows code debugging
in smaller steps. The package supports multicore com-
puters, where multiple central processing units in the
same computer operate in parallel on an analysis, and
distributed processing over separate computers work-
ing in parallel clusters. These capabilities support the
analysis of extremely large data sets. Missing data are
handled through the FIML method. There is an online
user guide,7 and the OpenMx community wiki offers
tutorials, example models, and forums.8 The syntax is
relatively complex but highly flexible once mastered—
see Neale et al. (2016) for examples.
4 J. Fox (personal communication, November 20, 2020).
5 https://www.lavaan.ugent.be/
6 https://groups.google.com/g/lavaan
7 https://vipbg.vcu.edu/vipbg/OpenMx2/docs//OpenMx/latest/
8 https://openmx.ssri.psu.edu/wiki/main-page
Pt1Kline5E.indd 72
The eponymously named package piecewiseSEM
(Table 5.1) supports the method of piecewise SEM,
described in Chapter 8. Briefly, the method features
(1) single-equation (local) estimation of observed vari-
able path models and (2) a global test of model–data
correspondence (i.e., goodness-of-fit) based on Pearl’s
(2009) approach to nonparametric structural equation
modeling covered in the next chapter. Local estimation
means that the equation for each outcome variable is
separately analyzed instead of the computer attempt-
ing to simultaneously estimate all model parameters,
or global estimation. Piecewise SEM is best known in
biology and ecology, but it offers potential benefits for
researchers in the behavioral sciences, too.
Listed in the lower part of Table 5.1 are “toolbox”
R packages for special kinds of analyses in SEM and
other statistical techniques. The semTools package
extends the capabilities of lavaan to exploratory fac-
tor analysis (EFA) or estimation of interactive effects of
latent variables. The same package can also estimate
power, conduct Monte Carlo simulations, correct sig-
nificance test results for small sample sizes, estimate
the reliability of factor measurement, and combine
results from MI. It has a special function that uses the
Kaiser and Dickman (1962) method to generate a raw
data file of a specified size from an input covariance
matrix, where all descriptive statistics of generated
raw scores exactly match those of the specified cova-
riance matrix (i.e., the scores are generated with no
added sampling error). This capability is handy when
the researcher has a summary covariance matrix but
no raw scores, such as from a journal article, and the
researcher wants to conduct a secondary analysis with a
computer tool that requires raw scores. A GitHub wiki
for semTools is available.9
The R package systemfit (Table 5.1) estimates sys-
tems of linear equations for observed variables. It has
capabilities for OLS and instrumental variable methods.
Versions of the latter method can be used for an analysis
called seemingly unrelated regressions (SUR), which
is actually a misnomer because the regressions for sep-
arate outcome variables are correlated due to overlap-
ping (correlated) error terms. In contrast, error terms
for multiple outcomes in standard OLS regression are
assumed to be independent. There are also functions in
systemfit that evaluate the overall fit of regression mod-
els to the data and conduct diagnostic tests for instru-
mental variable methods. The bmem package supports
9 https://github.com/simsem/semTools/wiki
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 Computer Tools 73

the generation of confidence intervals for estimates of
indirect causal effects in mediation analyses when there
are missing data (see the table). It also has capabilities
for estimating statistical power for tests of indirect
effects in a variety of mediational analyses, including
ones where the intervening variable is modeled as a
latent variable.
FREE SEM SOFTWARE
WITH GRAPHICAL USER INTERFACES
The :nyx (pronounced “onyx”) program for SEM runs
under the Java Runtime Environment (version 1.6 or
later) on Windows, Apple (macOS), or Unix/Linux plat-
form computers (von Oertzen et al., 2015). It is a graph-
ical computing environment for creating and analyzing
structural equation models that can be freely down-
loaded.10 There is no native programming language
in :nyx. Instead, the user draws the model onscreen.
After associating a data file with the diagram, estima-
tion of model parameters automatically begins. Miss-
ing data are handled by the FIML estimator. There is a
post-analysis option to synthesize raw data files where
cases are selected with sampling error from a hypo-
thetical population where model parameters equal the
sample estimates. The program can also automatically
generate syntax for Mplus, sem, lavaan, or OpenMx
that specifies the model represented in the diagram.
10 http://onyx.brandmaier.de/
The JASP program is an open-source, integrated
application for both traditional (frequentist) and Bayes-
ian statistical analyses (JASP Team, 2022).11 There
are versions for Windows, MacIntosh, and Linux plat-
form computers.12 It features a GUI that is intuitive
even for relatively inexperienced users of statistical
computer tools. Statistical capabilities include uni-
variate and multivariate analysis of variance (ANOVA,
MANOVA), regression analysis (linear, linear mixed,
logistic) and EFA, among others. There is a special
module for SEM, for which users enter lavaan syn-
tax to specify the model in a special text window, but
output options are controlled in the JASP user inter-
face. The SEM module also offers separate options for
analyzing mediation models and latent growth models.
COMMERCIAL SEM COMPUTER TOOLS
Listed in the top part of Table 5.2 are stand-alone com-
mercial programs for SEM that do not require a larger
computing environment. All four of these computer
tools—EQS, IBM SPSS Amos (hereafter just “Amos”),
LISREL, and Mplus—allow the user to work in batch
mode (syntax) or specify the model through a draw-
ing editor or templates. The drawing editors in EQS,
11 The
acronym stands for Jeffreys’s Amazing Statistics Program,
named after the British mathematician Harold Jeffreys for his
work on Bayesian probability theory.
12 https://jasp-stats.org/

TABLE 5.2. Major Commercial Software for SEM

Software Environment needed Batch (syntax) Drawing editor Template or menu
Stand-alone programs
EQS — 9 9 9
IBM SPSS Amos — 9 9 9
LISREL — 9 9 9
Mplus — 9 9 9

Procedures or commands in larger environments

Builder, sem, gsem Stata 9 9 9
CALIS SAS/STAT 9
SEPATH STATISTICA 9 9
CFA SYSTAT 9
RAMONA SYSTAT 9
 74 Concepts, Standards, and Tools
LISREL, and Mplus automatically write program syn-
tax in a separate window that can be edited, run, or
saved. The EQS and LISREL programs can be used in
all stages of the analysis from data entry and screening
to exploratory analyses to SEM. The Amos and Mplus
programs have somewhat more limited capabilities for
manipulating raw data files, so users of these applica-
tions may elect to prepare their data using other com-
puter tools for general statistical analyses.
There are versions of EQS (Equations) for Windows,
Apple (Mac/Unix), and Linux platform computers
(Bentler & Wu, 2020).13 Its syntax is straightforward
and based on the Bentler–Weeks representational
system, in which model parameters are regression
coefficients for effects on dependent variables and the
variances and covariances of independent variables
when means are not analyzed. All types of models
are thus set up in a consistent way. Special features of
EQS include the availability of estimators for ellipti-
cal distributions with varying degrees of kurtosis, but
not skew. Options for missing data include FIML for
either normal or nonnormal data or a method based on
the expectation–maximization (EM) algorithm. Other
features include bootstrapping, the ability to correctly
analyze a correlation matrix with no standard devia-
tions, EFA capabilities with parallel analysis and bifac-
tor rotation, and special syntax for multilevel analyses.
Books by Blunch (2016) and Dunn et al. (2020) are for
EQS users.
The Amos (Analysis of Moment Structures) pro-
gram is for Windows platform computers and does not
require the IBM SPSS environment to run (Arbuckle,
2021).14 It has two main parts, Amos Graphics, in which
users control the analysis by drawing the model on the
screen, and Amos Basic, its syntax editor that works in
batch mode. Amos Basic is also a language interpreter
and debugger for Microsoft Visual Studio VB.NET
or C# (“C-sharp”). Users with programming experi-
ence can write VB.NET or C# scripts that modify the
functionality of Amos Graphics. Other utilities include
a file manager, a random seed manager for bootstrap-
ping, and viewers for data and output files. The FIML
method is used for incomplete data files. Amos has
additional capabilities for Bayesian estimation, includ-
ing the generation of graphical posterior distributions.
13 https://mvsoft.com/
14 https://www.ibm.com/products/structural-equation-
modeling-sem
Pt1Kline5E.indd 74
Amos can also analyze mixture models with latent cat-
egorical variables either with training data, where some
cases are already classified but not the rest, or without
training data. Books by Blunch (2013), Byrne (2016),
and Collier (2020) support Amos users.
The LISREL (Linear Structural Relations) program
is the forerunner to all SEM computer programs.15
Available for Windows platform computers, LISREL
is actually a suite of applications that includes PRE-
LIS (“pre LISREL”), which generates and prepares raw
data files for analysis. It also has capabilities for diag-
nosing missing data patterns, MI, bootstrapping, and
Monte Carlo simulation (Jöreskog & Sörbom, 2021).
The FIML method for missing data is also available in
LISREL. There are additional bundled applications for
analyzing multilevel models and for fitting generalized
linear models to data from complex survey designs.
There are two LISREL programming languages, its
original syntax based on matrix algebra and SIMPLIS
(“simple LISREL”), which is not based on matrix alge-
bra nor does it require familiarity with the classic syn-
tax except to specify certain output options. The clas-
sic syntax is not easy to use until one has memorized
the whole system, but it is efficient: One can specify
a complex model with relatively few lines of code.
Some advanced capabilities, such as nonlinear param-
eter constraints, are unavailable when using the SIM-
PLIS language. Recent books about LISREL include
Jöreskog et al. (2016) and Viera (2011).
The Mplus program for Windows, Apple (macOS),
and Linux platform computers is divided into a base
program and three optional add-on modules (Muthén
& Muthén, 1998–2017).16 The Base Program for SEM
can analyze models with outcomes that are any combi-
nation of dichotomous, nominal, ordinal, censored, or
count variables. It can also analyze discrete- and con-
tinuous-time survival models. There are capabilities for
conducting exploratory factor analysis, bootstrapping,
Monte Carlo simulation, Bayesian estimation, and IRT
analyses. Special syntax supports the specification of
sampling weights—also called survey weights—that
correct for systematic differences in probability sam-
pling between target and sample proportions of cases
with specific demographic or other characteristics.
There is also special syntax for specifying latent growth
models and the analysis of indirect casual effects. Both
15 https://ssicentral.com/
16 https://www.statmodel.com/
3/22/2023 3:52:41 PM

MI and FIML methods are available for handling miss-
ing data under the assumption of MAR. Special meth-
ods in Mplus for data missing not at random (MNAR)
are described in Chapter 9.
The Multilevel Add-On estimates multilevel ver-
sions of the kinds of models analyzed in the Base Pro-
gram, and the Mixture Model Add-On estimates mix-
ture model versions, where the data are assumed to be
sampled from a mix of subpopulations that correspond
to levels of a latent categorical variable. The Combina-
tion Add-On contains all the features of the multilevel
and mixture model analyses just mentioned. Of all SEM
computer tools, Mplus can analyze perhaps the widest
range of statistical models, and some of the very newest
analysis capabilities can show up first in Mplus. Recent
books about Mplus include Finch and Bolin (2017),
Geiser (2021), Heck and Thomas (2015), and Wickrama
et al. (2022). See Geiser (2023) for examples of SEM
analyses conducted with both Mplus and lavaan.
Listed in the bottom part of Table 5.2 are SEM pro-
cedures or functions within larger software environ-
ments. Builder is the drawing editor for SEM in Stata,
and the commands sem and gsem are for specifying
models in syntax (StataCorp, 1985–2021).17 The sem
command analyzes models with continuous outcomes,
and the gsem (generalized SEM) command analyzes
outcomes that are continuous, dichotomous, categorical
(ordered or unordered), count, or censored variables.
The gsem command also has capabilities for multilevel
modeling in an SEM framework and for analyzing
models based on IRT. Stata automatically generates for
Builder diagrams the corresponding syntax, which can
be edited and saved as a text file. Special symbols in
Builder designate the underlying distribution (Gauss-
ian, Poisson, etc.) for observed variables and the cor-
responding link function (logit, probit, etc.). Missing
data are handled by FIML. The book by Acock (2013)
covers SEM in Stata.
The procedure CALIS (Covariance Analysis of Lin-
ear Structural Equations) in SAS/STAT for Windows
and Unix platform computers (SAS Institute, 2022)
is for SEM.18 It works in batch mode, and users can
specify their models using one of seven different pro-
gramming languages, including LISMOD, a matrix-
based syntax that corresponds to LISREL’s original
language, and LINEQS, an equation-based syntax
17 https://www.stata.com/
18 https://www.sas.com/
Pt1Kline5E.indd 75
Computer Tools 75
related to EQS’s original language, among others. The
missing data method in CALIS is FIML, but MI is also
available through the larger SAS/STAT environment.
The diagram for the analyzed model can be drawn
onscreen, but the researcher must specify the diagram
in syntax. O’Rourke and Hatcher (2013) describe exam-
ples of SEM analyses in SAS/STAT.
J. Steiger’s SEPATH (Structural Equation model-
ing and Path Analysis) is the SEM module in Statis-
tica, an integrated environment for data visualization,
simulation, and statistical analysis.19 There is a desk-
top version for Windows platform computers (TIBCO
Statistica, 2022) and an enterprise version with compa-
nywide server support. Models are specified using the
PATH1 programming language based on a represen-
tational system for SEM by McArdle and McDonald
(1984) introduced in Chapter 7. There are also tem-
plate-based options that are preprogrammed sequences
of graphical dialog boxes for specifying common types
of structural equation models—see Table 5.2. Special
features include the capabilities to correctly analyze a
correlation matrix with no standard deviations, gener-
ate simulated random samples for Monte Carlo studies,
and precisely control parameter estimation. A separate
power analysis module (also by J. Steiger) estimates the
power of various significance tests in SEM.
There are two SEM procedures in SYSTAT for
Windows platform computers (Systat Software Inc.,
2018).20 The user interacts with RAMONA (Reticular
Action Model or Near Approximation) by submitting
batch files in the general SYSTAT environment. Syn-
tax for RAMONA is relatively straightforward and
involves only two parameter matrices, one for covari-
ances between independent variables and the other for
direct effects on dependent variables. A second pro-
cedure is CFA, where the user specifies measurement
models and analysis options through graphical dialogs
or templates (Table 5.2). A special feature of both pro-
cedures just described includes the ability to correctly
fit a model to a correlation matrix only. There is a
“Restart” command that automatically takes parameter
estimates from a prior analysis as starting values in a
new analysis. This capability is convenient when evalu-
ating whether a complex model is identified. There
are relatively few other advanced features for SEM in
19 https://www.statistica.com/
20 https://systatsoftware.com/
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 76 Concepts, Standards, and Tools
SYSTAT including the capability to simultaneously fit
a model to data from multiple groups.
SEM RESOURCES FOR OTHER
COMPUTING ENVIRONMENTS
Resources for conducting SEM analyses in more spe-
cialized computing environments are listed next:
1. The freely available semopy (Structural Equation
Models Optimization in Python) package for the
object-oriented programming language Python
relies on lavaan-like syntax, features relatively
fast processing times, and has capabilities for impu-
tation of missing values, analysis of ordinal out-
comes, and estimation of random coefficients mod-
els (Igolkina & Meshcheryakov, 2020).21 A second
edition of semopy is recently available (Meshch-
eryakov et al., 2021).
2. Mathematica is a software system for technical and
symbolic computation with capabilities for inter-
facing with programs written in other languages
(Wolfram Research, 2022).22 Oldenburg (2020)
describes Mathematica code for estimating mod-
els in both the traditional way through covariance
matrix-based computations and through methods
based on least squares optimization that can also be
applied to nonlinear models.
21 https://semopy.com/
22 https://www.wolfram.com/
Pt1Kline5E.indd 76
3. The Matlab program is a computing environment
and programming language for data analysis, visu-
alization, and simulation (Mathworks, 2022).23
Williams (2021) describes the Toolbox for SEM, a
set of functions for estimating structural equation
models with continuous outcomes.
SUMMARY
Modern SEM computer tools are generally no more
difficult to use than other computer programs for mul-
tivariate statistical analyses. The capability to specify
a model by drawing it onscreen helps beginners to be
productive right away, but with experience they may
find that specifying models in syntax is actually more
straightforward. Problems can be expected in the anal-
ysis of complex models, and no amount of user-friend-
liness in the interface of a computer tool can negate this
fact. When things in the analysis go wrong, you need,
first, to have a good understanding of the problem and,
second, basic computer skills to correct the problem.
You should not let ease of computer tool use lead you
to carry out unnecessary analyses or select analytical
methods or options you do not understand. The con-
cepts and tools covered in Part I of this book set the
stage for considering the specification and analysis of
basic kinds of structural equation models in Part II.
23 https://www.mathworks.com/
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 Part II

Specification, Estimation,
and Testing

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Pt2Kline5E.indd 78 3/22/2023 3:43:59 PM
 6

Nonparametric Causal Models

The principal concepts in Pearl’s (2009) nonparametric approach to SEM (i.e., the structural causal model)
are introduced in this chapter. A causal model as described next corresponds to a directed acyclic graph
(DAG), which depicts hypotheses of unidirectional causation or temporal ordering among variables in graph-
ical form. A DAG does not allow for causal loops, where ≥ 2 variables are specified to have direct or indirect
effects on each other. In contrast, a directed cyclic graph (DCG) includes at least one causal loop, but we
will deal with such models later in the book. A directed graph as a nonparametric causal model implies two
things: (1) The researcher makes no commitment to distributional assumptions for any variable. (2) A direct
causal effect represents all forms of the functional relation between a putative cause and effect. If variables
X and Y are both continuous, for example, the specification X → Y in a nonparametric model represents the
linear and all curvilinear trends of the causal effect of X. But in parametric causal models—introduced in the
next chapter—the specification X → Y represents just the linear trend for continuous variables.
Another difference is that there are methods and computer programs for analyzing directed acyclic
graphs before any data are collected. Such analyses can alert the researcher to the presence of confounding,
including whether it would be necessary to measure additional variables in order to estimate any specific
causal effect with less bias. It is easier to address the problem of omitted variables when the study is being
planned than after the data are collected. Even if no new variables are required, analysis of the graph can
indicate options for estimating a target causal effect, including which covariates or instruments to select, in
the presence of confounding. A tutorial on instruments (i.e., instrumental variables) is offered in this chapter.
Analysis of a DAG can also help researchers to find testable implications of their causal hypotheses. No
special software is needed to analyze the data. This is because testable implications for linear models with
continuous variables can be evaluated using partial correlations, which can be estimated with standard com-
puter tools for statistical analysis. Thus, researchers who understand nonparametric causal models are better
prepared for all stages of SEM, from model specification through data collection to analysis and reporting
of the results. So if the ideas considered next seem at first unfamiliar, trust me, it is worth persevering. The
payoff will be apparent in later chapters when we apply the ideas outlined next.

GRAPH VOCABULARY pair of variables is adjacent if they are connected by

AND SYMBOLISM
Variables in directed graphs are also called nodes or
vertices. Some variables are connected by arcs, also
known as edges or links, that designate presumed
functional or statistical dependencies in the graph. A
an edge; otherwise, that pair is nonadjacent. An arrow
or directed edge represents a presumed direct causal
effect between two variables, such as
X→Y (6.1)

79

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 80 Specification, Estimation, and Testing
where X is a presumed cause of Y. In contrast, a bidi-
rectional edge, often symbolized with an arc rendered
as a dashed line instead of a solid line with arrowheads
at each end, such as
X Y (6.2)
designates a spurious (noncausal) association between
X and Y due to ≥ 1 unmeasured (latent) common causes.
An alternative symbolism in a causal DAG is
X UC Y (6.3)
where UC explicitly represents all unmeasured com-
mon causes of X and Y, and the arrows are rendered as
dashed lines because the corresponding causal effects
on both X and Y are not directly observed.
By convention, error terms for outcome variables are
not included in a causal DAG. This is in part because
it is assumed that all variables, causal or outcome,
will have idiosyncratic error due to unobserved fac-
tors that can vary over time or units (cases, settings,
regions, etc.). Also, error terms for outcome variables
are implied by arrows in the graph that point to them
from other variables, such as in Equation 6.1, where Y
is the outcome. The hypothesis of overlapping or cor-
related error is represented by Equation 6.2, where
a bidirectional edge connects two variables X and Y
(Equation 6.3 is an alternative specification). Corre-
lated errors are always explicitly represented in a DAG;
otherwise, error terms for outcomes are assumed to be
independent.
The direct causes of a variable in a DAG are it par-
ents, and all direct or indirect causes of a variable are
its ancestors. All variables directly caused by a given
variable are its children, and its descendants include
all variables directly or indirectly caused by that same
variable. All parents in a DAG are ancestors just as all
children are descendants. A variable with no parents
is exogenous, and a variable with at least one parent is
endogenous, just as in parametric structural equation
models.
A path is a sequence of adjacent edges that con-
nect ≥ 2 variables regardless of the directions of those
edges (i.e., unidirectional or bidirectional). It passes
through any variable along the path just once. In a
directed path, all edges are unidirectional arrows that
point away from a cause toward an outcome at the end
of the path through possibly ≥ 1 intervening variables
(i.e., indirect effects). Thus, directed paths transmit
Pt2Kline5E.indd 80
causal effects from variables at the beginning of the
path to “downstream” variables at the end the path. A
directed path is also called a front-door path because
it starts with an arrow pointing away from the cause,
and all subsequent arrows in the path are oriented
in the same direction. An undirected path is a path
where the arrows do not all point in the same direc-
tion. Undirected paths might convey statistical associa-
tion, but not causation between variables at either end
of the path. The goal of specifying a causal DAG is the
same as for any parametric model in SEM: The graph
represents all hypothesized connections, causal or non-
causal, between any pair of variables in the model.
CONTRACTED CHAINS
AND CONFOUNDING
Presented in Figure 6.1(a) is the smallest causal struc-
ture, the contracted chain X → Y (i.e., Equation 6.1).
The two variables in a contracted chain are uncondi-
tionally dependent because there are no intervening
variables that could disrupt or block the causal coor-
dination between them. Represented in Figure 6.1(a) is
the total causal effect—hereafter called just the total
effect—of X on Y. Besides the hypothesis about direc-
tionality, the figure also assumes there are no unmea-
sured confounders, or latent common causes of both X
and Y. A variation on this assumption is that all omitted
causes of Y are uncorrelated with X. For this reason,
variable X can be described as an exogenous regressor
in the prediction of Y.
If the assumptions for Figure 6.1(a) just stated are
correct, the coefficient from the regression of Y on X
would estimate the total effect without bias. Because
the model is nonparametric, though, no particular
regression technique can be specified. For instance, if
both X and Y were continuous and their relation strictly
linear, the method would be bivariate ordinary least
squares (OLS) regression. But if Y were dichotomous,
the regression method could be logistic regression or
probit regression and, if time-to-event data were also
collected for varying risk periods, a proportional haz-
ards model, such as a Cox model, could be specified,
among other possibilities for binary outcomes (Lee et
al., 2009). The point is that the choice of regression
technique depends on assumptions about the functional
form of the causal effect and on the level of measure-
ment for both X and Y, but nonparametric models are
not concerned with such details.
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 Nonparametric Causal Models 81

(a) Contracted (b) Unmeasured Unmeasured confounding bias is implied in Figure

chain intermediary 6.1(c) by the bidirectional edge that connects X and Y,
and that bias is explicitly depicted in Figure 6.1(d) by
UM the biasing path—also called a back-door path—that
X Y starts with an arrow pointing toward X and ends with
X Y an arrow pointing toward Y with UC as their latent com-
mon cause (i.e., Equation 6.3). A confounder does not
lie on a directed path between a cause and an outcome;
Unmeasured common cause that is, a confounder is not an intervening variable
(c) Implied (d) Explicit along an indirect effect—compare Figures 6.1(b) and
6.1(d). The biasing path in Figure 6.1(d) transmits non-
UC causal association between X and Y, which will be con-
founded with the total causal effect when Y is regressed
on X (i.e., the coefficient will estimate both together).
X Y X Y
The degree of bias depends on the magnitudes and
directions of the effects of unmeasured confounders
Identifying X Y on observed variables in the model, and that bias can
(e) Proxy (P) (f) Instrument (Z) be substantial, especially if there are ≥ 2 unmeasured
confounders that are uncorrelated (Fewell et al., 2007).
UC P Figures 6.1(c) and 6.1(d) can also be seen as imply-
ing a correlation between a causal variable X and the
Z X Y
error term of its outcome Y. The terms endogeneity and
X Y
simultaneity describe the same basic idea. A measured
causal variable that we presume overlaps with unmea-
FIGURE 6.1. Contracted chains and identification of sured causes of the outcome is called an endogenous
causal effects in the presence of unmeasured common regressor. VanderWeele (2019) described two basic
causes through covariate selection or instrumental variables. methods for dealing with unmeasured confounders: (1)
to control confounding bias in the analysis phase and
also (2) to identify the causal effect of interest.1 These
methods are covariate selection and the instrumental
The total effect of X on Y could also be estimated variable method, as described next.
without bias if there are ≥ 1 unmeasured intervening
variables that lie along a directed path between the two
variables and there are no unmeasured confounders COVARIATE SELECTION
of X and Y. This situation is depicted in Figure 6.1(b),
where UM is a latent intermediary variable along the In covariate selection, a proxy for a latent confounder is
path measured and specified as a covariate in the regression
of the outcome on both the cause and the proxy. This
X UM Y (6.4) analysis statistically controls for the proxy of an omit-
ted confounder when the coefficient for the presumed
In Figure 6.1(b), variable X has both direct and indirect cause is computed. Suppose that patient frailty is sus-
effects on Y, but the indirect effect through UM is not pected to be a latent confounder for both treatment and
observed. In the regression of Y on X, the coefficient outcome such that (1) physicians are less likely to use
will estimate both the direct and indirect effects but certain treatment options for frail patients, and (2) frail
with a single numerical value. This is not a problem in patients are also expected to have worse outcomes in
terms of the total effect of X on Y—the estimate is unbi-
ased—but the coefficient for X would not approximate 1 Thereare also design-based approaches to dealing with unmea-
just the direct effect of this variable, again assuming sured confounders, such as case-crossover designs for estimat-
correct specification of directionality and no omitted ing short-term effects of intermittent or time-varying exposures,
confounders for X and Y. among other variations described by Uddin et al. (2016a).

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 82 Specification, Estimation, and Testing
general. If frailty increases with age, patient age could
be measured as a proxy for frailty, given no other
direct measure of this variable (Stürmer et al., 2007).
Another example is the measurement of pretreatment
blood pressure as a proxy for smoking among patients
among whom histories of tobacco use are unmeasured
or poorly measured (Uddin et al., 2016a).
Covariate selection as a method to identify a causal
effect is depicted in Figure 6.1(e), where P is the proxy
for UC, a latent confounder of both X and Y. The figure
assumes an ideal proxy such that P captures essentially
all aspects of UC that confound X and Y. That is, the
figure assumes there is zero residual confounding
because analyzing P as a covariate entirely controls for
all effects of UC. This assumption is reflected in the fig-
ure by the absence of arrows from UC to both observed
variables, given P.
There are two paths between X and Y in Figure 6.1(e):
X←P→Y (6.5)
X→Y
The first path in Equation 6.5 is a back-door path that
reflects measured confounding bias because P, the
proxy, is measured, not latent. Regressing Y on both X
and P breaks the spurious association between X and
Y. Another way to describe the same analysis is that
conditioning on P closes (deactivates, blocks) the bias-
ing path, which renders X and Y statistically indepen-
dent except for their causal relation, or the second path
in Equation 6.5. That directed path between X and Y
remains open after controlling for P because the proxy
is not part of this path. Thus, the goal of covariate
selection in causal modeling can be succinctly stated:
Conditioning on the covariate(s) should close all non-
causal paths that transmit spurious association while
leaving causal paths open.2
It is unlikely that any single proxy would perfectly
measure a latent confounder. For example, classify-
ing age as simply “young” or “old” would be a crude
proxy for chronological age, and residual confounding
might be substantial, if age as a continuous variable is
a confounder. It is a common strategy to measure mul-
tiple covariates as proxies for ≥ 1 latent confounders
2 Otherways to condition on a variable include stratification, sub-
group analysis, or sampling from populations with certain values
on key variables (e.g., a survey of employed mothers). Condition-
ing can also happen inadvertently due to missing data (Elwert,
2013).
Pt2Kline5E.indd 82
but, for reasons explained momentarily, a poor choice
of covariates can actually increase bias. But knowing
something about directed acyclic graphs as nonpara-
metric causal models can give the researcher an edge
in covariate selection. Exercise 1 asks you to (1) draw
a new version of Figure 6.1(e) assuming that residual
confounding is not zero (i.e., P does not perfectly mea-
sure UC); (2) generate all paths between X and Y in the
modified DAG; and (3) comment on expected effects of
controlling for P in this likely more realistic scenario.
INSTRUMENTAL VARIABLES
A second way to reduce unmeasured confounder bias
in the analysis phase is the instrumental variable
method, which is represented in Figure 6.1(f). An
instrumental variable or instrument Z is a measured
variable that
1. Influences the causal variable X.
2. Has no direct effect on outcome Y except through X
(i.e., Z does not affect Y, if X is held constant).
3. Is independent of unmeasured confounding (Baioc-
chi et al., 2014).
The first condition just listed refers to relevance, the
second condition is the exclusion restriction, and third
condition is called exogeneity, or the requirement that
Z shares no causes with Y (Swanson & Hernán, 2013).
Another way to describe all three conditions is that Z
is correlated with X but is uncorrelated with the error
term for Y (Bollen, 2012). Exercise 2 asks you to explain
the difference between an instrument and a confounder.
Conceptually, instrumental variable estimation
works by (1) using the instrument Z to extract variation
from the causal variable X that is free of unmeasured
confounders. Next, (2) the outcome Y is regressed on
the adjusted (confounder-free) version of X, designated
here as X Z , and the coefficient for X Z estimates the
causal relation (Baiocchi et al., 2014). The basic logic
just outlined corresponds to the method of two-stage
least squares (2SLS), where “problematic” causal
variables—those thought to covary with unmeasured
confounders—are replaced with versions corrected by
instruments and then specified as predictors of the out-
come. Extending this conceptual definition of the 2SLS
method to Figure 6.1(f), variable X is regressed on
instrument Z, and then outcome Y is regressed on the
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part of X that is explained by Z, or X Z . Assuming that
Z satisfies the requirements for an instrument, the cor-
rected predictor X Z is independent of the unmeasured
confounder, and regressing Y on X Z should estimate
the causal effect of X with less bias than the coefficient
obtained by regressing Y on X in a standard (one-stage)
OLS regression analysis.
Computer implementations of 2SLS are actually car-
ried out in a single step, where the researcher specifies
causal variables, their instruments, the outcome, and
not over two separate analysis steps. Standard errors
for instrument-corrected predictors, such as for X Z in
Figure 6.1(f), are derived using special methods that
simultaneously estimate sampling error in predicting
X from Z and also in predicting Y from XZ , including
methods that are also robust against heteroscedastic-
ity (Baiocchi et al., 2014). The 2SLS method is strictly
a single-equation method, where each outcome vari-
able has its own equation. There are additional types
of instrumental variable methods, such as three-stage
least squares (3SLS), which allows for correlated
errors over multiple outcomes. This makes 3SLS more
like a simultaneous estimation method in that it takes
account of the features in other outcome and predictor
variables when estimating coefficients for each causal
variable—see Angrist and Krueger (2001) and Bollen
(2012) for more information.
Because instrumental variable methods are not as
intuitive as covariate selection, two empirical examples
are described next. In a cohort of about 37,000 people at
least 65 years old, Schneeweiss et al. (2007) compared
the 6-month all-cause mortality rate between patients
given typical antipsychotic medications and those
prescribed atypical antipsychotic medications.3 The
instrument was a doctor’s preference for prescribing
typical versus atypical medications. This was indicated
by how recently the doctor had prescribed a new anti-
psychotic drug. It was assumed that physician prefer-
ence here is independent of patient characteristics that
could confound the association between drug type and
mortality and that doctor preference would affect mor-
tality only through the type of antipsychotic medica-
tion actually prescribed to individual patients. Rates of
death among elderly patients within the first 6 months
3 Typical (first-generation) medications (e.g., haloperidol) are
associated with potentially severe extrapyramidal symptoms, or
drug-induced movement disorders. Atypical (second-generation)
antipsychotics (e.g., risperidone) are less likely to induce extra-
pyramidal side effects.
Pt2Kline5E.indd 83
Nonparametric Causal Models 83
of using typical antipsychotic drugs were comparable
with or slightly higher than the risk of death associated
with atypical antipsychotic medications (respectively,
14.1% vs. 9.6%). Somewhat higher mortality was asso-
ciated with haloperidol, the most frequently prescribed
typical antipsychotic drug, compared with risperidone,
the most frequently prescribed atypical medication.
In a national cohort of over 97,000 patients 50 years
and older who suffered a hip fracture and were not pre-
viously treated with osteoporosis medication, Desai et
al. (2018) estimated the effect of initiating osteoporosis
treatment or not treating on rates of subsequent non-
vertebral fractures over the following 10 years. The
instrumental variable with the strongest relation with
treatment was hospital-level rates of prescribing osteo-
porosis drugs controlling for patient age and gender.
Other instruments included calendar year (i.e., chang-
ing rates of prescriptions over time), access to special-
ists, and geographic region. All four instruments were
expected to directly affect treatment but should relate
to outcome only indirectly through treatment. Known
confounding variables, such as comorbid medical con-
ditions and history of falls, were also measured. That
is, instruments and covariates were analyzed together
to address, respectively, unmeasured and measured
confounding. The results indicated that lower rates of
subsequent fractures by about 4.2 events per 100 per-
son-years were associated with osteoporosis treatment
initiation compared with nonuse of the treatment, an
effect size considered by Desai et al. (2018) to be clini-
cally meaningful.
An advantage of the instrumental variable method
is that it does not require specific knowledge of unmea-
sured confounders. This is because bias in estimates of
causal effects will be reduced, if the requirements for
instruments stated earlier are satisfied. This advantage
can be especially germane for researchers who ana-
lyze large databases, such as from state, provincial, or
national governments, about population-level health-
care use and long-term outcomes. Such data are often
collected for reasons unrelated to research hypotheses
and thus may include relatively little information about
potentially important confounders (Stürmer et al., 2007).
For example, smoking is an obvious possible confounder
in health research, but accurate information about smok-
ing history may not be available in archival data.
A risk is selecting a weak instrument that has a low
covariance with the presumed causal variable (i.e., rel-
evance is suspect). There is a no single definition of a
“low” covariance, but as absolute covariances approach
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 84 Specification, Estimation, and Testing
zero, results based on analyzing weak instruments can
actually increase bias, especially if the other assump-
tions for an instrument are also violated (Bound et al.,
1995). Various rules of thumb based on significance
testing, such as partial F tests of the association between
instruments and causal variables, and effect sizes have
been proposed for detecting weak instruments (Davies
et al., 2013). For example, in a multiple database study
of the relation between use of antidepressant medica-
tion and risk of hip fracture, Uddin et al. (2016b) used
a threshold of r < .15 to identify weak instruments,
but suitable minimum effect size thresholds may vary
over studies. In general, it is better to have a few strong
instruments that are relevant for the causal variable than
many weak instruments. Angrist and Krueger (2001)
described examples of instruments in both observa-
tional and randomized studies, and Uddin et al. (2016b)
described challenges in finding good instruments for
time-varying exposures, such as repeated cycles of drug
treatment and cessation over a period of time.
There are also ways to empirically check the require-
ments for instrument exclusion and exogeneity, but such
falsification tests are usually not conclusive because
the full truth about omitted confounders is rarely
known. For example, observed covariances between
instruments and measured confounders (if any) should
be appreciably low; otherwise, the exogeneity assump-
tion is suspect. Estimates of direct effects of instruments
on outcomes while holding causal variables constant
should also be relatively low in magnitude; otherwise,
the exclusion restriction may be untenable. Authors of
only about 20% of studies where instrumental vari-
able methods were used to estimate effects of medical
interventions reviewed by Swanson and Hernán (2013)
provided reports of falsification tests. There is also the
Hausman specification test of whether a particular
causal variable is characterized by endogeneity, that
is, whether that variable is an endogenous regressor
(Hausman, 1978). It compares unstandardized coeffi-
cients for the same predictor from standard (i.e., one-
stage) regression analysis versus instrumental variables
regression, and the rejection of the null hypothesis of
coefficient equality indicates endogeneity (i.e., instru-
ments are needed).
Knowledge of nonparametric causal models depicted
as a DAG can also help the researcher to select proper
instruments. This is because there are precise, graphi-
cal methods to find instruments (if any) for putative
causal variables. These methods can be applied by
computer programs for analyzing graphs, which is a
Pt2Kline5E.indd 84
convenience. For example, the instrument in Figure
6.1(f) is exogenous, but instruments in larger graphs
can be endogenous, too, if they meet the essential
requirements stated earlier. But it can be difficult in a
large graph to determine by eye whether one variable is
a proper instrument for another variable. So approach-
ing the analysis with a complete, well-thought-out
causal graph can facilitate both covariate selection
and instrument selection.
CONDITIONAL INDEPENDENCIES
AND OTHER TYPES OF BIAS
Presented in Figure 6.2(a) is a fork, or the smallest
model with two variables that have a common cause.
Variables X and Y have no causal relation, but the single
back-door path that connects them to A, their common
cause, or
X←A→Y
induces a spurious association. Conditioning on A
would block the back-door path list and render X and
Y unrelated. Both implications of the figure just men-
tioned can be summarized as follows:
X⊥Y (6.6)
X⊥Y|A
In other words, variables X and Y are dependent, if
we ignore their common cause A, but they are con-
ditionally independent, if we control for A. Thus,
(1) the conditioning set that renders X and Y indepen-
dent is (A), and (2) the second expression in Equation
6.6 is the implied conditional independence, given
­Figure 6.2(a).
Figure 6.2(b) is a chain, or the smallest model for
three variables with a single directed path, or
X→A→Y
Unlike Figure 6.2(a), the relation between variables
X and Y is causal; specifically, that causal relation is
entirely indirect through the intervening variable A.
For reasons explained in Topic Box 6.1, I would not use
either the term “mediation” to describe Figure 6.2(b) or
the term “mediator” to describe variable A in the graph
without more information about the study context. This
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(a) Fork (b) Chain
X┴Y X┴Y
X┴Y|A X┴Y|A
X X
A X
Y Y
FIGURE 6.2. Elementary structures in directed acyclic graphs with three observed variables and corresponding implied
dependencies and independencies. (a) Fork (common cause confounding), (b) chain (intervening variable), and (c) inverted
fork with a collider.
is because the hypothesis of mediation demands much
more than just a graph where at least three variables
are connected by a directed path. Thus, I will use more
neutral terms, such as “indirect effect” or “intervening
variable” when referring to chains like the one in the
figure.
In Figure 6.2(b), only adjacent variables, such as X
and A, have direct causal dependencies. The nonadja-
cent pair X and Y is dependent due to the directed path
that runs through A, but this dependence can be bro-
ken, if the intermediary A is deactivated. For example,
regressing Y on both X and A would render X and Y
statistically independent. This is because A is the sole
intervening variable between X and Y, and including
A as a covariate closes the directed path between this
pair of variables. Both implications of Figure 6.2(b) just
mentioned are expressed by Equation 6.6. Because both
Figures 6.2(a) and Figure 6.2(b) imply the same con-
ditional independence (i.e., X and Y are independent,
given A), they are equivalent. Exercise 3 asks you to
find a third DAG for the same three variables that is
equivalent to the two graphs just mentioned.
Inadvertently controlling for an intervening variable
along a directed path from cause to outcome can lead
to overcontrol (overadjustment) bias (Elwert & Win-
ship, 2014), which discards some, or all, of the indirect
causal effect. For example, regressing Y on both X and
A, the intervening variable, would completely sever the
association between X and Y, given Figure 6.2(b); that
is, cause X and outcome Y are rendered conditionally
independent after controlling for A, the intervening
variable. This is why the technique of multiple regres-
sion assumes no causal effects among the predictors;
that is, there is a single equation, that of the criterion.
Less intuitive but still true is that overcontrol bias can
Pt2Kline5E.indd 85
Nonparametric Causal Models 85
(c) Inverted fork
X┴Y
X┴Y|A
A Y A
also occur when conditioning on the descendant of
an intervening variable. Suppose that variable B were
added to Figure 6.2(b) as a child of A (i.e., A → B).
Regressing Y on X and B (but not A) would partially
close the indirect pathway from X to Y through A
by removing the overlap between A and its other
­outcome, B.
Figure 6.2(c) is an inverted fork, or the smallest
graph with an undirected path that includes a collider,
or
X→A←Y
where variable A is the collider. A collider is a com-
mon outcome that lies along an undirected path with
two arrows pointing into it. Note that a variable can be
a collider along one path but not a collider along a dif-
ferent path in the same graph, but it is common to refer
to variables with at least two parents as colliders. The
term collider suggests a pileup of causal forces. Any
path with a collider is blocked, closed, or inactive. This
is because a collider blocks any association (includ-
ing causal effects) between variables at either end of
a path with a collider. In contrast, a path with no col-
lider is unblocked, open, or active, and thus potentially
conveys statistical association through the path. For
example, the paths between X and Y in Figures 6.2(a)
and 6.2(b) are open because they have no collider, but
the path between X and Y in Figure 6.2(c) is blocked
by the collider A (the path between X and Y is closed).4
4 Figure 6.2(c) allows for the possibility that causes X and Y
interact in their effects on their common outcome. Nilsson et al.
(2021) described explicit symbolism for representing the hypoth-
esis of interaction in a causal DAG.
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 86 Specification, Estimation, and Testing

TOPIC BOX 6.1

Mediation: Definition
Little (2013, p. 287) defined mediation as the “strict causal hypothesis . . . about the way in which . . .
one variable causes changes in another variable, which in turn causes changes in an outcome variable.”
Mediation as a causal hypothesis means that if the presumed model is not correct, results from data analy-
ses may have no meaningful interpretation; that is, mediation is not statistically defined (Kenny, 2021).
Instead, mediation is assumed (i.e., specified), and although analysis results can be used to evaluate that
assumption, mediation is not something that is “discovered” through analysis without a priori hypotheses.
This is why Pearl (2000, p. 136) reminded us that “causal assumptions are prerequisite for validating any
causal conclusion.”
The emphasis on changes in Little’s (2013) definition indicates the requirement for temporal pre‑
cedence, that is, causes precede their effects by some finite amount of time, however brief. Although
quantum causality allows for apparently simultaneous causation between particles that behave as a single
entity over great distances (entanglement, nonlocality; Carvacho et al., 2019), temporal precedence is part
of both classical mechanics at larger physical scales and every day, intuitive judgments about causation.
Without evidence for change, the only effects that can be supported are indirect effects, but not mediation.
In other words, mediation always involves indirect effects, but not all indirect effects automatically signal
mediation. This is especially true in cross-­sectional designs, where all variables are measured at the same
occasion. Stronger designs for establishing mediation that feature temporal precedence are described
later in the book.
Perhaps the most basic assumption is that of modularity, which means that an indirect causal
process consists of parts that are potentially isolatable, and thus can be understood as separate entities
(cause, mediator, outcome) instead of as an organic, holistic, and inseparable whole (Knight & Winship,
2013). The basic nonparametric model of mediation presented next

X Y

assumes that (1) all specifications about directions of causal effects are correct, for example, that X affects
Y and not the reverse or that X and Y mutually influence each other (a causal loop). Also, (2) there are no
unmeasured confounders for any pair of variables. Instruments or proxies could be added to the basic
nonparametric model just presented, if the assumption of no unmeasured confounders for a particular pair
of variables is doubtful. A nonparametric model allows for the possibility that the cause and mediator
interact, for example, that the effect of X on Y changes with the level of M, and also that the effect of M on
Y is conditional on X. In a parametric model, introduced in the next chapter, the hypothesis of interaction
should be explicitly represented in the model. Parametric models of mediation make additional assump-
tions about measurement error, but nonparametric models consist of theoretical, not actual, variables, so
measurement error is a not an issue for such models.

Pt2Kline5E.indd 86 3/22/2023 3:44:00 PM


Listed next are the patterns of independence versus
dependence implied by Figure 6.2(c):
X⊥Y (6.7)
X⊥Y|A
The first prediction of the graph just listed is that X and
Y are independent causes of A; that is, they are unre-
lated without controlling for any other variables (i.e.,
the conditioning set is empty). This assumption is based
on the absence of any path that connects X and Y in Fig-
ure 6.2(c) that does not include a collider. But it is the
second prediction in Equation 6.7 that corresponds to
a special insight about colliders, one with many rami-
fications: If we now condition on the collider, such as
when regressing Y on both X and A, then the variables
X and Y become be related. That is, controlling for a
common outcome of two independent causes induces a
spurious association between them. Even if two causes
are correlated, controlling for their common child adds
a spurious component to their observed association. It
does so by unblocking (opening, activating) the path
between them previously closed by the collider.
Here is an intuitive example: Suppose that students
in a private school were selected because of musical
giftedness or athletic prowess, which we assume are
unrelated. If we know that a student has no musical
talent, then by default we can say that the student is
an athlete, or vice versa. That is, the refutation of one
cause of admission (musicality) confirms the action of
the other cause (athleticism), which induces a negative
dependence of the two causes. Likewise, given confir-
mation of one cause eliminates the need to invoke the
other, which is described as the explaining away effect
in the artificial intelligence literature (Pearl, 2009)
and as Berkson’s paradox in the statistical literature
(Berkson, 1946). In this example, musical and athletic
abilities would be negatively correlated among students
in the school. The composition of the sample is a col-
lider independently caused by these two abilities, and
conditioning on that collider induces a negative correla-
tion between its independent causes.
That controlling for a collider imparts spurious
association between its causes is not just a theoretical
curiosity, but it is a real phenomenon of concern in dif-
ferent research areas. For example, Griffith et al. (2020)
described how collider bias induced by sampling from
patients admitted to hospitals or who volunteered to
participate can complicate the estimation of risk fac-
Pt2Kline5E.indd 87
Nonparametric Causal Models 87
tors for COVID-19 disease and severity. Munafò et
al. (2018) discussed how sampling from special pop-
ulations or case attrition in longitudinal studies can
amount to conditioning on a collider and thus distort
understanding of genetic or environmental causes of
health. Additional examples in epidemiology of poten-
tial bias due to conditioning on a collider are described
by Cole et al. (2010).
Perhaps even less intuitive but just as profound is
the fact that conditioning on the descendant of a col-
lider also induces spurious association. For example, if
variable B were added to Figure 6.2(c) as a child of the
collider A (i.e., A → B), the revised graph would also
predict
X⊥Y|B
Although variable A in the revised DAG does not lie
along a path between X and Y, controlling for B will
nevertheless open a path between them (induces a spu-
rious association), where B is a descendant of the col-
lider A.
A related idea is that an outcome is always a collider
on a path from a cause to the error term of that out-
come. (Recall that error terms are implied in a DAG.)
Thus, if the researcher conditions on a variable that
is the descendant of the outcome, the estimate for the
causal effect can be distorted (Schneider, 2020). In Fig-
ure 6.2(b), for example, outcome variable A is a collider
along the path between its cause, X, and its error term,
UA, shown explicitly next:
X→A UA
Because A is a collider in the path just listed and there
is no other path between X and UA in the graph, then
A and UA are unrelated. But if variable A is regressed
on X and also on Y, the descendent of collider A, then
(1) the path between X and UA is opened, and (2) a spu-
rious association is induced between X and unmeasured
causes of A.
Controlling for a collider—or for the descendant of
a collider—along an undirected path between a puta-
tive cause and its outcome can lead to collider bias,
also called endogenous selection bias, where spurious
associations are induced that may be falsely interpreted
as evidence for causation. This problem is especially
critical when researchers control for what they believe
to be background (causal or confounder) variables that
3/22/2023 3:44:00 PM
 88 Specification, Estimation, and Testing
are really outcomes with two or more parents. Elwert
and Winship (2014) describe endogenous selection bias
as representing the common structure of biases usu-
ally referred to with different names, including ascer-
tainment bias, which occurs when some members of
the target population are less likely than others to be
included in the final results, and homophily bias in
social network analysis, where causal effects in rela-
tionships are confused with social ties between people
seen as similar to one another, among others. That is,
collider bias is a concept that unifies types of biases
described in various disciplines but called different
names. Schneider (2020) describes other subtle varia-
tions on collider bias in economic history research. But
the three main types of bias described to this point—
confounding (common-cause), overcontrol, and col-
lider bias—are fundamental identification problems in
nonparametric models. Exercise 4 asks you to differen-
tiate the three kinds of bias just mentioned.
PRINCIPLES FOR
COVARIATE SELECTION
Summarized next are general principles for selecting
covariates when regressing an outcome on a presumed
cause, given a nonparametric model (i.e., a DAG) for
the problem (Ding et al., 2017; Elwert & Winship, 2014;
Shrier & Platt, 2008):
1. It is appropriate to control for the confounding
effects of a common cause; otherwise, measured
confounding bias may occur. This idea is generally
well known in the behavioral sciences.
2. Inadvertently controlling for an intervening vari-
able (or its descendant) along a directed path from
cause to effect can lead to overcontrol bias.
3. Controlling for a collider (or its descendant) along a
path linking cause and effect leads to collider bias,
or inducement of a spurious association between
cause and effect. Likewise, avoid specifying the
descendant of an outcome variable as a covariate
for the same reason.
4. Avoid controlling for a variable that is an instru-
ment for the causal variable. This is because con-
ditioning on a variable that directly affects the
cause, but has no impact on the outcome except
indirectly through the cause, can actually increase
bias. Because instruments are often designated by
Pt2Kline5E.indd 88
the symbol Z (e.g., Figure 6.1(f)), this phenomenon
is referred to by some methodologists as Z-bias. It
happens because controlling for an instrument can
actually increase variation in the causal variable
due to an unmeasured confounder, which amplifies
bias.
Presented in Figure 6.3 are three directed acyclic
graphs based on examples by Howards et al. (2012),
where S1 is the occurrence of a spontaneous abortion
(miscarriage) during a first pregnancy, S2 refers to the
same outcome during a second pregnancy, E is expo-
sure to a presumed risk factor, and A is a physiologi-
cal abnormality. The goal is to estimate the total causal
effect of exposure on a second miscarriage. From a
regression perspective, it might seem reasonable to
specify S1 as a covariate, but doing so would lead to
bias in all cases represented in the figure. For exam-
ple, Figure 6.3(a) depicts the hypotheses that exposure
causes an abnormality that is a common cause of mis-
carriage in both pregnancies and that miscarriage in
the first pregnancy affects the same in the second preg-
nancy. All paths between E and S2 in Figure 6.3(a) are
directed:
E → A → S2 (6.8)
E → A → S1 → S2
Regressing S2 on both E and S1 would result in overcon-
trol bias because S1 is an intervening variable along the
second directed path in Equation 6.8 (i.e., that directed
path is closed after controlling for S1).
The hypotheses represented in Figure 6.3(b) are
that exposure and a physical abnormality are unrelated
common causes of miscarriage over two pregnancies,
which implies that the association between miscarriage
in the first and second pregnancies is spurious. Listed
next are both paths between E and S2 in the figure:
E → S2 (6.9)
E → S1 ← A → S2
Because S1 is a collider in the second path just listed, no
association between E and S2 is transmitted along this
closed path, but regressing S2 on both E and S1 opens
the path and induces a spurious association between E
and S2, or collider bias.
The example in Figure 6.3(c) is more complex. This
graph represents the hypotheses that (1) exposure has
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 Nonparametric Causal Models 89

(a) Overcontrol (b) Collider (c) Collider and

overcontrol
E A E E A S1
S1 S2
S1 S2 A S2

FIGURE 6.3. Expected types of bias in estimating the causal effect of E on S2 when S1 is specified as a covariate; overcontrol
bias (a), collider bias (b), and both overcontrol and collider bias (c). E, exposure; A, physical abnormality; S1 and S2, spontane-
ous abortion at, respectively, first and second pregnancies.

both direct and indirect effects on miscarriage in the
second pregnancy through a physical abnormality; (2)
the physical abnormality directly affects miscarriage
over both pregnancies; and (3) miscarriages in both
pregnancies have a common unmeasured cause. The
paths between E and S2 in this graph are listed next:
E → S2 (6.10)
E → A → S2
E → A → S1 S2
The second path just listed is a directed path from E to
S2 through A, but S1 is the descendant of A, an interven-
ing variable, so regressing S2 on both E and S1 would
partially close this path, which results in overcontrol
bias. Variable S1 is also a collider that blocks the third,
undirected path in Equation 6.10, but treating S1 as a
covariate opens this path, which induces a spurious
association between E and S2 through the unmeasured
confounder; that is, collider bias. Whether expected
overcontrol bias and collider bias in this example would
offset each other or be cumulative is unknown, but is
it best not to hope that the two different types of bias
exactly cancel out. Exercise 5 asks you to generate the
conditional independencies implied by the graphs in
Figure 6.3. Exercise 6 asks you to make a DAG where
it would be both appropriate and necessary to specify
S1 as a covariate while still assuming that E is a cause
of S2.
Selecting covariates that properly control for com-
mon cause confounding while avoiding overcontrol bias
and collider bias can be greatly assisted by a complete
causal graph for the problem but, alas, such graphs are
not always available. Summarized next are suggestions
by VanderWeele (2019) for selecting covariates under
conditions of partial causal knowledge:
1. Specify as a covariate any variable that is a proxy
for unmeasured causes of both exposure and out-
come.
2. Exclude from the set of covariates any variable
known to be an instrument for exposure.
3. Control for each variable that is a direct cause of the
exposure, or of the outcome, or of both.
We already discussed the first two suggestions just
listed (e.g., Figure 6.1(e)). The third heuristic rule is the
disjunctive cause criterion, and it involves control-
ling for measured common causes when the covariate
is presumed to affect both exposure and outcome (e.g.,
Figure 6.2(a)). Covariates that directly cause either
exposure or treatment—but not both—would not be
intervening variables in directed paths between expo-
sure and treatment. Controlling for such variables may
close biasing paths due to unmeasured confounders,
among other possibilities. Exercise 7 asks you to gener-
ate two directed acyclic graphs, one where conditioning
on a direct cause of exposure (but not outcome) reduces
bias, and another where controlling for a direct cause of
outcome (but not exposure) reduces bias.
D‑SEPARATION AND BASIS SETS
Before we can consider the issues of confounding and
identification of causal effects in larger graphs, we need
a deep dive into the concept of d-separation. Pearl’s
(2009) d-separation criterion (d is for “directional”)
locates conditional independencies in the data; that is,
it tells us which pairs of variables are made independent
by controlling for other variables in the graph. Doing so
blocks the flow of information between a focal pair of
variables due to indirect causal effects or to common

Pt2Kline5E.indd 89 3/22/2023 3:44:00 PM

 90 Specification, Estimation, and Testing
causes (e.g., Figures 6.2(a)–6.2(b)). The same criterion
also warns against inducing spurious association by
conditioning on a collider or on their descendants (e.g.,
Figure 6.3(c)).
The d-separation criterion relies on the assumptions
listed next (Glymour, 2006):
1. Markov assumption, or the representation of
every unmeasured common cause by the symbol for a
bidirectional edge. Another statement of this assump-
tion is that after controlling for the parents of any vari-
able, that variable has nothing to do with all other vari-
ables that do not descend from it.
2. Faithfulness, or the assumption that direct and
indirect effects of one variable on another do not per-
fectly cancel each other out (sum to zero); otherwise,
the two variables would be statistically independent
despite their causal connection in the DAG (i.e., their
association would be unfaithful to their presumed
causal relation).
3. Negligible randomness, or the assumption that
the presence versus absence of statistical associations
are not due to sampling error (i.e., large samples are
required).
Under the assumptions just listed, the graph only
implies conditional independencies that are generated
under the d-separation criterion (Elwert, 2013).
The d-separation criterion is defined next for pairs of
variables (Glymour, 2006, p. 394), but it applies to sets
of variables, too:
RULE 6.1 A pair of variables in a DAG is
d-separated by a set of covariates C if either
1. one of the noncolliders on the path is in C; or
2. there is a collider on the path, but neither the
collider nor any of its descendants is in C
A pair of variables is d-connected (unblocked, open),
if not every path between them is d-separated; that is,
there is at least one unblocked path between them. If
a DAG is faithful, d-connectedness implies statistical
dependence. Pairs of variables in parent–child rela-
tions (e.g., Figure 6.1(a)) are inherently d-connected.
In graphs where every pair of variables is connected
by an edge, there are no d-separated sets of variables.
Because such graphs imply no conditional independen-
cies, they have no statistical implications that can be
Pt2Kline5E.indd 90
refuted with data. The analogous case for paramet-
ric models occurs when the model has no degrees of
freedom (df M = 0), which means that the model is as
complex as the data the model is supposed to explain.
(Model df for parametric models is defined in more
detail in the next chapter.) In fact, a necessary condition
for df M = 0 is that the graph implies no d-separations.
Let’s try two examples. Listed in the first column of
Table 6.1 are the three pairs of nonadjacent variables in
Figure 6.4(a) that can be d-separated:
1. The nonadjacent pair X and B are independent,
given A, the sole intermediary between them. Because
Y is the child of B and thus contributes nothing to their
association, variables X and B are also independent,
given both A and Y.
2. The nonadjacent pair A and Y are independent,
given B, their sole intermediary. The same pair is also
independent of both B and X, which follows from the
Markov assumption that controlling for the parent of
Y, or B, shields Y from any the influence of any other
ancestor, or X. Thus, variables A and Y are unrelated,
given both B and X.
3. The nonadjacent pair X and Y at the end of the
directed path are rendered independent after condition-
ing on any combination of the intervening variables, A
or B, for a total of three conditional independencies for
this pair—see Table 6.1.
Not all of the 7 conditional independences in Table
6.1 for Figure 6.4(a) are themselves pairwise indepen-
dent; that is, they are overlapping as a set, so not all are
needed. The basis set for a DAG is the smallest num-
ber of conditional independences that imply all others
located by the d-separation criterion. The size of the
basis set equals the number of pairs of nonadjacent vari-
ables that can be d-separated. Any conditional indepen-
dencies beyond this number are predicted by the basis
set. For example, there are three pairs of nonadjacent
variables in Figure 6.4(a) that can be d-separated (see
Table 6.1), so the size of the basis set is 3. Thus, a basis
set of 3 for this graph can explain all the rest.
There is more than a single way to generate a basis
set for a DAG (Pearl, 2009), but the union basis set
consists of the smallest number of conditional indepen-
dencies that are mutually orthogonal and can predict
all possible conditional independencies represented in
the graph (Shipley, 2000). A straightforward method to
derive a union basis set is outlined next:
3/22/2023 3:44:00 PM
 Nonparametric Causal Models 91

(a) (b)
B

X A B Y X A Y

FIGURE 6.4. Larger directed acyclic graphs.

RULE 6.2 To generate the union basis set,
1. list each pair of nonadjacent variables in the
graph that can be d-separated; next
2. condition on the parents of both variables in each
pair
Let’s apply Rule 6.2 to Figure 6.4(a): Three pairs of
variables can be d-separated, so the size of the union
basis set is 3. The parents of variables A, B, and Y are,
respectively, X, A, and B (variable X is exogenous).
Thus, the union basis set for the graph consists of the
three conditional independencies so designated in
Table 6.1. This basis set explains all 7 conditional pos-
sible independencies implied by the graph.
Now let’s consider the larger graph in Figure 6.4(b).
The five nonadjacent pairs of variables that can be
d-separated are listed in the first column of Table 6.2.
The pair X and Y is independent with no covariates.
This is because every path that connects X and Y, or
X→A→B←Y (6.11)
X→A→D←Y
mentioned is considered next. Two paths connect vari-
ables X and B:
X→A→B (6.12)
X→A→D←Y→B
The first (directed) path is open, but the second (undi-
rected) path is blocked by collider D. Controlling for A
alone closes the directed path between X and B while
leaving the undirected path between them blocked.
Thus, variables X and B are independent, given A.
Including the collider D in a conditioning set would
open the second path in Equation 6.12, but controlling
for A would block the path again. Controlling next for
both A and Y leaves the undirected path closed because
Y is not a collider in that path. Finally, variable Y along
with both A and D also d-separate the pair X and B. The
four conditional independencies for the pair X and B
are listed in Table 6.2 along with the four conditional
independencies for the pair X and D.
The two paths between variables B and D in Figure
6.4(b) are listed next

is blocked by a collider, B or D. The same pair remains TABLE 6.1. Conditional Independencies Located
by the d-Separation Criterion in Figure 6.4(a)
independent if A is the sole covariate. This is because
and the Union Basis Set
controlling for variable A does not open any path in
Equation 6.11 that is closed by a collider. Condition- Nonadjacent Part of union
ing on any combination of colliders B or D without pair Conditional independencies basis set
also controlling for A would open at least one path in X, B X⊥B|A Yes
Equation 6.11 and thus induce a spurious association. X ⊥ B | A, Y
But including A in a conditioning set that includes B
or D would close the path again. All five conditional A, Y A⊥Y|B
in­dependencies for the pair X and Y just described are A ⊥ Y | B, X Yes
listed in Table 6.2.
X, Y X⊥Y|A
The logic for generating conditional independencies Yes
X⊥Y|B
for the pair X and B and for the pair X and D in Figure
X ⊥ Y | A, B
6.4(b) is similar, so only the first pair of variables just

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 92 Specification, Estimation, and Testing

B←A→D (6.13)
B←Y→D
Controlling for both of their common causes, A and Y,
renders the pair B and D independent. The same pair
will also be independent after conditioning on A, Y, and
X because controlling for the parent of B, or A, isolates
B from its only other ancestor, or X. Both conditional
independencies just described for this pair are listed in
Table 6.2.
Finally, both paths that connect variables A and Y in
Figure 6.4(b), or
union basis set for Figure 6.4(b) consists of the five
conditional independencies so designated in Table 6.2.
For example, variable X in the figure has no parents, the
parents of B are variables A and Y, so the conditional
independence in the table
X ⊥ B | A, Y
belongs to the union basis set for the graph. The five
conditional independencies of the union basis set in
Table 6.2 predict all 17 possible such independencies
for Figure 6.4(b).

A→B←Y (6.14) Testable Implications

A→D←Y
Each d-separation statement in a causal DAG cor-
responds to a prediction that is potentially testable in
are blocked by colliders, B or D. Thus, the variables
sample data. If all variables are continuous in a lin-
A and Y are independent without covariates. The same
ear model, each conditional independence matches
pair is also independent given X, the parent of A. Both
up with a partial correlation that should equal zero. In
implied independencies, one unconditional and the
models with independent error terms, the whole set of
other conditional, are also listed in Table 6.2. The
vanishing partial correlations represents all testable
implications of the model. For example, the union basis
set for Figure 6.4(a) described in the previous section
TABLE 6.2. Conditional Independencies
implies for continuous variables the vanishing partial
Located by the d-Separation Criterion in Figure
6.4(b) and the Union Basis Set
correlations listed next (see also Table 6.1):

Nonadjacent Part of union rXB•A = rAY•BX = rXY•B = 0

pair Conditional independencies basis set
X, Y X⊥Y Yes If any of the predictions just listed is appreciably incon-
X⊥Y|A sistent with the data, the associated implied conditional
X ⊥ Y | A, B independence is not supported. This outcome may help
X ⊥ Y | A, D to diagnose misspecification in a particular part of the
X ⊥ Y | A, B, D graph. Suppose we observe in a sample that rXB•A =
.40, which contradicts the prediction of zero. In Figure
X, B X⊥B|A 6.4(a), there is an indirect causal pathway from vari-
X ⊥ B | A, D able X to B through the intermediary A, but perhaps
X ⊥ B | A, Y Yes the omission of a direct causal effect from X to B is a
X ⊥ B | A, D, Y mistake, among other possibilities for respecification.

X, D X⊥D|A
X ⊥ D | A, B GRAPHICAL IDENTIFICATION CRITERIA
X ⊥ D | A, Y Yes
X ⊥ D | A, B, Y Two basic strategies for identifying a total causal effect,
covariate selection and instrumental variable methods,
B, D B ⊥ D | A, Y Yes were discussed earlier for simple graphs with single out-
B ⊥ D | A, X, Y comes (e.g., Figures 6.1(e) and 6.1(f)). For larger graphs,
A, Y A Y
there are methods based on the concept of d-separation
for finding a sufficient (adjustment) set of covariates
A⊥Y|X Yes
that identify a particular causal effect, either total or

Pt2Kline5E.indd 92 3/22/2023 3:44:01 PM


direct. Controlling for a sufficient set removes spuri-
ous components by closing biasing (back-door) paths,
leaving just the causal relation. It also does not open
paths that are otherwise closed by colliders. If there is
no sufficient set, the corresponding causal effect may
be identified through instrumental variable methods. If
neither method can identify a causal effect, then adding
variables, such as proxies for unmeasured confounders,
may yield a solution.
The graphical rules considered next can be automati-
cally applied by computer tools that analyze directed
acyclic graphs. This is a benefit for larger graphs, where
locating by eye all possible paths between any pair of
variables is prone to error. Computer assistance also
helps the researcher to avoid selecting inappropriate
covariates that fail to remove common cause confound-
ing, block indirect causal pathways, or introduce new
biases such as those due to conditioning on a collider
or controlling for an instrument. Next, we consider the
back-door criterion for identifying total causal effects
(the sum of all direct and indirect effects) through
covariate selection, the single-door criterion for iden-
tifying just direct effects also through covariate selec-
tion, and graphical rules to locate instruments for direct
effects.
Back‑Door Criterion
An adjustment set of covariates (which may include
none) is sufficient for identifying a total effect, if that
covariate set meets the back-door criterion (Pearl,
2009):
RULE 6.3 A set of covariates C is sufficient to
identify the total causal effect of X on Y if
1. no variable in C is a descendent of X; and
2. C blocks all biasing paths between X and Y
Presented in Figure 6.5(a) is a DAG where variable
X has both a direct effect on Y and an indirect effect
on Y through the intervening variable E. Thus, the
total effect of X on Y consists of the direct and indirect
effects just described. In the figure, there are a total of
two biasing paths between X and Y. They are
X←A→D→E→Y (6.15)
X←A→D←B→Y
Two sufficient sets of covariates that block all the bias-
Pt2Kline5E.indd 93
Nonparametric Causal Models 93
ing paths just listed and thus identify the total effect
of X on Y are (A) and (B, D). Because variable A is a
common cause in both back-door paths, regressing Y
on both X and A will close all paths in Equation 6.15.
Regressing Y on X, B, and D has a more complicated
effect: Conditioning on D will close the first path in
Equation 6.15, where D is an intervening variable. But
variable D is a collider in the second path, so condition-
ing on D alone would open that path, but including B as
other covariate will close the path again because B is a
common cause.
Each conditioning set for the total effect of X on Y
in Figure 6.5(a) just described, (A) and (B, D), is also
a minimally sufficient (adjustment) set for which no
proper subset is itself a sufficient set. (A proper sub-
set does not include the original set.) This means that
the covariates in each of the two minimally sufficient
sets just listed are enough to block all biasing paths
between X and Y. The larger adjustment set (A, B, D)
is also sufficient, but it is not minimally sufficient.
This is because two of its proper subsets include the
minimally sufficient sets (A) and (B, D). This example
shows that there can be multiple sets of covariates,
each of which identifies that same causal effect. This
is a kind of overidentifying restriction in that esti-
mates based on different sufficient sets should all be
equal, if the graph is correct. Because the back-door
criterion is sufficient, there is no need to identify any
of the individual direct or indirect effects that make up
the total effect of X on Y. There is a separate graphical
method to identify direct effects through the single-
door criterion, which is described shortly. Exercise 8
asks you to verify that (A, B) and (B, X) are each mini-
mally sufficient sets that identify the total effect of D
on Y in Figure 6.5(a).
Exogenous variables have no ancestors; thus, there
are no back-door paths when the causal variable is
exogenous. In this case, the sufficient set has no covari-
ates. For example, variable A in Figure 6.5(a) is exoge-
nous and has two indirect effects on Y through variables
X, D, and E. There are no biasing paths between A and
Y, so the sufficient set is empty. Thus, regressing Y on A
with no covariates would estimate the total effect of A
on Y. Variable E in the figure has a direct effect on Y, but
there are no indirect effects, so the total effect of E on
Y is the same as the direct effect. In this case, applying
either the back-door criterion for the total effect or the
single-door criterion for the direct effect would gener-
ate the same minimally sufficient adjustment sets for
variables E and Y as explained next.
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 94 Specification, Estimation, and Testing

(a) Original graph (b) Modified graph

X ┴ Y | B, E
X ┴ Y | A, D, E

X X

A A

D E Y D E Y

B B

FIGURE 6.5. An original directed acyclic graph (a). The graph modified by deleting the direct effect from X to Y in the origi-
nal graph and sets of variables that d-separate X and Y in the modified graph (b).

Single‑Door Criterion
In a linear model with unidirectional causal effects
among continuous variables, the single-door criterion
tells us whether the coefficient for a particular direct
effect is identified by covariate selection, and which
variables should serve as the conditioning set (Pearl,
2009):
RULE 6.4 A set of covariates C is sufficient to
identify the direct causal effect of X on Y if
1. no variable in C is a descendant of Y; and
2. C d-separates X and Y in the modified graph
formed by deleting the direct effect between them
in the original graph
Look back at Figure 6.5(a). We just demonstrated
that the total effect of X on Y is identified through
covariate selection. Is the direct effect of X on Y also
identified? Assuming a linear model for continuous
outcomes, we can apply the single-door criterion. First,
we delete the directed edge from X to Y from the origi-
nal model. Figure 6.5(b) is the graph with the modifica-
tion just described. There are no descendants of Y. Two
minimally sufficient sets d-separate variables X and Y
in the modified graph, (B, E) and (A, D, E); that is, both
X ⊥ Y | B, E
X ⊥ Y | A, D, E
are true in the modified graph. This means that the
coefficient for the direct effect of X on Y is identified in
the original graph (Figure 6.5(a)). Exercise 9 asks you
to show that the minimally sufficient adjustment sets
(B, X) and (D, X) each identify the direct effect of E on
Y in the original graph.
Instrumental Variables
Another way to identify direct effects in linear models
involves instruments (e.g., Figure 6.1(f)). It can be dif-
ficult to determine proper instruments for a particular
causal variable, especially in large models with many
variables and potential instruments that are endogenous
instead of exogenous. Summarized next is a rule based
on d-separation for locating instruments in a graph (van
der Zander et al., 2015):
RULE 6.5 The variable Z is an instrument relative to
the direct effect of X on Y, if
1. Z correlates with X (i.e., the two variables are
d-connected); and
2. Z is d-separated from Y in the modified graph
formed by deleting the direct effect of X on Y from
the original graph
In Figure 6.6(a), it is pretty easy to see that exogenous
variable A is an instrument for causal variable X even
without applying Rule 6.5. Is endogenous variable B
another potential instrument for X? Yes: Variable B is
both correlated with X in the original graph and also
d-separated from Y in Figure 6.6(b), the modified graph
without the direct effect from X to Y. It is also true in
the same modified graph that variable A is d-separated

Pt2Kline5E.indd 94 3/22/2023 3:44:01 PM

 Nonparametric Causal Models 95

from Y, which is consistent with the intuition that A is
a proper instrument. Thus, two instruments, variables
A and B, for identifying the causal effect of X on Y in
the presence of unmeasured confounding are located
by Rule 6.5.
Now let’s consider a more difficult graph. In Figure
6.6(c), neither variable A nor B is a proper instrument:
Variable A affects Y through an intermediary other than
X, and variable B has a direct effect on Y. But there is an
alternative: A conditional instrument, which is formed
by partialling out one variable from another such that
the residual is a valid instrument. For example, Fig-
ure 6.6(d) is the modified graph, where the direct effect
from X to Y is deleted. Variable A is a proper instrument
but only after controlling for B; that is, the instrument is
A | B, or the residuals after regressing A on B in a linear
model. This conditional instrument A | B is (1) related
to X after controlling for B and is (2) d-separated from
Y in the modified graph, or
A⊥Y|B
which can also be expressed as
(A | B) ⊥ Y
Presented next is a formal definition for a conditional
instrument (Pearl, 2009):
RULE 6.6 The variable Z is a conditional instrument
relative to the direct effect of X on Y, if
1. Z correlates with X controlling for W;
2. W d-separates Z from Y in the modified graph
formed by deleting the direct effect of X on Y from
the original graph; and
3. W is the set of variables (excluding X) that are not
descended from Y
In Figure 6.6(d), the set of variables that are nondescen-
dants of Y is W = (B) for variable Z = A. After controlling
for B, variable A both correlates with X and is unrelated
to Y; thus, A | B is a valid instrument. See Chalak and

Instruments (A, B)

(a) Original graph (b) Modified graph

A┴Y
B┴Y
A B A B

X Y X Y

Conditional instrument (A|B)

(c) Original graph (d) Modified graph

A┴Y|B
A B A B

X Y X Y

FIGURE 6.6. An original directed acyclic graph (a). The graph modified by deleting the direct effect from X to Y in the origi-
nal graph and independencies of both instruments, A and B, with Y (b). An original directed acyclic graph, where neither A
nor B is a proper instrument. (d) The graphs modified by deleting the direct effect from X to Y in the original graph and implied
independence of the conditional instrument A | B with Y.

Pt2Kline5E.indd 95 3/22/2023 3:44:02 PM

 96 Specification, Estimation, and Testing
White (2011) for more information about conditional
instruments and other types of extended instruments
constructed from original variables in a model.
In actual data sets, instruments or partial instru-
ments located by, respectively, Rule 6.5 or 6.6, should
have appropriate statistical properties. For example,
the sample covariance between a potential instrument
and a causal variable should be appreciably high, and
results of falsification tests—although not absolutely
conclusive—should not indicate an obvious problem.
That is, selection of an instrument by a graphical rule
does not guarantee adequate statistical properties of
that instrument in actual samples.
Pearl (1995) described an equation-based alterna-
tive to graphical identification rules called do-calcu-
lus, which predicts the effects of interventions, given
a causal graph, and evaluates whether a particular
causal effect is identified. Briefly, it simulates physical
interventions in a causal graph through the mathemat-
ical operator do(x), which sets the value of a causal
variable X to equal a constant x. Next, the original
graph is modified by replacing certain relations in the
model with the constant X = x while the rest of the
model is not altered. The joint probability distribution
associated with the modified graph reflects the pos-
tintervention distribution of the variables, given do(x).
Expressions for postintervention distributions are
manipulated to determine whether causal effects can
be estimated, given the data defined by the preinter-
vention joint probability distributions associated with
the original graph. There are R packages that imple-
ment do-calculus algorithms, such as causaleffect
(Tikka, 2022; Tikka & Karvanen, 2017), but I believe
graphical identification rules are more accessible for
applied researchers.
DETAILED EXAMPLE
Presented in Figure 6.7 is the causal DAG of a man-
ifest-variable path model based on Roth et al. (1989).
Hypotheses implied by the graph are listed next:
1. Exercise and hardy (i.e., hardiness) have a common
unmeasured cause.
2. Both exogenous variables just mentioned affect ill-
ness through a single intermediary, fitness for exer-
cise and stress for hardiness.
Pt2Kline5E.indd 96
Exercise Fitness
Illness
Hardy Stress
FIGURE 6.7. A nonparametric path model of illness
expressed as a casual directed acyclic graph.
3. There are no unmeasured common causes of fit-
ness, stress, and illness.
4. Unmeasured causes of the three outcomes just men-
tioned are unrelated to both exercise and hardy (and
also unrelated to their latent common cause).
There are a total of 4 direct effects in Figure 6.7. The
graph has “room” for 5 additional direct effects (e.g.,
from exercise to illness) such that there are no causal
loops, but all such “missing” direct effects were hypoth-
esized by Roth et al. (1989) to be zero. There are also
two indirect pathways in the figure, such as
Exercise → Fitness → Illness
Because direct effects of exercise and hardy on illness
are hypothesized to equal zero, both indirect effects
in the figure represent the total effects of exercise and
hardy on illness.
Listed in Table 6.3 are the annotated script files
and R packages used to analyze Figure 6.7. All syn-
tax and output files can be downloaded from this
book’s website. In the first analysis, packages dagitty
(Textor et al., 2021), ggm (Marchetti et al., 2020),
and C­ auseAndCorrelation (Shipley, 2017) are used to
generate all possible implied conditional independen-
cies and the smaller basis set that predicts all the rest.
That basis set has 5 elements, which equals the num-
ber of “missing” direct effects (predicted to be zero)
in the figure. That df M = 5 for the parametric version
of Figure 6.7 is not a coincidence as is explained in the
next chapter. The dagitty package is used in the second
analysis to locate covariates (adjustment sets), instru-
ments, or partial instruments that identify each direct
or total effect.5 The results of both analyses generate
5A graphical, browser-based version, DAGitty, is freely available
at http://dagitty.net/
3/22/2023 3:44:02 PM

a plan for fitting the parametric version of Figure 6.7
to the data summarized in Table 4.3 that is carried out
in Chapter 8. The parametric path model is linear with
continuous outcomes.
Listed in Table 6.4 are all 15 possible conditional
independencies implied by Figure 6.7. For example, the
variables exercise and stress are d-separated by a total
of three different sets of variables, among which the
conditioning set that consists of hardy as the sole vari-
able belongs to the union basis set. The remaining four
pairs of nonadjacent variables in the table each have
three conditioning sets that d-separate them, only one
of which for each pair belongs to the union basis set of
five implied conditional independencies for the whole
graph. Because all variables in the parametric version
of Figure 6.7 are continuous and the model is linear,
each element of the union basis set corresponding to a
vanishing partial correlation that can be compared with
the sample coefficient. One of these is
rFS•EH = 0
which predicts that the partial correlation between fit-
ness and stress equals 0 when controlling for both exer-
cise and hardy (see Table 6.4). If the sample correlation
rFS•EH is appreciably different from zero, then a specifi-
cation error for this pair of variables is indicated.
Reported in the second and third columns of Table
6.5 are, respectively, minimally sufficient sets of
covariates in standard (OLS) regression analysis or
instruments in instrumental variable regression analy-
sis that identify each direct or indirect effect in Figure
6.7. For example, no covariates are needed to estimate
the direct effect of exercise on fitness because there
are no biasing paths between this pair of variables.
Although no unmeasured common cause of exercise
TABLE 6.3. Script Files and R Packages for Analyses of a Nonparametric Path
Model of Illness
Analyses
1. Locate all implied conditional independencies
and generate the union basis set
2. Identify direct and total effects through
covariates, instruments, or partial instruments
Note. Output files have the same name except the extension is “.out.”
Pt2Kline5E.indd 97
Nonparametric Causal Models 97
and fitness is assumed in the figure, the same direct
effect can be estimated by specifying hardy or stress
as an instrument for exercise. (You should verify this
statement using Rule 6.5 for instruments). Altogether,
there are three different ways to identify the direct
effect of exercise on fitness. Through similar logic,
there are also three estimators for the effect of hardy
on stress (see the table).
In Table 6.5, the direct effect of fitness on illness is
identified by three different minimally sufficient sets of
covariates each composed of a single variable, stress,
exercise, or hardy. Conditioning on any of the individ-
ual variables just listed satisfies Rule 6.4 for the single-
door criterion. The same direct effect is also identified
through the specification of a conditional instrument
for fitness, either
Exercise | Stress or Hardy | Stress
both of which satisfy Rule 6.6 for conditional instru-
ments. Altogether there are five estimators for the
direct effect of fitness on illness, three based on covari-
ate selection and two based on conditional instruments.
Estimators for the direct effect of stress on illness (5
in total) are generated with similar reasoning (see the
table).
There are a total of three different estimators in
Table 6.5 for each indirect pathway in Figure 6.7. For
example, regressing illness on exercise and hardy
closes all back-door paths between exercise and illness,
which satisfies Rule 6.3 for the total effect of exercise
on illness. That total effect in the figure is the indirect
effect of exercise on illness through fitness. A differ-
ent covariate, stress instead of hardy, also meets the
back-door criterion, and the coefficient for exercise
in the analysis just described is the second estimator.
Script file R packages
roth-basis-set.r dagitty
ggm
CauseAndCorrelation
roth-identify.r dagitty
3/22/2023 3:44:02 PM
 98 Specification, Estimation, and Testing

The third estimator of the same indirect effect features TABLE 6.5. Adjustment Sets (Covariates)
specification of the conditional instrument or Instruments that Identify Causal Effects
in a Nonparametric Path Model of Illness
Hardy | Stress Adjustment
Effect set Instruments
for the causal variable exercise (Rule 6.6). Through Exercise → Fitness — Hardy
analogous logic, the indirect effect of hardy on illness Stress
through stress also has a total of three estimators—see
Hardy → Stress — Exercise
Table 6.5. Fitness
For correctly specified parametric models analyzed
in large, representative samples, values of multiple Fitness → Illness Stress Exercise | Stress
estimators for the same causal effect should be reason- Exercise Hardy | Stress
Hardy
ably similar; otherwise, a possible specification error
is indicated. What is considered “reasonably similar” Stress → Illness Fitness Exercise | Fitness
should be guided by the researcher’s domain knowl- Exercise Hardy | Fitness
edge, including about the psychometric characteristics Hardy
of measures for causal or outcome variables and about Exercise → Fitness → Hardy Hardy | Stress
the magnitudes of “typical” effect sizes in a particular Illness Stress
research area. For example, whether estimates of 5.50
Hardy → Stress → Exercise Exercise | Fitness
versus 6.25 based on different methods for the same Illness Fitness
unstandardized direct effect are appreciably different
or ignorably similar depends on context. Note. Adjustment sets are minimally sufficient.

TABLE 6.4. All Implied Conditional SUMMARY

Independencies and the Union Basis Set
for a Nonparametric Path Model of Illness
According to Swanson and Hernàn (2013), “Causal
Part inference relies on transparency of assumptions and
Implied of union on triangulation of results from methods that depend
independence Conditioning sets basis set on different sets of assumptions” [emphasis added]
Exercise ⊥ Stress Hardy Yes (p. 373). In nonparametric SEM, graphical rules can be
Hardy, Fitness applied to locate covariates or instruments that iden-
Hardy, Fitness, Illness tify causal effects in the model. Covariates address
measured confounding bias by deactivating or block-
Exercise ⊥ Illness Fitness, Stress Yes
Hardy, Fitness
ing backdoor (biasing) paths, and instruments adjust
Hardy, Fitness, Stress causal variables for their associations with unmeasured
confounders. Thus, the researcher is alerted to the pos-
Hardy ⊥ Fitness Exercise Yes sibility that the same causal effect has multiple estima-
Exercise, Stress tors, some of which could be based on different meth-
Exercise, Stress, Illness ods and assumptions (i.e., covariates vs. instruments).
Hardy ⊥ Illness Fitness, Stress Yes If there are no covariates or instruments that identify a
Exercise, Stress particular causal effect, the need to measure additional
Exercise, Fitness, Stress variables is indicated. Still other graphical rules gen-
erate testable implications in the form of conditional
Fitness ⊥ Stress Exercise, Hardy Yes independencies between certain pairs of variables pre-
Exercise
dicted by the graph. All the graphical rules just men-
Hardy
tioned can be automatically applied by computer tools,

Pt2Kline5E.indd 98 3/22/2023 3:44:02 PM


which helps to avoid error in larger graphs. Additional
contributions of Pearl’s (2009) nonparametric approach
to SEM, including novel perspectives on mediation, are
considered in Chapter 20. Parametric structural equa-
tion models are introduced in the next chapter.
LEARN MORE
Angrist and Krueger (2001) describe the history and appli-
cations of instrument variable methods and address the
challenges of finding good instruments, Elwert and Win-
ship (2014) elaborate on several forms of collider bias, and
EXERCISES
1. Modify Figure 6.1(e) to show that P does not mea-
sure all aspects of the confounder UC. Generate all
paths between X and Y in the modified graph and
describe the anticipated effect of conditioning on P.
2. Explain the difference between an instrument and a
confounder.
3. Draw a DAG that implies the same conditional
independencies as Figures 6.2(a) and 6.2(b).
4. Succinctly define confounding bias, overcontrol
bias, and collider bias.
5. Generate the conditional independencies implied
by all graphs in Figure 6.3.
Pt2Kline5E.indd 99
Nonparametric Causal Models 99
VanderWeele (2019) discusses covariate selection when a
complete causal graph is unavailable.
Angrist, J. D., & Krueger, A. B. (2001). Instrumental vari-
ables and the search for identification: From supply and
demand to natural experiments. Journal of Economic
Perspectives, 15(4), 69–85.
Elwert, F., & Winship, C. (2014). Endogenous selection
bias: The problem of conditioning on a collider variable.
Annual Review of Sociology, 40(1), 31–53.
VanderWeele, T. J. (2019). Principles of confounder selec-
tion. European Journal of Epidemiology, 34(3), 211–219.
6. Draw a DAG for the variables in Figure 6.3 where
S1 is a proper covariate when regressing S2 on E.
7. For the variables X (cause), Y (outcome), and C
(covariate), draw a DAG where controlling for C as
a cause of X, but not Y, reduces bias. Draw a second
DAG where controlling for C as a cause of Y, but not
X, reduces bias.
8. Show that (A, B) and (B, X) are minimally sufficient
sets for the total effect of D on Y in Figure 6.5(a).
9. Find minimally sufficient sets of covariates that
identify the coefficient for the direct effect of E on Y
in Figure 6.5(a).
3/22/2023 3:44:04 PM
 7

Parametric Causal Models

A parametric structural equation model represents a commitment to operational definitions of theoretical

variables and specification of expected functional forms for causal effects. Along with the estimator, or the
statistical method used to generate estimates from sample data, a parametric model also reflects assumptions
about specific probability distributions, especially for outcome (endogenous) variables. In path analysis, it
helps when planning a study to evaluate a nonparametric model to determine whether each causal effect
is identified. If not, then the problem should be addressed, such as by adding covariates or instruments to
identify target causal effects. In most types of SEM analyses, it is a parametric model that is ultimately tested
(fitted to sample data). Thus, researchers must specify a parametric model that both reflects their hypotheses
and is consistent with analysis requirements, including identification. Accordingly, the main goals of this
chapter are to (1) describe graphical symbolism for parametric models, (2) explain the correspondence
between model diagrams and analysis options, and (3) articulate assumptions represented by model dia-
grams. In this chapter we assume linear path models with continuous variables unless otherwise stated.

MODEL DIAGRAM SYMBOLISM sented in the model. A benefit of a notational system

Recall that error terms for outcome variables are usu-
ally not represented in diagrams for nonparametric
models (e.g., Figure 6.1). In contrast, symbols for error
terms are typically included in diagrams for parametric
models. For both types of causal models, though, the
hypothesis of correlated errors is explicitly represented
in the diagram; otherwise, errors terms are assumed
to be independent. The graphical symbolism used for
parametric models is introduced next.
McArdle and McDonald (1984) described the retic-
ular action model (RAM), a system based on matrix
algebra for representing parametric structural equa-
tion models with just three matrices: S (Symmetric)
for variances and covariances among exogenous vari-
ables including the error terms; A (Asymmetric) for
direct causal effects; and F (Filter) for designating the
observed variables from among all variables repre-
with so few matrices is that computation times in maxi-
mum likelihood estimation, a widely used simultane-
ous method described in Chapter 9, can be reduced,
especially for large models (von Oertzen & Brick,
2014). But given the speed and large memory capacities
of modern personal computers, any reduction in pro-
cessing time due to the notational system per se could
be slight.
The McArdle–McDonald RAM system also
includes a set of graphical symbols for model diagrams.
A special feature of full RAM graphical symbolism is
that each and every model parameter is represented
with its own symbol. This property has pedagogical
value because it helps beginners to avoid mistakes
when translating a diagram to the syntax of a particular
computer tool. A drawback to RAM symbolism is that
it takes up more space (diagrams are bigger) compared
with more compact symbolism that is probably seen

100

Pt2Kline5E.indd 100 3/22/2023 3:44:05 PM


in most published SEM studies. But one of the costs
of saving space in the diagram is that more compact
symbolism can “hide” (does not explicitly represent)
certain parameters that the computer must estimate. In
contrast, model diagrams in RAM symbolism are both
transparent and complete; that is, what you see is what
you get (all model parameters are depicted).
The issues just considered explain why model dia-
grams for the detailed examples in Parts II and III of
this book are rendered in full RAM graphical sym-
bolism; otherwise, more compact notation is used in
model diagrams to save space. This practice reflects the
reality that researchers with more experience in SEM
probably do not need full RAM symbolism, but tran-
sitioning from full RAM to more compact graphical
symbolism can benefit novices.
Part of RAM graphical symbolism is nearly univer-
sal because one sees these symbols in most model dia-
grams even when they are based on more compact sym-
bolism. This includes the graphical representation of
1. Observed variables (indicators) with squares or
rectangles.
2. Proxies for latent variables, such as common factors
with multiple indicators, with circles or ellipses.
3. Direct causal effects by a line with a single arrow-
head (e.g., →).
4. Covariances (in the unstandardized solution) or
correlations (in the standardized solution) between
exogenous variables with a curved line with two
arrowheads ( ).
The symbol described in item 4 designates an unan-
alyzed association (i.e., covariance, correlation).
Although such associations are estimated by the com-
puter, they are unanalyzed in the sense that no predic-
tion is put forward about why the two causal variables
are related. The counterpart of the symbol (see item 4)
for nonparametric models ( ) has the same general
meaning, including the designation of correlated errors
terms.
Full RAM graphical symbolism includes two special
symbols that may be omitted in more compact model
diagrams. They are
and
The first symbol just listed designates the analysis of
means along with covariances, and its use is explained
Pt2Kline5E.indd 101
Parametric Causal Models 101
in Chapter 9. The second symbol, an arc with arrow-
heads at each end that exit and reenter the same vari-
able, depicts the variance of an exogenous variable.
Because causes of exogenous variables are not included
in model diagrams, exogenous variables are generally
considered free to vary and perhaps covary, too (if they
are not assumed to be independent). In contrast, endog-
enous variables are not free to vary because they are
represented as determined by their presumed direct
causes and by their unmeasured causes (i.e., error
terms), and the model, as a whole, explains why endog-
enous variables covary with each other or with the
exogenous variables. To summarize, model parameters
in full RAM symbolism are represented with just three
symbols when means are not analyzed:
and (7.1)
Model Parameters
The RAM graphical symbols in Equation 7.1 corre-
spond to the types of parameters defined next:
RULE 7.1 Parameters of structural equation models
when means are not analyzed include
1. Variances and covariances of the exogenous
variables
2. Direct effects on exogenous variables from other
variables
That’s it. The simple rule just stated applies to all para-
metric structural equation models described in this
book (including path models) with continuous out-
comes and just a covariance structure. Thus, we will
refer to Rule 7.1 many times in later chapters.
A model parameter can be free, fixed, or constrained
depending on its specification. A free parameter
is estimated by the computer with the data. A fixed
parameter is specified to equal a constant. This means
that the computer “accepts” the constant as the estimate
regardless of the data. For example, the hypothesis
that variable X has no direct effect on Y corresponds
to the specification that the coefficient for the path
X → Y is fixed to equal zero. It is common in SEM to
test hypotheses by specifying that a previously fixed-
to-zero parameter becomes a free parameter, or vice
versa. Results of such analyses may indicate whether to
respecify a model by making it more complex (an effect
is added—a fixed parameter becomes a free parameter)
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 102 Specification, Estimation, and Testing
or more simple (an effect is dropped—a free parameter
becomes a fixed parameter).
A constrained parameter is estimated by the com-
puter within some restriction, but it is not fixed to equal
a constant, and the restriction typically involves the
relative values of other parameters. For example, an
equality constraint means that the estimates of two
or more parameters are forced to be equal. Suppose
that an equality constraint is imposed on the two direct
effects in the same model listed next:
X → Y and W→Y
The equality constraint just described simplifies the
analysis because only one coefficient is needed rather
than two. In a multiple-group analysis, where the model
is simultaneously fitted to the data from ≥ 2 samples, a
cross-group equality constraint forces the computer
to derive equal estimates of the same parameter across
all groups. This specification corresponds to the null
hypothesis that the parameter is equal in all popula-
tions from which the samples are drawn.
A proportionality constraint forces one parameter
estimate to be some fraction of the other. For instance,
the coefficient for the direct effect of X on Y may be
forced to equal 3 times the value of the direct effect
of W on the same outcome. An inequality constraint
forces an estimate to be either less than or greater than
the value of a specified constant. The requirement that
the value of an unstandardized coefficient must be at
least 5.0 is an example of an inequality constraint. The
imposition of proportionality or inequality constraints
generally requires knowledge about the relative mag-
nitude of effects, but such knowledge is relatively rare.
A nonlinear constraint imposes a nonlinear relation
between two or more parameter estimates. For exam-
ple, the value of one estimate may be forced to equal
the square of another. Nonlinear constraints are part
of some advanced SEM methods or analyses that are
described later in the book.
Model Degrees of Freedom
The potential size of a parametric model in terms of its
free parameters is limited by the number of observa-
tions, which is not the sample size (N). Instead, it is
literally the number of entries in the sample covariance
matrix in lower diagonal form. This number can be cal-
culated with a simple rule:
Pt2Kline5E.indd 102
RULE 7.2 If v is the number of observed variables
in the model, the number of observations equals v
(v + 1)/2 when means are not analyzed
If v = 5 observed variables are in the model, the
number of observations is 5(6)/2, or 15. This count (15)
equals the total number of variances (5) and unique
covariances below the main diagonal (10) in the data
matrix (e.g., Table 4.3). With v = 5, the greatest num-
ber of free parameters that could be estimated by the
computer is 15. Fewer parameters can be estimated in
a simpler model, but not more than 15. The number of
observations has nothing to do with sample size. If
five variables are measured for 100 or 1,000 cases, the
number of observations is still 15. Adding cases does
not increase the number of observations; only adding
observed variables can do so.1
The difference between the number of observa-
tions and the number of free parameters is the model
degrees of freedom, or
df M = p – q (7.2)
where p is the number of observations (Rule 7.2) and q
is the number of free parameters (Rule 7.1). A general
requirement for identification in SEM is that df M ≥ 0.
This is because a model with more free parameters
than available observations (df M < 0) is not amenable
to empirical analysis because there are infinite sets of
estimates (e.g., Equation 3.1). If you tried to estimate a
model with negative degrees of freedom, an SEM com-
puter program would likely terminate its run with error
messages. Otherwise, a parametric model with df M < 0
must be respecified. One option is to decrease the num-
ber of free parameters by imposing constraints, such as
equality constraints or fixing a previously free param-
eter to a constant that could include being equal to zero.
Adding observed variables to the model would increase
the number of observations, but new free parameters
for those variables would be needed, too, so the net
effect should be to increase df M. The option just men-
tioned comes too late, if the data are already collected.
Any respecification of a model with negative degrees of
freedom should respect theory.
Most identified structural equation models with no
degrees of freedom (df M = 0) will not only perfectly fit
1 “Number of observations” is confusingly used in some SEM
computer programs to refer to N, the sample size.
3/22/2023 3:44:05 PM

the data in a particular sample (e.g., Equation 3.3), but
they will also perfectly fit any arbitrary sample data
matrix for the same variables. In contrast, models with
positive degrees of freedom do not generally have per-
fect fit. This is because df M > 0 allows for the possibility
of model–data discrepancies. Raykov and Marcoulides
(2006) described each degree of freedom as a dimen-
sion along which a model can potentially be rejected.
Thus, retained models with greater degrees of freedom
have withstood a greater likelihood for rejection. This
idea underlies the parsimony principle: Given two
models with similar fit to the data, the simpler model is
preferred, assuming that the simpler model is theoreti-
cally plausible.
DIAGRAMS FOR CONTRACTED
CHAINS AND ASSUMPTIONS
Presented in Figure 7.1(a) is the parametric version of a
contracted chain with two measured variables rendered
in full RAM graphical symbolism. The presumed total
effect of X on Y is represented as a directed path, just as
in a nonparametric model. But the total effect is simply
the linear causal effect of X on Y for continuous vari-
ables in a parametric model. The variance of exogenous
variable X is a free parameter, so it is designated in the
figure with the RAM symbol for a variance. The second
variance parameter is not for Y—which is endogenous
and, thus, not free to vary—but instead for its distur-
bance, or error term, designated as D, which represents
variation in Y not explained by X.
There are four general sources of disturbance vari-
ance (Bollen, 2002):
1. Systematic variation due to ≥ 1 unmeasured causes
of the corresponding outcome.
2. Inherent random variation in just about any system
or individual variable.
3. Random measurement error of the kind estimated
in reliability analyses, such as time sampling error,
content sampling error, or interrater error.
4. Misspecification of the functional form of the
causal effect, such as linear when the true relation
is curvilinear.
That disturbances reflect, in part, omitted causes is
consistent with their representation in RAM symbol-
Pt2Kline5E.indd 103
Parametric Causal Models 103
(a) RAM (b) Compact
D
1
X Y X Y
FIGURE 7.1. Diagrams for a contracted chain in full
­McArdle–McDonald reticular action model (RAM) graphical
symbolism (a) versus more compact symbolism (b).
ism as unmeasured exogenous variables—see Figure
7.1(a). Disturbance variances must be estimated by the
computer, so they count as free model parameters, too
(Rule 7.1).
The path D → Y in Figure 7.1(a) represents the direct
effect of all omitted causes (and error, too) on the cor-
responding endogenous variable Y. The numerical value
(1) that appears in the figure next to the path is a scaling
constant that assigns a metric to the disturbance. This
specification is necessary because disturbance variance
is latent, and latent variables need scales before the
computer can estimate anything about them. The scal-
ing constant is also called the unstandardized residual
path coefficient or unit loading identification (ULI)
constraint (1 is the “unit”). Any positive constant could
be specified as a scaling constant, such as 2.2, but the
value of “1” tells the computer to exactly partition the
total (observed) variance of Y into two nonoverlapping
(orthogonal) parts, variance explained by X and unex-
plained variance, or the disturbance variance.
Some, but not all, SEM computer tools automatically
specify and scale error terms in structural equation
models. In lavaan syntax, for example, the command
Y ~ X
instructs the computer to regress variable Y on X and
to automatically scale the disturbance as depicted in
Figure 7.1(a) (Rosseel et al., 2023). The same command
also defines the variances of X and the disturbance vari-
ance of Y as free parameters. But in syntax for Amos
Basic, the user must both explicitly name the error term
and include the constant as part of that name, such as
Y = X + DY(1)
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 104 Specification, Estimation, and Testing
Amos Graphics likewise requires the user to manu-
ally enter the constant 1 in a dialog box after drawing
onscreen the symbol for a disturbance to fix the unstan-
dardized residual path coefficient to 1 (Arbuckle, 2021).
Check the documentation for your SEM computer to
see how metrics for error terms are specified (i.e., pro-
gram defaults vs. user specification).
Two general requirements for identification can now
be stated:
RULE 7.3 The necessary but insufficient requirements
for identification of parametric models are
1. df M ≥ 0
2. Every unmeasured variable (including error terms)
must be assigned a scale (metric)
The first requirement in Rule 7.3 is the counting rule
(see Rules 7.1–7.2), and the second requirement is the
scaling rule. Use of full RAM symbolism helps the
researcher to check both requirements just listed; spe-
cifically, counting free parameters is part of deriving
df M (Equation 7.2), and explicit scaling constants in
the diagram remind the researcher about the need to
scale unmeasured variables. Various types of paramet-
ric structural equation models have additional sufficient
requirements that guarantee identification, but only if
Rule 7.3 is satisfied.
Figure 7.1(b) is the diagram for a contracted chain
shown using more compact symbolism that omits the
symbols for variance parameters (for X, D), the scal-
ing constant (1), and the circle that represents the dis-
turbance as a latent variable compared with full RAM
symbolism in Figure 7.1(a). What remains is a less
informative model diagram that shows just the basics—
X causes Y, and Y has a disturbance—but it also saves
space compared with RAM symbolism. McDonald and
Ho (2002) described even more conventions for repre-
senting error terms in structural equation models. They
emphasized there is no single “right” way to draw a
model diagram, and that is true. It is just as important
to know that the use of more complete versus more
compact graphical symbolism should not matter for
researchers who know Rules 7.1–7.3.
Assumptions of Figure 7.1 are listed next and dis-
cussed afterward:
1. Scores on exogenous variable X are perfectly reli-
able (i.e., rXX = 1.0).
2. Causal directionality is correctly specified (i.e.,
Pt2Kline5E.indd 104
X → Y), and the functional form of that relation is
strictly linear.
3. All unmeasured causes of Y are independent of the
measured cause X; that is, there are no unmeasured
common causes of both variables.
The assumption that measured exogenous variables
in path models are unaffected by random measurement
error is analogous to the requirement in standard mul-
tiple regression that predictors have no measurement
error. The reason is the same, too: Such variables do
not have error terms (see Figure 7.1), so random error
has no place to go. In contrast, endogenous variables
in path models—and criterion variables in regression
analysis—have error terms that can “absorb” measure-
ment error. In bivariate regression, measurement error
in just the criterion Y does not affect the unstandard-
ized regression coefficient but (1) its standard error
increases, (2) the value of R2 decreases, and (3) the
absolute value of the standardized coefficient decreases
as measurement error in Y increases (Williams et al.,
2013). Measurement error in just the predictor X (but
not in Y) negatively biases regression coefficients.
But the effect of measurement error in both X and
Y is more difficult to anticipate. For example, if mea-
surement error in both variables is independent, then
the general effect is negative bias; that is, absolute
population regression coefficients are underestimated.
But if measurement error is shared between X and Y,
then regression results can overestimate population
coefficients; that is, the bias is positive. How the con-
sequence just mentioned (positive bias) comes about is
demonstrated in Topic Box 15.1 if you would like to
look ahead, but it is a myth that measurement error
always results in negative bias. For all these reasons,
unmodeled measurement error in exogenous variables
can severely distort the results (Cole & Preacher, 2014;
Williams et al., 2013), especially if multiple exogenous
variables are highly correlated (Kenny, 1979). The
good news is that the assumption of zero measure-
ment error in exogenous variables can be evaluated in
the data by estimating the reliability of scores in the
researcher’s sample, a best practice (Chapter 4). There
is also a method in SEM that controls for measurement
error in individual observed exogenous or endogenous
variables that is described in Chapter 15, but we need to
cover more statistical modeling basics in the meantime.
The assumption that the relation between X and Y
in Figure 7.1 is linear can also be evaluated in the data
3/22/2023 3:44:05 PM

(Chapter 4). If the observed relation is appreciably cur-
vilinear, then the analysis can be adjusted to relax the
linearity requirement. Two options for doing so—poly-
nomial regression and nonparametric regression—are
described as advanced topics in Appendix 7.A. But the
remaining assumptions of Figure 7.1 cannot be directly
addressed through analysis alone. For example, direc-
tionalities of causal effects are generally assumed,
not actually tested in SEM. That is, there is little, if
anything, from analysis results that could either verify
or refute hypotheses about directionality represented
in the researcher’s model. The main reason is because
equivalent structural equation models feature (1) that
same variables and value of df M as the researcher's
original model but (2) the directions of some presumed
causal effects are reversed or replaced over the two
models. Also, (3) the two models, original and equiva-
lent, will have identical—not just similar but exactly
the same—fit to the data. We will revisit the issue of
equivalent models several times in later chapters, but
they are a major but often unacknowledged validity
threat in many, and perhaps most, SEM studies.
Summarized next are additional reasons why causal
directionality is assumed but not directly tested in
SEM:
1. Most SEM studies are based on cross-sectional
designs where all variables are measured at the
same occasion (i.e., no temporal precedence). In
such designs, the only thing that supports direction-
ality specification is argument, that is, the quality
of the ideas behind the hypothesis that X causes
Y instead of the reverse or that the two variables
mutually influence each other in a feedback rela-
tion, or reciprocal causation.
2. Measurement of variables at different times in lon-
gitudinal designs provides temporal precedence:
The hypothesis that X causes Y would be bolstered
if X were actually measured before Y. But tempo-
ral precedence is no guarantee. This is because
the covariance between X and Y could still be rela-
tively large even if Y causes X and the effect (X) is
measured before the cause (Y)—see Bollen (1989,
pp. 61–65).
3. Whether the coefficient for a presumed causal effect
is significant or not significant at some arbitrary
level, such as p < .05, neither confirms nor discon-
firms the corresponding directionality hypothesis.
In a large sample, the coefficient could be signifi-
Pt2Kline5E.indd 105
Parametric Causal Models 105
cant yet trivial in magnitude, but in a small sample,
a coefficient that indicates a meaningful effect size
could fail to be significant.
A bottom-line summary is that SEM is not gener-
ally a technique for causal discovery. This means that
if given a true model, then SEM could be applied to
estimate the directions, magnitudes, and precisions of
causal effects. But this is not how researchers generally
use SEM. Instead, a causal model is hypothesized, and
then the model is fitted to the data under the assumptions
just outlined. If the assumptions are invalid, then so are
analysis results. This is why Pearl (2000) reminded us
that “causal assumptions are prerequisite for validating
any causal conclusion” (p. 136). See Kline (2023) for
more information about assumptions in SEM.
CONFOUNDING
IN PARAMETRIC MODELS
Endogeneity in the diagram for a contracted chain is
represented in Figure 7.2(a) by the symbol for a covari-
ance that connects measured cause X with the distur-
bance for Y. For two reasons, Figure 7.2(a) is not iden-
tified. First, df M = –1, so the model violates Rule 7.3.
Exercise 1 asks you to prove the fact just stated. Second,
the biasing (back-door) path between X and D in the fig-
ure cannot be closed because D is treated as a latent
variable (e.g., Figure 6.1(d)). Endogeneity in parametric
models can be induced by the conditions listed next and
discussed afterward (Antonakis, 2017; Bollen, 2012):
1. An unmeasured common cause of X and Y (i.e., a
confounder).
2. Random measurement error in X (i.e., rXX < 1.0).
3. Reciprocal causation, or X and Y mutually cause
each other (i.e., they are both endogenous variables)
in a feedback loop.
4. Autoregressive errors, or where X is a lagged ver-
sion of Y and errors persist over the two variables.
5. Spatial autoregression, which occurs when scores
of each case are influenced by those from nearby, or
spatially adjacent, cases.
Unmeasured confounders can be addressed through
covariate selection or through instrumental variables
methods. For example, represented in Figure 7.2(b)
is the specification of a proxy (P) for an unmeasured
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 106 Specification, Estimation, and Testing
(a) Confounding (b) Proxy
P Z
X Y X Y
FIGURE 7.2. Endogeneity in a contracted chain (a). Identification of the model by controlling for a proxy (P) of a common
unmeasured cause (b) and through instrumental variable (Z) methods, which also addresses measurement error in variable X
(c). All diagrams shown in compact symbolism.
confounder of variables X and Y. The causal variable
X is endogenous in this model because P is assumed to
cause X (and also Y). Exercise 2 asks you to specify an
equivalent version of Figure 7.2(b) but where the proxy
P is not assumed to cause variable X but P is still is
a cause of Y. Instrumental variable methods, depicted
in Figure 7.2(c), address both unmeasured confound-
ers and measurement error in the exogenous variable:
When variable X with its implied correlation with the
disturbance is replaced by X Z in 2SLS regression, ran-
dom measurement error in X is also moved from X Z
under the standard assumptions for instruments (Chap-
ter 6). Note that variable X is represented as endogenous
in Figure 7.2(c), but not all researchers include instru-
ments in model diagrams. How to model hypothesized
reciprocal causation is the subject of Chapter 19.
A statistical model is autoregressive if future values
are predicted by past values for the same variable. In
this case, variables X and Y in Figure 7.2(a) would mea-
sure the same thing but at different times. That is, these
variables are repeated measures, where scores on Y at a
later time are predicted by scores on X from an earlier
time. Errors of repeated measures may not be indepen-
dent, especially if the measurement occasions are close
together in time. It is relatively straightforward in SEM
to estimate autoregressive error for repeated measures;
indeed, it is one of the great strengths of the technique
for analyzing longitudinal data, as you will see in Chap-
ter 21 about latent growth models. Spatial autoregres-
sion concerns the possibility that measurements of an
outcome variable in different physical locations are not
independent, especially if those locations are in close
proximity. The idea of a disease hotspot or cluster as a
geographic region with elevated incidence, prevalence,
or transmission rate of an infectious illness exemplifies
the idea of spatial autoregression. It is beyond the scope
Pt2Kline5E.indd 106
(c) Instrument
X Y
of this book to cover this topic further, but see Guliyev
(2020), who analyzed spatial panel models of COVID-
19 spread in mainland China for an example.
MODELS WITH CORRELATED CAUSES
OR INDIRECT EFFECTS
The parametric model in Figure 7.3(a) represents the
hypothesis that Y is a common outcome of two cor-
related exogenous variables, X and W. The diagram
offers no causal hypotheses about why X and W covary,
so their association is unanalyzed (estimated but not
explained). In computer analysis, estimates for effects
of X and W would be adjusted for their sample covari-
ance. Some SEM computer tools assume by default that
measured exogenous causes of the same outcome are
all pairwise correlated. For example, the command in
lavaan listed next
Y ~ X + W
specifies Figure 7.3(a) because the computer will auto-
matically estimate effects of X and W while control-
ling for their observed covariation. The same command
also tells the computer that variances of X, W, and the
disturbance for Y are all free parameters. If exogenous
variables X and W are hypothesized to be indepen-
dent—that is, there is no covariance path between this
pair of variables in the diagram—then the additional
command in lavaan
X ~~ 0*W
fixes the covariance between X and W to zero while
leaving both of their variances as free parameters.
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(a) Correlated (b) Indirect
X direct and indirect effects on outcome Y. The indirect
X M
Y
W
Y where M is presumed to be an intervening or interme-
FIGURE 7.3. Models with correlated causes (a) and both
direct and indirect effects (b). All diagrams shown in com-
pact symbolism.
Although nonparametric causal models allow for the
possibility of interaction between multiple causes of the
same outcome (e.g., Figure 6.2(c)), this is not true for
parametric models. In Figure 7.3(a), for example, any
interaction between causes X and W is assumed to be
zero; that is, the linear effect of X on Y does not change
across the levels of W, and vice versa. The hypothesis
of interaction between causes of the same outcome is
the prediction for conditional causality, for example,
that the linear effect of X on Y changes across the levels
of W, and vice versa. But Figure 7.3(a) with no specifi-
cation for interaction predicts unconditional causality
such that the linear effect of X on Y remains constant
over the levels of W, and vice versa. How to represent
the hypothesis of interaction in parametric path models
is described in Appendix 7.A, and methods to estimate
conditional causal effects in SEM are outlined in Chap-
ters 12 and 20. Exercise 3 asks you to list the assump-
tions for Figure 7.3(a).
You should know that the consequences of mea-
surement error in models with correlated causes are
complex and difficult to anticipate (e.g., Bollen, 1989,
chap. 5). This is because bias can be negative or posi-
tive depending on whether measurement error is cor-
related over multiple predictors or shared between pre-
dictors and outcome and also on sample covariances
among all variables. Although there is a relatively
simple technique to disattenuate (increase in absolute
value) individual regression coefficients for measure-
ment error (Osborne & Waters, 2002), it assumes that
error is independent over all variables; otherwise,
disattenuated coefficients can be inaccurate (Williams
et al., 2013). Thus, it is no small potential advantage
Pt2Kline5E.indd 107
Parametric Causal Models 107
that measurement error can be explicitly modeled in
SEM.
In Figure 7.3(b), variable X is represented as having
pathway is
X→M→Y
diate variable through which effects from cause X are
transmitted to outcome Y. Intervening variables are
endogenous (i.e., X → M) while at the same time they
are also causal variables (i.e., M → Y). Variable M also
has a dual role concerning reliability: As an outcome
of X, variable M has a disturbance, which allows for
measurement error in M. But as a cause of Y along with
X, the standard regression assumption for observed
variables is that both X and M are unaffected by mea-
surement error. There is no problem if reliabilities for
scores on intervening variables are very high (i.e., there
is no contradiction in requirements about measurement
error). Figure 7.3(b) also assumes that (1) variable X
directly affects Y above and beyond its indirect effect;
(2) variables X and M do not interact in their strictly
linear effects on Y; and (3) there are no omitted con-
founders for any pair of variables among X, M, and Y.
Effects of measurement error and omitted confound-
ers in models with indirect causal effects are also com-
plex and tough to fully anticipate. For example, with
no measurement error in causal variable X in Figure
7.3(b), measurement error in intermediary variable M
results in negative bias for estimates of the indirect
causal effect, while violation of the requirement for
no confounding in between M and outcome Y leads to
positive bias. Violation of both assumptions at once can
result in overestimation, underestimation, or in rare
cases no bias in estimates for the indirect effect (Fritz
et al., 2016). Results of computer simulations by Fritz et
al. (2016) suggested that correcting for only one source
of bias, such as for measurement error only, when both
sources of bias are present can lead to even greater bias
than in uncorrected results.
Perhaps you noticed that I did not use the term
“mediational model” for Figure 7.3(b) nor “mediator”
for variable M in the figure. As explained in Topic Box
6.1 and elaborated in Topic Box 7.1 about a timing cri-
terion for putative cause, mediator, and outcome vari-
ables, the hypothesis of mediation depends on strong
assumptions with persuasive rationales, not just on a
model diagram with an indirect causal pathway. For
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 108 Specification, Estimation, and Testing

TOPIC BOX 7.1

Mediation: Timing Criterion

The strong causal hypothesis of mediation depends on a time-­ordered relation between variables, where
the cause must precede the mediator, which in turn must affect the outcome at some later time (Little,
2013). Research designs with temporal precedence where cause, mediator, and outcome are measured in
this order but at different times, such as longitudinal designs, are consistent with estimating time-­ordered
effects. But most mediational studies are based on cross-­sectional designs with no temporal precedence,
so how does the issue of mediation as a time-­ordered phenomenon align with the use of a cross-­sectional
design?
Tate (2015) described the Hyman–Tate Criterion (see also Hyman, 1955), which requires a con-
ceptual time-­ordering of cause, mediator, and outcome. This means that regardless of study design (even
if cross-­sectional), the cause should precede mediator just as the mediator should precede outcome in
theoretical time. For example, does the cause conceptually exist before the mediator? Does the mediator
conceptually exist before the outcome? Unless the answer to both questions just posed is affirmative, there
is no interventional sequence among the three variables (Tate, 2015). The same rationale about conceptual
timing should also rule out as implausible any reverse causal pattern among presumed cause, mediator,
and outcome. For example, specification of a demographic variable as a cause is incompatible with the
possibility that the mediator affects the cause (e.g., attitude as a mediator cannot affect age as a cause).
It should likewise be argued that the mediator sets into motion necessary elements for observing change
in the outcome.
The same conceptual timing criterion also implies that the presumed mediator must be theoretically
amendable to influence by the cause. For example, variables conceptualized as traits, or relatively stable
characteristics like general cognitive ability or anxiety as a consistent personality attribute, cannot mediate
between a cause and outcome. It is only variables conceptualized as states, or potentially changeable
characteristics like anxiety as a momentary experience or motivation to perform well in a particular con-
text, that could potentially mediate anything. Likewise, group-level characteristics, such as norms, cohesive-
ness, or stereotypes, cannot function as mediators because they are basically constants that apply over all
people in particular groups.
Addressing the conceptual timing criterion is a matter of argument or logic, not analysis. This is
because the results of statistical mediation analysis cannot “prove” that a particular variable is actually
a mediator or distinguish between alternative causal models, some of which do not involve mediation at
all. An example is spurious mediation, where a presumed mediator is merely correlated with another
unmeasured variable that is the actual mediator. Another possibility occurs when the presumed mediator
is actually a consequence of the outcome. Both scenarios just mentioned are typically indistinguishable
by statistical analysis from meditation that happens just as hypothesized by the researcher (Fiedler et al.,
2011). MacKinnon et al. (2000) made the related point that mediation and both confounding and sup-
pression effects are statistically identical and can be distinguished only by rationale, not analysis. The
challenges just mentioned overlap with the problem of equivalent models, which fit the data just as well as
the researcher’s preferred model while making opposing causal claims. In Chapter 20 we will revisit the
issue of equivalent models in mediation analysis.

Pt2Kline5E.indd 108 3/22/2023 3:44:05 PM


the same reason, Kenny (2018) noted that mediation is
not statistically defined; instead, estimators of indirect
effects can be used to evaluate presumed mediation,
but analysis results for models with indirect causal
effects are not automatically interpreted as evidence
for mediation. Altogether the statistical and conceptual
requirements for estimating mediation are demanding
but rarely acknowledged in empirical studies (Kline,
2015; Pek & Hoyle, 2016).
RECURSIVE, NONRECURSIVE,
AND PARTIALLY RECURSIVE MODELS
All more complex parametric path models can be
“assembled” from the elemental models in Figures
7.1–7.3. There are two basic kinds, recursive and non-
recursive. Recursive models are the most straight-
forward and have two essential features: all causal
effects are unidirectional, and their disturbances are
independent. (All models considered to this point are
recursive.) The model in Figure 7.4(a) is recursive as
just defined. Exercise 4 asks you to calculate df M for
(a) Recursive
X1 Y1
X2 Y2
Partially recursive
(c) Bow-free pattern
X1 Y1
X2 Y2
FIGURE 7.4. Examples of recursive, nonrecursive, and partially recursive models with two different patterns of error correla-
tion. All diagrams shown in compact symbolism.
Pt2Kline5E.indd 109
Parametric Causal Models 109
this model and describe the hypothesized relations
between Y1 and Y2.
Nonrecursive models have causal (feedback) loops
where ≥ 2 endogenous variables are specified as causes
and effects of one another, directly or indirectly. In non-
parametric form, such models correspond to directed
cyclic graphs. Figure 7.4(b) is an example of a non-
recursive parametric model with reciprocal causation
depicted as
Y1  Y2
which specifies that variables Y1 and Y2 have simultane-
ous effects on each other. Examples of studies in which
hypotheses about causal loops were tested include
Schmitt and Bedeian (1982), who hypothesized that
life satisfaction and job satisfaction reciprocally cause
each other such that satisfaction with work boosts sat-
isfaction with life, and vice versa. Another is Stanovich
(1986), who described expected reciprocal causation
between reading and vocabulary: Reading contributes
to vocabulary growth, and knowledge of more words
benefits reading comprehension.
(b) Nonrecursive
X1 Y1
X2 Y2
(d) Bow pattern
X1 Y1
X2 Y2
3/22/2023 3:44:06 PM
 110 Specification, Estimation, and Testing
Models with causal loops may or may not have dis-
turbance covariances (correlated errors). Recall that
correlated errors in nonparametric models represent
hypotheses about unmeasured common causes (e.g.,
Figure 6.3(c)), and the same is true in parametric mod-
els. For example, variables Y1 and Y2 in Figure 7.4(b)
are specified as causes of each other, and the additional
specification
D1 D2
says that Y1 and Y2 are expected to share ≥ 1 unmea-
sured common causes. Though it makes sense that
variables involved in reciprocal causation might also be
affected by overlapping unmeasured confounders, the
inclusion of a disturbance covariance requires explicit
justification, just as for any other model specification.
It is also possible to specify reciprocal causation where
the disturbances are independent (Rigdon, 1995); thus,
correlated errors are an option in nonrecursive models,
but they are not mandatory.
There is another type of path model, one that has
unidirectional effects and disturbance covariances; two
examples of this type are presented in Figures 7.4(c)
and 7.4(d). Some authors call these models nonrecur-
sive (Bollen, 1989), whereas others use the term par-
tially recursive (Tsai et al., 2006). But more important
than the label for these models is the distinction made
in the figure and also by Brito and Pearl (2003): Par-
tially recursive models with a bow-free pattern of dis-
turbance correlations can be treated in the analysis just
like recursive models. A bow-free pattern means that
correlated errors are restricted to pairs of endogenous
variables without direct effects between them—see Y1
and Y2 in Figure 7.4(c).
In contrast, partially recursive models with a bow
pattern of disturbance correlations must be treated in
the analysis as nonrecursive models. A bow pattern
means that a disturbance covariance occurs between
a pair of endogenous variables with a direct effect
between them, such as Y1 and Y2 in Figure 7.4(d). The
problem is that the combination of a direct effect and
correlated disturbances implies a back-door path that
cannot be closed through covariate selection in this
model. For example, the two paths between Y1 and Y2
in the figure are
Y1 → Y2
Y1 ← D1 D 2 → Y2
Pt2Kline5E.indd 110
The second path just listed is a biasing path that
involves two latent confounders (D1, D 2), so it cannot
be closed by controlling for covariates. But the causal
path between Y1 and Y2 can be identified in the instru-
mental variable method, a point elaborated next.
Recursive models and partially recursive models
with no causal loops can be represented with directed
acyclic graphs, which means that all the graphical iden-
tification rules described in the previous chapter can be
applied to path models like those in Figures 7.4(a) and
7.4(c)–7.4(d). For example, computer tools that ana-
lyze directed acyclic graphs can be used to determine
whether a particular causal effect in a recursive or par-
tially recursive path model can be identified through
covariate selection or the use of instruments. Nonre-
cursive models with causal loops like Figure 7.3(b) cor-
respond to directed cyclic graphs, and graphical identi-
fication rules for such graphs are not as well developed.
Some methods convert a directed cyclic graph with
causal loops to a directed acyclic graph with no causal
loops before applying a method for the latter type of
graph (Spirtes, 1995). But there is relatively little com-
puter support for analyzing directed cyclic graphs com-
pared with directed acyclic graphs. Models with causal
loops also have special assumptions that generally can-
not be verified in the data. Chapter 19 deals with how
to manage special challenges when analyzing models
with causal loops.
We can now state a general rule for parametric path
models:
RULE 7.4 Recursive models or partially recursive
models with bow-free patterns of disturbance
covariances that satisfy Rule 7.3 are identified
Recall that Rule 7.3 concerns necessary but insufficient
requirements (i.e., df M ≥ 0, each unmeasured variable is
scaled). Rule 7.4 is sufficient, so path models that also
meet it are in fact identified.
Identified path models—or any type of identified
structural equation model—with just as many observa-
tions as free parameters (df M = 0) are just-identified
(just-determined), and identified models with more
observation than free parameters (df M > 0) are overi-
dentified (overdetermined). A structural equation
model can be underidentified in two ways: (1) It fails
Rule 7.3 because df M < 0, or (2) although df M ≥ 0, some
free parameters are underidentified because there is
not enough information to estimate them but others
are identified. In the second case, the whole model is
3/22/2023 3:44:06 PM

considered nonidentified, even though df M ≥ 0. Unless
nonrecursive models are specified in very particular
ways, they can wind up not identified as just described.
Thus, a more general definition is that an underidenti-
fied model is one for which it is not possible to uniquely
estimate all of its free parameters (Kenny, 2011).
DETAILED EXAMPLE
Represented in Figure 7.5 with full McArdle–McDon-
ald RAM graphical symbolism is a parametric path
based on Roth et al. (1989). The data collected in a
sample of N = 373 university students are summarized
in Table 4.3. The hypotheses were summarized in the
previous chapter for the nonparametric version of the
same path model (Figure 6.7). With v = 5 observed
variables in the figure, there are 5(6)/2, or 15 observa-
tions available for the analysis. Free parameters include
1. A total of 5 variances (2 measured exogenous vari-
ables, exercise and hardy, and 3 error terms for
endogenous variables, fitness, stress, and illness).
2. A single covariance (1) between exercise and hardy.
3. A total of 4 coefficients for direct effects on endog-
enous variables.
The total number of free parameters is thus 10, so
df M = 5, which exactly matches the number of implied
conditional independencies in the union basis set for
Exercise Fitness
Hardy Stress
FIGURE 7.5. A parametric path model of illness.
Pt2Kline5E.indd 111
Parametric Causal Models 111
the same model (Table 6.4). Detailed analysis of this
model is described in Chapters 8–10.
SUMMARY
Parametric structural equation models are closer to
the analysis than nonparametric models in at least two
ways: Observed variables in parametric models should
directly correspond to measured variables in an extant
or planned data set, and specific forms of functional rela-
tions between causal and outcome variables, such as lin-
ear versus curvilinear effects for continuous variables,
should also be represented in the model. The diagram
of a parametric model is also a communication medium
in that a complete diagram is basically a set of visual
instructions about how to specify the model in com-
puter syntax. Every model parameter, free or fixed (e.g.,
scaling constants), is represented in diagrams based
on McArdle–McDonald RAM graphical symbolism,
which can also help researchers who are learning about
SEM to better understand the analysis. There are other,
more compact graphical symbolisms that save diagram
space, but some model parameters or analysis require-
ments may not be explicitly shown compared with full
RAM symbolism. This should not pose a problem for
more experienced researchers who understand the con-
nections between model parameters, the data, and anal-
ysis details. In the next chapter we begin the analysis
of the ongoing detailed example for the recursive path
model of illness in Figure 7.5. Let the good times roll.
DF
1
DI
1
Illness
1
DS
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 112 Specification, Estimation, and Testing
LEARN MORE
Jaccard and Jacoby (2020) address how to bridge the gap
between theoretical concepts and predictions and their
representation in causal or mathematical models that can
be tested, McDonald and Ho (2002) describe options for
graphical symbolism in parametric structural equations mod-
els, and Tate (2015) explains the conceptual timing criterion
in studies of mediation.
EXERCISES
1. Show that df M = –1 for Figure 7.2(a).
2. Specify a variation of Figure 7.2(b) such that proxy
P is not assumed to cause X but where the effect of
X on Y would be estimated controlling for P.
3. State assumptions for Figure 7.3(a).
4. Calculate df M for Figure 7.4(a) and describe hypoth-
eses represented in the model about the relation
between Y1 and Y2.
5. Listed next as (X, Y) are scores for N = 8 cases:
(–9, 14), (–6, 11), (–3, 9), (–1, 9)
(1, 5), (3, 8), (7, 11), (9, 14)
Compute rXY. Next, regress Y on both X and X2.
Pt2Kline5E.indd 112
Jaccard, J., & Jacoby, J. (2020). Theory construction and
model-building skills: A practical guide for social scien-
tists (2nd ed.). Guilford Press.
McDonald, R. P., & Ho, M.-H. R. (2002). Principles and
practice in reporting structural equation analyses. Psy-
chological Methods, 7(1), 64–82.
Tate, C. U. (2015). On the overuse and misuse of mediation
analysis: It may be a matter of timing. Basic and Applied
Social Psychology, 37(4), 235–246.
Comment on the new results. Plot the regression
line with both linear and quadratic trends.2
6. Listed next as (X, W, Y) are scores for N = 8 cases:
(2, 10, 5), (6, 12, 9), (8, 13, 11), (11, 10, 11)
(4, 24, 11), (7, 19, 10), (8, 18, 7), (11, 25, 5)
Regress Y on X and W and report the multiple cor-
relation. Next, regress Y on X, W, and XW without
centering the scores. Report the new multiple cor-
relation. From the unstandardized regression equa-
tion that includes the product term, generate the
simple linear regressions for
M W – SDW, M W, and M W + SDW
and describe the pattern. Plot the simple regression
lines.
2 Anonline polynomial regression plotter is available at https://
mycurvefit.com/
3/22/2023 3:44:06 PM

Appendix 7.A
Advanced Topics
in Parametric Models
Three extensions of parametric path models are
described next. They all involve regression concepts
about how to analyze categorical predictors and esti-
mate curvilinear or interactive effects of continuous
predictors—see Cohen et al. (2003, chaps. 6–8) for
more information.
CATEGORICAL EXOGENOUS
VARIABLES
The levels of a categorical (nominal) variable repre-
sent membership in two or more mutually exclusive
and exhaustive groups (g ≥ 2) that are not necessarily
ordered from lowest to highest along a single dimen-
sion. Group membership is represented both in the
analysis and model diagrams with g – 1 code variables
that (1) uniquely associate each case with a particular
group and (2) can be specified as predictor variables in
regression analysis or as exogenous causal variables in
SEM. Categorical variables with g = 2 groups can be
represented with a single code variable, such as 0 for
control and 1 for treatment, but multiple code variables
are needed to represent membership in g ≥ 3 groups.
An example follows.
Suppose the levels of a categorical exogenous vari-
able are represented in a data file as
1 = Diagnosis A, 2 = Diagnosis B, 3 = Control
The numerical values just listed are arbitrary because any
set of three different numbers, such as (3, –2, 17), could
be used to associate cases with groups. Thus, results of
mathematical operations on arbitrary values for group
membership would be meaningless. But code variables
are not arbitrary in that (1) they represent all informa-
tion contained in the whole categorical variable about
group membership, and (2) their specification provides
a distinct pattern of contrasts between groups. Among
the four basic types of code variables—dummy codes,
unweighted effect codes, weighted effect codes, and con-
trast codes—only dummy codes are described next.
Pt2Kline5E.indd 113
Parametric Causal Models 113
Presented in Table 7.1 is a set of two dummy codes,
C1 and C2, that represent membership in the three groups
listed in the table. Note that each group has a unique pat-
tern of values over C1 and C2. The group coded as (0, 0)
over the two dummy codes, Control, is specified as the
reference group against which each of the two remain-
ing groups is contrasted. For example, code C1 in the
table specifies the comparison of the Diagnosis A group
with Control, and code C2 specifies the contrast between
­Diagnosis B and Control. Specification of a different
­reference group, such as Diagnosis A, is possible by
respecifying the dummy codes so that this group is coded
as (0, 0) over C1 and C2 instead of Control.
Figure 7.6(a) represents membership in one of the
three groups from Table 7.1 as two correlated causes
of a continuous outcome Y. The causes in the figure
are C1 and C2, the two dummy codes in Table 7.1. The
coefficient for the direct effect of C1 estimates the mean
contrast on Y between Diagnosis A and Control, and
the coefficient for C2 is the mean difference between
Diagnosis B and Control, each adjusted for overlap
with the other comparison. The specification of a refer-
ence group in dummy coding and the choice of dummy
codes over other kinds of code variables for categorical
exogenous variables should be guided by substantive
considerations—see Daly et al. (2016) for an example.
CURVILINEAR EFFECTS
OF CONTINUOUS
EXOGENOUS VARIABLES
There are two basic options to relax the assumption that
the effect of a continuous exogenous variable is strictly
linear (e.g., Figure 7.1): Polynomial regression and non-
parametric regression. In polynomial regression, the
researcher creates power terms that represent orders of
curvilinear effects. For example, regressing Y on both
X and the power term X2—literally, the squared scores
TABLE 7.1. Dummy Codes for an Exogenous
Categorical Variable with Three Levels
Dummy codes
Group C1 C2
Diagnosis A 1 0
Diagnosis B 0 1
Control 0 0
3/22/2023 3:44:06 PM
 114 Specification, Estimation, and Testing
(a) Dummy codes
C1
Y Y
C2
FIGURE 7.6. Models for representing membership in one of three groups with dummy codes (a), and both linear and qua-
dratic effects of a quantitative cause (b). All diagrams shown in compact symbolism.
on X—adds one bend to the regression line, which cor-
responds to a quadratic trend. Now any combination
of linear or quadratic effects of X on Y in the data can
be estimated. Regressing Y on X, X2, and X3 specifies
a regression line with two bends, or a cubic trend in
addition to linear and quadratic trends, and so on. Cur-
vilinear effects beyond cubic are relatively rare in the
behavioral sciences, but cubic relations describe cer-
tain learning curves and dose-response curves, where
increases in Y over lower levels of X is slow at first but
then increases more rapidly over intermediate levels
before further increases in Y decelerate over higher
(asymptotic) levels of X.
The unstandardized equation for regressing Y on X
and X2 is as follows:
Ŷ = B1X + B2 X2 + A (7.4)
where B1 estimates the linear slope, B2 represents the
quadratic slope (i.e., degree of departure from linear-
ity), and A is the intercept. Equation 7.4 is represented
as a parametric causal model in Figure 7.6(b) without
a mean structure (i.e., there is no intercept in the dia-
gram). The figure represents both the linear and qua-
dratic causal effects of X on Y. Figure 7.7 is a scatterplot
for a relation between X and Y that has both a posi-
tive linear trend and a negative (decelerating) quadratic
trend. The specific equation for the regression line in
the figure is
Ŷ = 2.20X – .20X2 + 2.00 (7.5)
The first derivative of Equation 7.5, or
dYˆ
= 2.20 − .40 X (7.6)
dX
Pt2Kline5E.indd 114
(b) Linear and quadratic
X
X2
generates the slope of the tangent line for Equation 7.5
at a given value of X. In the figure, the slope of tangent
line at X = 1 is 2.20 – .40(1), or 1.60. The slope of the
tangent line at X = 4 is still positive but not as steep,
or 2.20 – .40(4) = .60, which is consistent with a nega-
tive quadratic trend in the regression line. Exercise 5
asks you to estimate a curvilinear relation in a small
data set using polynomial regression. See Loehlin et al.
(1990), who analyzed linear and quadratic effects of age
in models of extroversion, socialization, and emotional
lability among adopted and biological children of adop-
tive parents.
A second option is nonparametric regression,
which estimates the form of the functional relation
between continuous variables exclusively from the data
8
6
Y
4
2
0 1 2 3 4 5
X
FIGURE 7.7. Hypothetical scatterplot and regression line
(solid) with linear and quadratic trends. The tangent lines
(dashed) are shown for the points X = 1, 4.
3/22/2023 3:44:06 PM

and with no prior assumptions about its shape. Instead,
methods like the loess procedure rely on smoothing
techniques analogous to how moving averages are
computed in time series data. These methods gener-
ate regression curves with multiple bends that locally
fit the data at each point throughout the length of the
scatterplot. In this case, the specification X → Y rep-
resents any functional forms of the relation between
these two variables, just as in a nonparametric model.
Nonparametric regression techniques generally require
larger samples compared with parametric methods that
assume linearity, and their use is better known in eco-
nomics than in the behavioral sciences—see Takezawa
(2006) for more information.
INTERACTIVE EFFECTS
OF CONTINUOUS
EXOGENOUS VARIABLES
In Figure 7.3(a), two continuous predictors, X and W, are
assumed not to interact in their linear effects on Y. This
assumption is relaxed in Figure 7.8(a), shown with no
intercept, where Y is regressed on X, W, and the prod-
uct term XW, which is just the product of scores on
(a) Regression style
X X
W Y
XW
(c) Focal (X) vs.
moderator (W)
W W
X Y
FIGURE 7.8. Alternative diagrams of parametric models for representing linear interactive effects of two continuous causes.
All diagrams shown in compact symbolism.
Pt2Kline5E.indd 115
Parametric Causal Models 115
X and W for all cases. In moderated multiple regres-
sion (MMR), the prediction equation just described is
Ŷ = B1X + B2W + B3XW + A (7.7)
where coefficients B1 and B2, respectively, estimate
unconditional linear effects of X and W and where B3
estimates their conditional linear effect, or a linear ×
linear interaction. If B3 ≠ 0, then (1) the linear effect of
X on Y changes in a gradual (linear) way over the levels
of W, and because interaction is symmetrical, then it is
also true that (2) the linear effect of W on Y changes in
a linear way over the levels of X. Note that although the
product term in Figure 7.8(a) has a direct effect on Y, it
has no causal agency by itself. Instead, the coefficient
for the path XW → Y estimates the joint effect of vari-
ables X and W (i.e., their interaction).
There are at least three other ways to represent
interactive effects of continuous exogenous variables
shown with no intercepts in diagrams for parametric
path models. They differ in their symbolism, if any, for
the product term in Equation 7.7. In Figure 7.8(b), for
example, the product term is represented with a closed
circle, and covariances between XW and its constitu-
ent variables, X and W, are implied, but not explicitly
(b) Mplus style
Y
W
(d) Skeletal
X Y
3/22/2023 3:44:06 PM
 116 Specification, Estimation, and Testing
shown. The coefficient for the direct path from the
closed circle to Y in the figure estimates the interactive
effect (i.e., B3 in Equation 7.7). This particular graphi-
cal symbolism for interaction is associated with Mplus
(Muthén & Muthén, 1998–2017).
The product term XW is not explicitly represented in
Figure 7.8(c), but its analysis along with variables X and
W is assumed. The hypothesis that the linear effect of
focal variable X on Y changes over the levels of mod-
erator W is represented in the figure by the path from
W that bisects the X-to-Y path at a right angle, and the
coefficient for this path corresponds to the interactive
effect (B3 in Equation 7.7). Because interaction is sym-
metrical, an equivalent version of Figure 7.8(c) features
switching the labels for X and W with no other change
in the diagram. In the equivalent version just described,
variable W is represented as focal with X depicted as
the moderator. Figure 7.8(d) is a minimalist version of
Figure 7.8(c) that also omits the covariance between X
and W and the direct effect of W on Y. This very skeletal
representation is best viewed as a conceptual diagram
that quickly conveys the hypothesis of moderation, but
it hides many details compared with the full regression-
style model in Figure 7.8(a).
Exercise 6 asks you to conduct a multiple regression
11
10
9 MW
8
Y MW + SDW
7
4
2 3 4 5
FIGURE 7.9. Simple linear regressions of Y on X at three different levels on W for the data in Exercise 6.
Pt2Kline5E.indd 116
analysis of Equation 7.7 in a small data set with scores
on X, W, and Y. After you create the product term, next
regress Y on X, W, and XW. Although centering scores
on the predictors—that is, subtracting the mean from
predictor raw scores—is an option in MMR analyses,
doing so it not required—see Edwards (2009) for an
explanation—so do not center the scores in this analy-
sis. With the full regression equation, you are asked to
generate equations for the simple linear regressions
of Y on X at three different levels for W, at its mean
and at ±1 standard deviation above or below the mean.
Your plot should resemble Figure 7.9, which depicts the
three simple regression lines just described for the data
in Exercise 6. In the figure, the linear relation between
Y and X is positive when the level of W is 1 standard
deviation below its mean. But there is basically zero
linear relation at the mean of W, and the association
between Y and X is negative when W is 1 standard devi-
ation above its mean. Thus, the linear relation between
Y and X changes in a linear way (from positive to nega-
tive) as W increases in value. Aguinis and Gottfredson
(2010) describe best practices for estimating interactive
effects of continuous variables in moderated multiple
regression.
MW − SDW
6 7 8 9 10 11
X
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 8

Local Estimation and Piecewise SEM

There are two broad families of estimation methods in SEM, local and global. In local estimation—
also called limited-information methods, partial-information methods, or single-equation
methods—equations for endogenous variables are analyzed one at a time. Conceptually, (1) the full
model is decomposed into a series of submodels, one for each outcome; and (2) presumed causal effects
for each outcome are estimated in separate regression analyses. In global estimation, the whole model
is analyzed all at once; that is, equations for all outcomes and their presumed causes are simultaneously
estimated. Until recently, (1) local estimation in SEM was mainly restricted to manifest-variable path analysis
models, and (2) global estimation was the sole practical choice for models with common factors as proxies
for latent variables. But the availability of relatively new computer tools for local estimation of path models
has expanded analysis options for both types of models just mentioned. This chapter covers local estimation
for manifest-variable path models and the related method of piecewise SEM. Options for local estimation or
global estimation of models with common factors are covered in later chapters.

RATIONALE OF LOCAL ESTIMATION
In local estimation, the researcher conducts a series of
regression analyses, one for each outcome variable in
the model. A suitable regression technique should be
used for a particular outcome. This means that
1. The link function, which associates a linear com-
bination of predictors to a parameter for the distri-
bution of the outcome, is appropriate, given the data
type of the outcome (e.g., count, ordinal, or binary
data).
2. Distributional assumptions of the technique, if any,
should be plausible.
3. Functional forms of statistical associations between
predictors and outcomes are properly specified in
parametric methods, or nonparametric methods
are used that do not assume a particular functional
form (Appendix 7.1).
For example, ordinary least squares (OLS), or stan-
dard multiple regression (identity link), is for continu-
ous outcomes with linear relations to all predictors.
Curvilinear relations can also be estimated if the com-
puter is instructed to include in the equation polyno-
mial terms, such as X2 for quadratic effects of X, along
with variable X itself (Appendix 7.1). Normal distribu-
tions for observed scores are not required in the OLS
method, but distributions of residuals for cases should
be normal. Dichotomous outcomes could be analyzed
in logistic regression (logit link) or probit regression
(probit link), among other options for binary regression,
and outcomes that are count variables could be ana-
lyzed in Poisson regression (log link), and so on. The
point is that there should a be a good match between the
distributional assumptions and types of functional rela-
tions estimated in a particular regression technique and
the outcome analyzed with its presumed causes.
Potential advantages of local estimation are listed
next (Bollen, 2019; Lefcheck, 2016; Shipley, 2000):

117

Pt2Kline5E.indd 117 3/22/2023 3:44:06 PM

 118 Specification, Estimation, and Testing
1. No specialized software is needed. This is
because local estimation can be conducted using soft-
ware for general statistical analyses, such as SPSS,
SAS/STAT, or native regression procedures in R, such
as function “lm( )” (linear regression models) for con-
tinuous outcomes.
2. Local estimation accommodates a wide range of
variable types and distributions, and it also allows the
use of parametric or nonparametric regression meth-
ods. Thus, no universal requirements or assumptions,
such as multivariate normality, necessarily apply over
the analyses for all outcome variables.
3. Local estimation may be less susceptible to prop-
agation of specification error compared with global
estimation. Because each outcome is separately ana-
lyzed in local estimation, effects of specification error
for one outcome may not spread to different outcomes
with correctly specified equations.
4. Global estimation methods are typically asymp-
totic; that is, they require large samples for precise esti-
mation. They also require statistically identified mod-
els; otherwise, estimation may fail. In contrast, local
estimation is generally less demanding about sample
size, and it may be possible in local estimation to gen-
erate estimates for individual outcomes even though the
whole model is not identified.
5. The availability of significance tests of overall
model fit was once the near-exclusive domain of global
estimation, but there are now computer tools that con-
duct global fit testing in the context of local estimation,
too. For observed-variable path models, these global fit
tests are generally based on the concept of d-separation
and simultaneously test all model-implied conditional
independencies for a union basis set (Chapter 6). Such
tests can be conducted without estimating a single
model parameter; that is, d-separation tests can be con-
ducted prior to local estimation. Doing so is part of the
rationale for piecewise SEM, which is described next.
PIECEWISE SEM
Shipley (2000) described the basic logic of piece-
wise SEM, also called confirmatory path analysis,
for recursive path models with no causal loops and
no correlated errors. The method was later expanded
to include path models with correlated errors, multi-
Pt2Kline5E.indd 118
level analysis of path models, comparison of alterna-
tive models fitted to the same data, evaluation of path
models over multiple samples, and models with prox-
ies for latent variables (Shipley, 2003, 2009; Shipley
& Douma, 2020, 2021). Lefcheck (2016) described the
freely available piecewiseSEM package for the R com-
puting environment.
The basic steps of piecewise SEM for recursive path
models with continuous outcomes with linear relations
(Shipley, 2000) are summarized next:
1. The path model is expressed as a directed acyclic
graph (DAG).
2. The union basis set of implied conditional indepen-
dencies is derived. Recall that the union basis set
controls for all parents of each nonadjacent pair of
variables, or those not directly connected by a path
in the graph. It consists of the smallest number of
nonoverlapping conditional independence claims
that generate all such hypotheses encoded by the
DAG.
3. In the data, calculate the value of the Pearson cor-
relation or partial correlation that corresponds to
each implied conditional independency in the union
basis set. Each of these coefficients is also a correla-
tion residual, or the difference between the observed
(sample) correlation and the predicted value, which
is zero (i.e., conditional independence). Correla-
tion residuals are measures of local fit because they
involve a single pair of variables, not all variables in
the model considered at once.
4. Next, for each observed correlation test the null
hypothesis that the corresponding parameter equals
zero against a nondirectional alternative hypoth-
esis. For example, if rXY•W is the sample coefficient
for the implied conditional independence X ⊥ Y | W,
then the null and alternative hypotheses are, respec-
tively,
H0: rXY•W = 0 and H1: rXY•W ≠ 0
Depending on the computer tool, the test statistic
could be t (N – 2 – c), where c is the number of
variables for which we are controlling (c = 1 in this
example), or it could be the normal deviate z based
on the Fisher transformation for correlation coeffi-
cients.
5. Conduct the d-separation (d-sep) test, which is a
3/22/2023 3:44:07 PM

multivariate significance test of all implied condi-
tional independencies in the union basis set. The
test statistic is C (Fisher, 1954), and its formula is
k be significant in a large sample. But in a small sample
C = −2∑ ln( pi ) (8.1)
i =1
where ln is the natural log transformation to base e
(approximately 2.7182), and pi is the p value from
each of the individual significance tests described
in Step 4. The C statistic is distributed over random
samples as central chi-square with df = 2k, where k
is the number of independence claims in the union
basis set. The null hypothesis tested by C is
H0: pk×1 = 0k×1
where pk×1 is the population vector of p values from
the tests of all implied conditional independences
and 0k×1 is the zero vector of the same dimension
where all elements equal zero.
6. If the model fails the d-sep test (e.g., C is statis-
tically significant at p < .05), then the researcher
may decide to respecify it. Model respecification is
considered in more detail in a later chapter, but for
now we will treat a failed d-sep test as indicating
a potential problem with the original model. The
d-sep test should also be conducted for any respeci-
fied model.
7. If the original model or any respecified version is
eventually retained, the last step is to locally esti-
mate the equation for each outcome. Path coef-
ficients for presumed causal effects are generally
identified through the specification of adjustment
(conditioning) sets of covariates in the OLS method
or through the specification of instruments in
instrumental variables regression, such as the two-
stage least squares (2SLS) method.
Two elaborations are needed. First, the question of
what is the minimally acceptable absolute correlation
residual before concluding that an independence claim
is deficient is not clearly specified in the works on piece-
wise SEM cited to this point. Statistical significance
as the sole decision criterion (e.g., reject the model if
p < .05 for the C statistic) is problematic because it
ignores effect size and power. For instance, in a large
sample, the test for a sample partial correlation that is
close to zero, such as r = .002, could be statistically sig-
Pt2Kline5E.indd 119
Local Estimation and Piecewise SEM 119
nificant, but this degree of departure from zero may be
seen as negligible.1 A d-sep test based on partial corre-
lations that all differ trivially from zero could likewise
due to low power, the d-sep test may fail to be signifi-
cant even though some sample partial correlations are
much larger, such as r = .20, which indicates a 100-fold
greater departure from zero than r = .002.
Suggested next is a rule of thumb for interpret-
ing correlation residuals based more on an effect size
perspective than on outcomes of significance testing:
Absolute discrepancies between observed and pre-
dicted correlations that exceed .10 may signal apprecia-
ble model–data disagreement. This standard has been
suggested for exploratory factor analysis (Pett et al.,
2003; Tabachnick & Fidell, 2013) and, in my judgment,
it seems like a reasonable guideline when continuous
variables are analyzed in SEM, too. Although it is dif-
ficult to say how many absolute correlation residuals
> .10 is “too many,” the more there are, the worse the
correspondence between model and data concerning
implied conditional independencies. An example of
considering effect size when conducting the d-sep test
follows.
Suppose in a large sample that p = .001 for C sta-
tistic, so the model “fails” the d-sep test at a conven-
tional level of statistical significance. The researcher
inspects the absolute values for the whole set of par-
tial correlations and finds that none exceeds .01. If
these degrees of departure from zero are all consid-
ered unimportant, then the researcher could decide to
ignore the failed d-sep test for the model. That is, the
model is not rejected, given the relatively low mag-
nitudes of partial correlations even though the global
significance test was failed. Now suppose in a small
sample that a model “passes” the d-sep test (i.e., C is
not significant) even though some, and perhaps most,
absolute partial correlations exceed .10. Low power
of the d-sep test could explain this pattern of results.
Accordingly, the researcher could decide in this case
to ignore the passed d-sep test (i.e., the model is not
retained), given the magnitudes of the correlation
residuals.
1 An alternative is to test correlation residuals for significance
against nonzero values, such as .05 in absolute value or some
other reasonably small value—see Thoemmes and Rosseel
(2018) for more information and examples of R code that imple-
ment this type of test.
3/22/2023 3:44:07 PM
 120 Specification, Estimation, and Testing
A second issue in piecewise SEM concerns local esti-
mation. The version of piecewiseSEM that I used in the
upcoming detailed example permitted the specification
of a single regression equation for each outcome, gener-
ally the one that includes all parents for a specific out-
come (Lefcheck, 2020). There may be other equations
for the same outcome that feature different covariates or
the inclusion of instruments for particular causal vari-
ables, but multiple equations for the same outcome can-
not be analyzed in a single execution (run) of the function
“psem( ),” which is used in the piecewiseSEM package
to specify the equations and fit them to the data. But it is
not problematic to specify and analyze additional equa-
tions for the same outcome in regression analyses con-
ducted outside of the piecewiseSEM package.
DETAILED EXAMPLE
Let’s recap the ongoing example to this point: In Chap-
ter 6, we specified as a directed acyclic graph (DAG) the
nonparametric version of the Roth et al. (1989) recur-
sive path model of illness in Figure 6.7. We analyzed
the graph with a computer tool (analysis 1, Table 6.3)
that generated the union basis set, or the smallest num-
ber of conditional independencies (5 in total) located
by the d-separation criterion that (1) are mutually inde-
pendent; (2) imply all other conditional independen-
cies; and (3) include the parents of both variables in
the conditioning (adjustment) set (Rules 6.1–6.2). The
union basis set for the Roth et al. (1989) model is listed
in Table 6.4. For example, the graph predicts that the
fitness and stress outcomes are independent after con-
trolling for both of their parents, exercise and hardy.
For the same DAG in Chapter 6, we applied graphi-
cal identification criteria (analysis 2, Table 6.3) to gen-
erate (1) minimally sufficient adjustment sets of covari-
ates to estimate causal effects in ordinary least squares
(OLS) regression (Rules 6.3–6.4) or in two-stage least
squares (2SLS) regression with instruments or partial
instruments (Rules 6.5–6.6). The results of these analy-
ses—see Table 6.5—provide a “roadmap” or analysis
plan for local estimation in this chapter.
In Chapter 7, we specified the parametric version of
the Roth et al. (1989) path model depicted using full
McArdle–McDonald RAM graphical symbolism in
Figure 7.5. We determined that the model is identified
(Rules 7.3–7.4) and that the degrees of freedom are
df M = 5 (Rules 7.1–7.2), which exactly equals the size
of the union basis set for this model (5). For continuous
Pt2Kline5E.indd 120
variables in linear recursive models, each element of the
union basis set corresponds to a vanishing partial cor-
relation that can be compared with a sample partial cor-
relation coefficient. If the model is correctly specified,
then the two values—predicted (zero) and observed—
should be similar with the bounds of sampling error or
effect size (i.e., any discrepancy is considered trivial);
otherwise, the model should not be retained.
Listed in Table 8.1 are the analyses, annotated
script files, and R packages used in the piecewise
SEM analysis of the Roth et al. (1989) parametric path
model of illness in Figure 7.5. All files can be freely
downloaded from this book’s website. The version of
the p­ iecewiseSEM package used in this example (Lef-
check, 2020) could not read summary data (i.e., raw
data input is required). So, I generated in analysis 1 a
raw data file in comma separated values (.csv) format
based on the summary statistics in Table 4.3 for the
Roth et al. (1989) data set in a sample of N = 373. Spe-
cifically, I used the “kd( )” function in semTools (Jor-
gensen et al., 2022) for the Kaiser-Dickman algorithm
(Kaiser & Dickman, 1962) to create raw scores for 373
cases where variable descriptive statistics (covariances,
means) exactly match those in Table 4.3 for the actual
data. These generated raw scores were specified as the
input data for the analyses 2–4 in Table 8.1.2
Partial Correlations
and the d‑Separation Test
For analysis 2 in Table 8.1, I used the psych package
(Revelle, 2022) and the piecewiseSEM package to
calculate the sample partial correlation and p value
for each of the five conditional independence claims
in the union basis set and also to conduct the multi-
variate d-sep test for the whole model. Recall that
sample (observed) partial correlations in these analy-
ses are also correlation residuals because they all cor-
respond to predicted values that are zero. The results of
­analysis 2 are summarized in Table 8.2. There is one
absolute correlation that is just .10 or more. This result,
–.103 (shown in boldface in the table), is for the pair
fitness and stress. The model implies that fitness and
stress are independent, given exercise and hardy, but
2 Note that “kd( )” generates a different set of raw scores each
time it is run, but score descriptive statistics always exactly
match those of target covariances and means. Thus, all analysis
results described in this chapter are identical in any raw data so
generated for this example.
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 Local Estimation and Piecewise SEM 121

TABLE 8.1. Analyses, Script Files, and Packages in R for Piecewise SEM
Analyses of a Recursive Path Model of Illness
Analysis Script files R packages
1. Generate unstandardized scores that roth-generate-scores.r semTools
exactly match sample covariances, means lavaan

2. Estimate and test implied conditional roth-d-sep-test.r piecewiseSEM

independencies psych

3. Local estimation of causal effects

a. Covariate adjustment (OLS) roth-effects-ols.r piecewiseSEM
b. Instruments (2SLS) roth-effects-2sls.r systemfit

4. Bootstrapped standard errors and roth-bootstrap-ci.r bmem

confidence intervals for indirect effects sem

Note. The external raw data file created in analysis 1 is roth.csv. Output files have the same names except
the extension is “.out.” Packages semTools and lavaan are also used in analyses 2–4. OLS, ordinary least
squares; 2SLS, two-stage least squares.

their observed residual differs by what I would consider
to be worrisome. In Figure 7.5, there is a single back-
door path between fitness and stress:
Fitness ← Exercise Hardy → Stress
A possible specification error is that fitness and stress
are related through paths omitted from the origi-
nal model. For instance, perhaps fitness affects stress
(­Fitness → Stress), or vice versa (Stress → Fitness). We
will deal with respecification later, but we have already
detected a local fit problem.
The value of the C statistic for the d-sep test cal-
culated for these data in the piecewiseSEM package
is 19.521 (see the output file for analysis 2, Table 8.1).
With a total of 5 conditional independence claims in
the union basis set, the degrees of freedom are 5 × 2,
or 10. For c2 (10) = 19.521, p = .034, so the model fails
the d-sep test at the .05 level. Thus, there is covariance
evidence against the model from the perspective of
significance testing. The sample size here is not large
(N = 373), one absolute correlation exceeds .10 (for
fitness and stress), and other absolute correlations are
nearly as large (e.g., .089 for hardy and fitness)—see
Table 8.2—so local fit problems are indicated from
an effect size perspective, too. Exercise 1 asks you to
calculate C for this analysis, given the p values for the
partial correlations in Table 8.2.
Given the results to this point, I would reject the
model as inconsistent with the data and thus begin the

TABLE 8.2. Sample Partial Correlations and p

Values for a Union Basis Set of Implied Conditional
Independencies for a Recursive Path Model of Illness
Conditional independence Adjustment set Partial correlation p
Exercise ⊥ Stress Hardy –.058 .260
Exercise ⊥ Illness Fitness, Stress .039 .455
Hardy ⊥ Fitness Exercise .089 .087
Hardy ⊥ Illness Fitness, Stress –.081 .118
Fitness ⊥ Stress Exercise, Hardy –.103 .048

Note. The p values are for two-tailed tests that the population correlation is zero.

Pt2Kline5E.indd 121 3/22/2023 3:44:07 PM

 122 Specification, Estimation, and Testing

respecification phase. But in this pedagogical example,
we continue next to local estimation using two different
methods, covariate selection with estimation in OLS
regression and estimation with instruments in 2SLS
regression. Doing so gives us the opportunity to appre-
ciate that multiple estimators for the same causal effect
may be available in local estimation of path models.
Estimates of Direct Causal Effects
I used the piecewiseSEM package for analysis 3a in
Table 8.1 to generate the OLS estimators of unstan-
dardized direct effects in the Roth et al. (1989) path
model that are listed in the second and third columns of
Table 8.3 and shown in boldface. These results control
for the parents of each outcome.. Because there are no
causes of fitness other than exercise and also no back-
door paths between these two variables—see Figure
7.5—the adjustment set is empty (i.e., no covariates).
This means that the bivariate regression of fitness on
exercise is the sole OLS estimator for this effect. The
unstandardized coefficient is .108 (see the table), which
indicates that fitness is expected to increase by .108
points in its raw score metric, given a 1-point increase
in the raw score metric of exercise. Exercise 2 asks you
to interpret the unstandardized OLS coefficient for the
direct effect of hardy on stress.
There are a total of three OLS estimators for the
unstandardized direct effect of fitness on illness, each
with a different adjustment set (see Table 8.3). Their
values are generally consistent and range from –1.036
when controlling for exercise to –.849 when control-
ling for stress, the other parent of illness in the origi-
nal model (Figure 7.5). The result just mentioned says
that for every 1-point increase in fitness, there is an
expected decline in illness of .849 points while hold-
ing stress constant. There are also a total of three esti-
mators for the unstandardized direct effect of stress on
illness, each with just one of the variables fitness, exer-
cise, or hardy as the adjustment set (Table 8.3). Values
of these alternative estimators are all positive and gen-
erally consistent. Exercise 3 asks you to interpret the
OLS coefficient for the direct effect of stress on illness
while controlling for fitness, the other parent of illness.
Reported in the fourth and fifth columns in Table 8.3
are the 2SLS estimates of unstandardized direct effects
in the Roth et al. (1989) path model. These results are
inconsistent or plainly anomalous for some effects, and
thus problematic. For example, the estimate for the
direct effect of exercise on fitness is negative, or –.646
(i.e., more exercise, less fitness) when the instrument is
hardy, but the coefficient for the same direct effect is
positive, or .719 (i.e., more exercise, more fitness) when
the instrument is stress. There is a similar inconsistent

TABLE 8.3. Unstandardized Local Estimates for Direct Effects in a Recursive

Path Model of Illness
OLS 2SLS
Effect Estimate Adjustment set Estimate Instrument
Exercise → Fitness .108 (.013) — –.646 (1.377) Hardy
.719 (.687) Stress

Hardy → Stress –.203 (.045) — 1.469 (3.252) Exercise

–1.637 (1.240) Fitness

Fitness → Illness –.849 (.162) Stress –.558 (.443) Exercise | Stress

–1.036 (.183) Exercise –6.927 (8.533) Hardy | Stress
–.951 (.168) Hardy

Stress → Illness   .574 (.089) Fitness 88.191 (5,980.901) Exercise |

  .628 (.091) Exercise 1.180 (.431) Fitness
  .597 (.093) Hardy Hardy | Fitness

Note. OLS, ordinary least squares; 2SLS, two-stage least squares. Adjustment sets are minimally sufficient.
Standard errors are reported in parentheses. Values in boldface for OLS estimates control for parents of each
outcome, and values in italic boldface for 2SLS estimates are contradictory in sign for the same effect or out-
of-bounds (invalid).

Pt2Kline5E.indd 122 3/22/2023 3:44:07 PM


pattern of 2SLS estimates for the direct effect of hardy
on stress depending on the instrument, exercise or fit-
ness (see the table). Both 2SLS estimators for the direct
effect of fitness on illness are negative, but the magni-
tude of the result when the conditional instrument is
Hardy | Stress
exceeds by more than 10-fold the magnitude of the esti-
mate when the conditional instrument is
Exercise | Stress
or, respectively, –6.927 versus –.558 (Table 8.3).
Finally, the standard error for the 2SLS estimate of the
direct effect of stress on illness, or 5,980.901, is so large
compared with the observed standard deviation of the
illness variable (62.48; Table 4.3) that no meaningful
interpretation seems possible (i.e., it is out-of-bounds,
and thus invalid).
There are features of the Roth et al. (1989) data set
that handicap estimation with instrumental variables.
For instance, the sample correlation between exercise
and hardy is practically zero (r = –.03; Table 4.3), so
these variables would be weak instruments for one
another. Another example is that the conditional instru-
ment
Exercise | Stress
is essentially unrelated to stress (r = –.001) and, thus,
it is a weak instrument when estimating the coefficient
for the direct effect of stress on illness (the estimate was
invalid; see Table 8.3). Given these problems, estima-
tion with the 2SLS method is not pursued further in
this example.
TABLE 8.4. Unstandardized Ordinary Least Squares Estimates
of Disturbance Variances for a Recursive Path Model of Illness
Outcome s2
Fitness   338.56
Stress 1,122.25
Illness 3,903.75
Note. The parent(s) of fitness, stress, and illness are, respectively, exercise, hardy, and both
fitness and stress. The 1 – R2 values are the standardized estimates of disturbance variances.
Pt2Kline5E.indd 123
Local Estimation and Piecewise SEM 123
Disturbance Variances
The second column of Table 8.4 lists the observed
variances (s2) for the outcome variables fitness, stress,
and illness, and the third column lists the values of R2
where the predictor variables are the parents of each
outcome. Proportions of explained variation range
from .053 for stress to .177 for illness. The standardized
disturbance variances are calculated as 1 – R2, or the
proportion of variance not explained, for each outcome.
For example, R2 = .152 for fitness, 1 – .152 = .848, so
exercise does not explain .848 of the total variation in
fitness.3 Unstandardized disturbance variances are cal-
culated as (1 – R2) s2. For fitness, the unstandardized
disturbance variance is calculated as .848 (338.56), or
287.009. Exercise 4 asks you to interpret the results in
Table 8.4 for illness.
Parametric Model Diagram
with Estimates
Now we have unstandardized OLS estimates for all
direct effects and disturbance variances in the Roth
et al. (1989) path model. They are shown in their
proper places in Figure 8.1(a) depicted in full McAr-
dle–McDonald RAM symbolism. Estimates for direct
effects on illness control for both of its parents, stress
and illness (Table 8.3). Because the variables exercise
and hardy are exogenous, their variances and covari-
ances are also model parameters, but these values are
just the corresponding descriptive statistics (Table 4.3).
Because not all measured variables in Figure 8.1(a)
have the same raw score metric, values of unstandard-
3 Values of R 2 adjusted for shrinkage could be substituted for
unadjusted R2 in these calculations.
Unstandardized
R2 1 – R2 estimate
.152 .848   287.099
.053 .947 1,062.771
.177 .823 3,212.786
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 124 Specification, Estimation, and Testing

(a) Unstandardized estimates

287.099
4,422.250 DF 3,212.786
1

.108
Exercise Fitness DI
−.849 1

−75.810 1,440.000 Illness

−.203 .574
Hardy Stress
1,062.771
1
DS

(b) Standardized estimates

.848
1.000 DF .823

.390
Exercise Fitness DI
−.250

−.030 1.000 Illness

−.230 .308
Hardy Stress
.947

DS

FIGURE 8.1. A recursive path model of illness with ordinary least squares estimates. Results for illness are based on both
fitness and stress as parents.

ized path coefficients, such as for direct effects on ill-
ness from fitness (–.849) and stress (.574), cannot be
directly compared. This is not a problem for the stan-
dardized coefficients, which are presented in Figure
8.1(b). For example, the standardized direct effect of
fitness on illness is –.250, which says that for every
increase in fitness of 1 standard deviation, the level of
illness is expected to decline by .25 standard deviations
while controlling for stress. The standardized direct
effect of stress on illness is .308, so the level of illness
is predicted to increase by about .30 standard devia-
tions for every increase in stress of 1 standard deviation
while controlling for fitness. Because both results just
mentioned are expressed in a common metric (standard
deviation units), they can be directly compared: The
absolute magnitude of the standardized direct effect of
stress on illness exceeds that of fitness by about 23%
(.308/.250 = 1.23). Exercise 5 asks you to interpret the
standardized direct effects of exercise and hardy on
their respective outcomes.
Figure 8.1(a) for the unstandardized estimates does
not include regression intercepts, or values of predicted
scores when scores on all predictors equal zero, for fit-
ness, stress, and illness, the outcome variables. (All
intercepts are zero in the standardized solution.) Inter-
cepts are usually reported in output from regression
computer procedures—see the output files for analy-
sis 3a for this example (Table 8.1)—and their values
could be reported for each outcome along with those
for unstandardized regression coefficients. In contrast,

Pt2Kline5E.indd 124 3/22/2023 3:44:07 PM


some SEM computer tools do not generate or print
intercepts unless specifically instructed to do so, but
we will consider this issue in the next chapter.
Indirect Effects
The fact that indirect effects do not automatically war-
rant interpretation as “mediation” in cross-sectional
designs with no temporal precedence or a clear con-
ceptual time-ordering of cause, mediator, and outcome
was discussed in Topic Boxes 6.1 and 7.1. For histori-
cal completeness, the four steps by Baron and Kenny
(1986) for testing mediation are described in Topic Box
8.1. Note that simply following the four steps does not
by itself “prove” mediation. That is, analysis is insuf-
ficient to establish mediation without strong theory.
The direct effects of exercise and hardy on illness
in the Roth et al. (1989) path model are both fixed to
zero. Each presumed causal variable just mentioned
has a single indirect effect on illness, exercise through
fitness, and hardy through stress (Figure 8.1). Both of
these indirect effects are also total effects, so they can
be estimated in two different ways: (1) as products of
coefficients from the direct effects that comprise each
part of the whole indirect pathway, and (2) through
covariate adjustment. Both types of estimates just men-
tioned are described next.
The second column of Table 8.5 gives the values of
the product estimators for both indirect effects in the
Roth et al. (1989) path model. The unstandardized
estimate for the effect of exercise on illness through
fitness is –.092, which equals the product of the two
unstandardized coefficients for the two direct effects
that make up the indirect pathway, or .108 (–.849) (see
Figure 8.1(a)). Note that the second term of the product
for the effect of fitness on illness, –.849, controls for
stress, the other parent of illness. In words, the unstan-
dardized estimate for the indirect effect means that
.092 is the expected decrease in illness in its raw score
metric while holding exercise constant and increas-
ing fitness to whatever value it would attain under a
one-point increase in the raw score metric of exercise
(Pearl, 2009, pp. 355–358). This definition is actually
counterfactual because it expresses what could happen
(a decrease in illness), if a previous condition had been
different (increasing fitness to the level it would be after
an increase in exercise).
The standardized product estimator for the indirect
effect of exercise on illness through fitness is –.099
(Table 8.5). It is calculated as .390 (–.250), which is the
Pt2Kline5E.indd 125
Local Estimation and Piecewise SEM 125
product of the standardized coefficients for the direct
effects that compose the indirect pathway (Figure
8.1(b)). Thus, illness is predicted to decrease by .099
standard deviations while keeping exercise constant
and increasing fitness to the level it would be under an
increase in exercise of a full standard deviation. Exer-
cise 6 asks you to reproduce the calculations for product
estimators of the unstandardized and standardized indi-
rect effect of hardy on illness through stress reported in
Table 8.5 and interpret both path coefficients. Note that
indirect effects in the table are based on the direct effect
of fitness on illness controlling for stress or on the direct
effect of stress on illness controlling for fitness. There
are other potential product estimators for direct effects
of fitness and stress on illness that control for different
variables—see the OLS estimates in Table 8.3. Thus,
multiple product estimators for each indirect effect
through fitness and stress are available in this example.
Because product estimators of indirect effects have
complex distributions over random samples, it can be
challenging to estimate their standard errors. The best-
known example of a method amenable to hand calcula-
tion for unstandardized indirect effects that involve just
three variables is the Sobel approximate standard
error (Sobel, 1982). Suppose that a is the unstandard-
ized coefficient for the direct effect X → W and that
SEa is its standard error. Let b and SEb, respectively,
stand for the same things for the direct effect W → Y.
The product ab estimates the unstandardized indirect
effect of X on Y through W, and its standard error is
approximated as
=
SE ab b 2 SE a2 + a 2 SE b2 (8.2)
Values of the Sobel standard errors for both unstan-
dardized indirect effects in the Roth et al. (1989) path
model are reported in Table 8.5. Exercise 7 asks you
to reproduce the calculations for the standard error of
the unstandardized indirect effect of exercise on illness
through fitness.
In large samples, the ratio z = ab/SEab is the Sobel
test for the unstandardized indirect effect. A web page
by K. Preacher automatically calculates the Sobel test.4
The same calculator also gives results for the Aroian
test and the Goodman test, each of which is based
on somewhat different approximations of the standard
error compared with the Sobel test. Specifically, the
value of the Sobel standard error is smaller than the
4 http://www.quantpsy.org/sobel/sobel.htm
3/22/2023 3:44:07 PM
 126 Specification, Estimation, and Testing

TOPIC BOX 8.1

Mediation: The Four Steps and Assumptions

Baron and Kenny (1986) described the application of multiple regression over four steps to estimate
indirect effects among continuous variables. The steps were originally phrased in terms of statistical signifi-
cance, but that language was later changed to refer to zero versus nonzero coefficients. This is because
coefficients that are trivially small can be significant in large samples while very large coefficients can fail
to be significant in small samples (Kenny, 2021). This means that statistical significance is not a decision
criterion when estimating indirect effects (or any other kinds of effects). The four steps listed next refer to
Figure 8.2, where X, M, and Y designate, respectively, the hypothesized cause, mediator, and outcome,
and where a, b, c′, and c represent coefficients for direct effects between these variables:

1. The cause affects the outcome ignoring the mediator, that is, coefficient c in Figure 8.2(a) is not
zero.
2. The cause affects the mediator, that is, coefficient a in Figure 8.2(b) is not zero.
3. The mediator affects the outcome controlling for the cause, that is, coefficient b in Figure 8.2(a) is
not zero.
4. To claim that the mediator is completely responsible for the relation between cause and outcome,
coefficient c′ should be zero.

In Figure 8.2(b), the product ab estimates the indirect effect of X on Y through M. The quantity ab + c′ esti-
mates the total effect of X on Y, or the sum of the direct and indirect effects of X. It also equals coefficient
c in Figure 8.2(a) where X is the sole cause of Y. For continuous variables,

c – c′ = ab (8.3)

That is, the difference between the total effect of X in Figure 8.2(a) ignoring M and the direct effect of X in
Figure 8.2(b) controlling for M equals the product estimator for the indirect effect. Equation 8.3 does not
hold when Y is a binary outcome variable analyzed using logistic regression or probit regression. This is
(continued)

(a) No indirect effect (b) Full model

a
X X M

c c′ b

Y Y

FIGURE 8.2. Models for putative cause, mediator, and outcome variables, respectively, X, M, and Y. Partial model
with no indirect effect (a). Full model with direct and indirect effects (b).

Pt2Kline5E.indd 126 3/22/2023 3:44:07 PM

 Local Estimation and Piecewise SEM 127

because the variance of the outcome variable is not fixed across the models in Figures 8.2(a) and 8.2(b)
analyzed in logistic or probit regression. In contrast, the scale in standard regression analyses for continu-
ous outcomes is constant over equations—­see MacKinnon (2008, chap. 11) for more information and
examples.
The requirement in Step 1 just listed that coefficient c should not be zero is problematic because it
does not allow for inconsistent mediation—also called competitive mediation—where the signs
of ab and c′ in Figure 8.2(b) are different. In this case, the total effect c in Figure 8.2(a) could be zero even
though the size of the product estimator ab is appreciable. Suppose that

a = –.50, b = .30, and c′ = .15

for Figure 8.2(b). The indirect effect of X on Y through M is ab = –.50(.30) = –.15, which exactly cancels
out the direct effect of X on Y, or .15, when the total effect is computed, or

c = ab + c′ = –.15 + .15 = 0

The situation where the coefficients for the two constituent direct effects of an indirect effect for three vari-
ables (e.g., a and b in Figure 8.2(b) have the same sign is called consistent mediation or comple‑
mentary mediation (Zhao et al., 2010).
James and Brett (1984) argued that Step 3 just listed should be modified by not controlling for the
causal variable X in Figure 8.2(b) when estimating coefficient b for the direct effect of the mediator, if the
hypothesis involves complete mediation. This means that the cause is unrelated to the outcome when
the mediator is held constant. If so, then including the cause adds nothing to the prediction of the outcome
over what is already explained by the mediator (i.e., c′ = 0). Step 4 refers to the expectation for complete
mediation. In contrast, partial mediation is indicated when c′ ≠ 0; that is, the mediator is not solely
responsible for the observed association between cause and outcome. Because complete mediation is not
always expected, though, there may be little harm in routinely controlling for the cause in Step 3 (Tate,
2015).
In consistent mediation, controlling for the mediator weakens the association between the cause and
outcome variables, or c′ < c in absolute value for Figure 8.2. Suppression can be described as special
cases of inconsistent mediation where controlling for the mediator strengthens the association between
cause and outcome, or c′ > c in absolute value. That is, the relation between cause and outcome is
strengthened by the mediator’s omission. In general, suppression is indicated when the indirect effect and
the total effect have opposite signs (Rucker et. al., 2011). Another indication of suppression is when the
magnitudes of the direct and indirect effects exceed that of the total effect (Lachowicz et al., 2018)—see
MacKinnon et al. (2000) and Zhao et al. (2010) for more information.
Here is an example of suppression in an actual mediation study of demoralization in breast cancer
patients after primary therapy (Peng et al., 2021): The variables are X = stress, M = demoralization, Y =
psychological well-being estimated as common factors and

a = .48, b = –.85, and c′ = .37

The indirect effect is ab = .48(–.85) = –.41, the total effect is –.41 + .37 = –.04, which is also the model-­
implied correlation between X and Y. Thus, the relation between stress and well-being increases from –.04

(continued)

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 128 Specification, Estimation, and Testing

ignoring demoralization to .37 after controlling for it. Without including demoralization in the analysis, a
researcher could falsely conclude that stress and well-being are basically unrelated among these patients.
In too many mediation studies, researchers have uncritically followed the four-step method while
applying statistical significance as basically the sole criterion for interpretation. The “logic” works like this:
If the product estimator ab is “significant,” then variable M mediates at least part of cause X on outcome
Y. But without also addressing assumptions, effect size, research design, and theory, the conclusion just
stated is unwarranted; Zhao et al. (2010) described additional myths in mediation analysis. New develop-
ments in mediation analysis, outlined in Chapter 20, are making the four-step method ever more obsolete.

Aroian standard error but larger than the Goodman
standard error (e.g., MacKinnon et al., 2002, p. 85).
Thus, it can happen that the same indirect effect is “sig-
nificant” in the Goodman test but “not significant” in
the Sobel test or in the Aorian test. It can be difficult to
know which outcome is correct in this case because all
results are approximate. Thus, p values from the Sobel
and related tests should not be overinterpreted (i.e.,
avoid dichotomania).
The Sobel test assumes normality, but distributions
of product estimators are not generally normal; instead,
such distributions are often asymmetrical with high
kurtosis (MacKinnon et al., 2002). The test requires
large samples, and p values in small samples can be
very inaccurate. The test is restricted to unstandard-
ized indirect effects composed of just three variables.
An alternative method is nonparametric bootstrapping,
which does not assume normality. Nonparametric boot-
strapping can be applied to direct or indirect effects,
and indirect effects can be composed of ≥ 3 variables.
The method generates a bootstrapped confidence inter-
val for a particular effect. If the value of zero is not
included within the bounds of a bootstrapped 95% con-
fidence interval, then the corresponding effect could be
considered as “significant” at the .05 level for a non-
directional test. But if the confidence interval includes
zero, then the effect could be considered as “not sig-
nificant.”
Of course, there is no requirement to interpret a con-
fidence interval as a significance test. This is because
from the perspective of interval estimation, all values
within a confidence interval are considered as basically
equivalent within the limits of sampling error at a par-
ticular level of confidence (i.e., 1 – a). For example, if
zero falls within the bounds of a confidence, it has no
more special status than any numerical value contained
by the interval.
Preacher and Hayes (2004) described macros for
SPSS and SAS/STAT that generate bootstrapped con-
fidence intervals for unstandardized indirect effects

TABLE 8.5. Unstandardized and Standardized Estimates of Indirect Effects

in a Recursive Path Model of Illness
Effect Product estimator Estimated as total effect Adjustment set
Exercise → Fitness → Illness –.092a (.021) –.099 –.080 (.048) –.085 Hardy
–.059 (.046) –.063 Stress

Hardy → Stress → Illness –.116b (.031) –.071 –.267 (.084) –.163 Exercise
–.231 (.081) –.140 Fitness

Note. The estimator is ordinary least squares for all results. Adjustment set is minimally sufficient when estimating each
indirect effect as a total effect. Standard errors for product estimators are Sobel standard errors. Estimates are reported
as unstandardized (standard error) standardized.
aBootstrapped 95% confidence interval is [–.131, –.053].

bBootstrapped 95% confidence interval is [–.195, –.065].

Pt2Kline5E.indd 128 3/22/2023 3:44:08 PM


that involve just three variables. Preacher and Hayes
(2008) described revised SPSS and SAS/STAT mac-
ros and also syntax for Mplus and LISREL that extend
nonparametric bootstrapping methods to models with
multiple intervening variables or indirect pathways
composed of ≥ 3 variables. Hayes (2022) described
PROCESS, a macro for R, SPSS, and SAS/STAT for
analyzing a wide range of models with indirect effects
based on nonparametric bootstrapping. There are also
R packages that can generate bootstrapped confidence
intervals for direct or indirect effects in path models.
Examples include MBESS (Kelley, 2022), and bmem
(Zhang & Wang, 2022), which also has extensive capa-
bilities for handling missing data in mediation studies
(Zhang & Wang, 2013).
Confidence intervals or significance tests based on
nonparametric bootstrapping are not magic. For exam-
ple, bootstrapped estimates can be severely biased in
small samples, especially if sample distributions do not
reflect population distributions. There are various cor-
rections for small sample bias (Dwivedi et al., 2017),
but whether corrected estimates in a particular analysis
are trustworthy is generally unknown. Also, values of
the lower and upper bounds for a bootstrapped con-
fidence interval are potentially not unique unless the
researcher specifies a seed, or the initial value of the
random number generator used by the computer to
select cases. Suppose for a particular seed that the value
zero falls just inside the bounds of a 95% bootstrapped
confidence interval, so the corresponding effect is “not
significant” at the .05 level. The analysis is rerun except
for a different seed, and the value zero now falls just
outside the bounds of the second confidence interval.
Now the same effect is “significant,” again at the .05
level. This “disagreement” is not surprising because
statistical results based on simulated random sampling
are typically indeterminant (i.e., not unique).
Presented in the third and fourth columns of Table
8.5 are results for the indirect effects of exercise and
hardy on illness estimated as total causal effects through
covariate adjustment (see also Table 6.5). For example,
two different minimally sufficient sets identify the total
effect of exercise on illness. The unstandardized and
standardized estimators with hardy as the covariate
are, respectively, –.080 and –.085, and the correspond-
ing estimators derived with stress as the covariate are,
respectively, –.059 and –.063. Results across the three
different estimators (including the product estimators)
of the same indirect effect are generally similar: The
Pt2Kline5E.indd 129
Local Estimation and Piecewise SEM 129
unstandardized coefficients for the indirect effect of
exercise on illness range from –.092 to –.059, and the
standardized coefficients range from –.099 to –.063
(see Table). Exercise 8 asks you to verify that outcomes
of significance testing are not consistent over different
estimators for the same indirect effect.
For analysis 4 in Table 8.1, I used the bmem package
to generate bootstrapped 95% confidence intervals for
estimates of all model parameters, but next we consider
only results for the indirect effects. An advantage of
bmem in this analysis is that it allowed the specification
that direct effects of both exercise and hardy on illness
are zero; that is, effects of these causal variables are
solely indirect—see Figure 8.1. The method specified
was the bias-corrected bootstrap, which adjusts for
possible asymmetry in the empirical sampling distri-
bution by determining the proportion of bootstrapped
estimates that fall below the observed result (Efron,
1987). The default total of 1,000 generated samples
was not changed in these analyses. The path model was
specified for analysis in bmem using syntax from the
sem package (Fox et al., 2022).
The bootstrapped estimate of the standard error for
indirect effect of exercise on illness through fitness is
.020, or very similar to the Sobel standard error for this
effect (.021; see Table 8.5). The bootstrapped 95% con-
fidence interval is [–.131, –.053], and the corresponding
point estimate is –.092—see Table 8.5. For the indi-
rect effect of hardy on illness through stress, the boot-
strapped standard error of .032 is just slightly larger than
the Sobel standard error of .031 for this effect, and the
bootstrapped 95% confidence interval is [–.195, –.065]
for the point estimate of –.116. Neither bootstrapped
confidence interval includes zero, so both point esti-
mates are statistically significant at the .05 level, but
keep in mind the limitations of significance tests based
on nonparametric bootstrapping considered earlier.
Whether any effect, indirect or otherwise, is sig-
nificant or not significant at some arbitrary level of a
may be irrelevant, especially if the researcher empha-
sizes interval estimation and also considers whether
observed effect sizes are large and precise enough to
matter in a particular research area. In Chapter 20,
which covers enhanced mediation analysis, you will
learn about additional ways to describe the magnitudes
of indirect effects. The next chapter concerns global
estimation, and we will consider analysis results for the
same model and data as covered in this detailed exam-
ple of local estimation.
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 130 Specification, Estimation, and Testing
SUMMARY
In local estimation, the equation for just one outcome at
a time is analyzed using a suitable regression method.
It may be less susceptible to the propagation of speci-
fication error than global estimation. This means that
if the equation for a particular outcome is wrong, then
the error need not inevitably contaminate estimates for
other outcomes. Local estimation is also the last step
in the method of piecewise SEM. The initial steps are
to (1) express a path model as a DAG; (2) derive the
union basis set of conditional independencies implied
by graph; (3) test each of these hypothesized indepen-
dence relations against sample data; and (4) conduct
the multivariate d-separation test over all implied
conditional independencies. A failed (i.e., significant)
d-separation test signals covariance evidence against
the model, but effect size, or the empirical magnitudes
of departures from implied conditional independence,
should be considered, too. If either the original model
or a respecified version is retained, its parameters are
locally estimated. There may be multiple estimators for
some parameters, but their results should generally be
EXERCISES
1. Calculate C for the d-sep test based on the results in
Table 8.2.
2. Interpret the OLS result in Table 8.3 for the direct
effect of hardy on stress.
3. Interpret the OLS result in Table 8.3 for the direct
effect of stress on illness, controlling for fitness.
4. Interpret the results in Table 8.4 for illness.
5. Interpret the standardized coefficients in Figure
8.1(b) for the direct effects of exercise and hardy on
their respective outcomes.
Pt2Kline5E.indd 130
consistent; otherwise, a problem is indicated. Global
estimation is introduced in the next chapter.
LEARN MORE
Shipley (2000) and Lefcheck (2016) outline the logic of
piecewise SEM, and Zhao et al. (2010) classify types of
mediated effects and caution against blindly applying the
classical four-step method for testing mediation.
Lefcheck, J. S. (2016). piecewiseSEM: Piecewise structural
equation modelling in R for ecology, evolution, and
systematics. Methods in Ecology and Evolution, 7(5),
573–579.
Shipley, B. (2000). A new inferential test for path models
based on directed acyclic graphs. Structural Equation
Modeling, 7(2), 206–218.
Zhao, X., Lynch, J. G., Jr., & Chen, Q. (2010). Reconsider-
ing Baron and Kenny: Myths and truths about media-
tion analysis. Journal of Consumer Research, 37(2),
197–206.
6. Calculate and interpret the product estimators
for the unstandardized and standardized indirect
effects of hardy on illness through stress, given the
coefficients in Figure 8.1.
7. In Table 8.5, the Sobel approximate standard error
for the unstandardized indirect effect of exercise on
illness through fitness is .021. Calculate this result
based on the information in Table 8.3.
8. Verify in Table 8.5 that outcomes of significance
tests for estimators of the unstandardized indirect
effect of exercise on illness through fitness are not
consistent.
3/22/2023 3:44:09 PM
 9

Global Estimation and Mean Structures

Unlike local estimation, where equations for each outcome are separately analyzed, in global estimation—
also called simultaneous methods or full-information methods—all free model parameters are
estimated at once. Under conditions that may not hold in many actual studies, global estimation is generally
more efficient than local estimation. An efficient estimator has lower variation (sampling error) among
estimates of the same parameter than a less efficient estimator, when analyzing a correctly specified model
over random samples. This property of simultaneous methods is realized because they take greater advan-
tage of information in the data than local estimation. But this potential benefit may be more theoretical than
practical because researchers do not often analyze models known to be true over representative samples.
Thus, global estimation is not always a better choice than local estimation. There are various methods for
global estimation, but maximum likelihood (ML) estimation is probably the most widely used technique in
SEM. Types of ML methods for continuous outcomes are described. Also introduced in this chapter is the
analysis of path models with a mean structure, which implies that (1) both sample covariances and means
are analyzed, and (2) intercepts for endogenous variables and means for exogenous variables are also
estimated. A tutorial on full-information ML (i.e., FIML) methods for analyzing incomplete data sets as an
alternative to multiple imputation is also offered in this chapter.

SIMULTANEOUS METHODS contamination, but the more serious the specification

AND ERROR PROPAGATION
Because simultaneous methods estimate all free model
parameters at once, the overriding assumption is that
the model is correctly specified. This assumption is
critical due to propagation of specification error. Simul-
taneous methods tend to spread such errors throughout
the whole model, which means that a specification error
in one parameter can affect results for other parameters
elsewhere in the model. Suppose that a common cause
for a pair of outcomes is not included in the model
(unmeasured confounding bias), but their disturbances
are specified as independent. This specification error
may propagate to estimation of the direct effects or dis-
turbance variances for this pair of variables. It can be
difficult to predict the direction or magnitude of this
error, the more serious the resulting bias in other parts
of the model may be.
When misspecification occurs, local estimation may
outperform global estimation. This is because single-
equation methods may better isolate the effects of error
to misspecified parts of the model instead of allowing
them to spread. In a computer simulation study, Bollen
et al. (2007) found that bias in the ML method (global
estimation) and various 2SLS methods (local estima-
tion) was generally negligible when analyzing a cor-
rectly specified, three-factor measurement model. But
for misspecified models, there was greater bias in ML
results compared with those generated in 2SLS, even
in large samples. More recent simulation results also
support the relative advantage of single-equation esti-
mators based on instrumental variables over ML esti-

131

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 132 Specification, Estimation, and Testing
mation for misspecified measurement models (Nestler,
2013), but valid instruments are required; otherwise,
local estimation results can be worse than those from
global estimation (Jin et al., 2016).
Another requirement of global estimation is that the
whole model is identified, which means that the com-
puter can generate a unique estimate for each and every
free parameter; otherwise, the analysis may fail, such
as terminating with a warning or error message. Or the
solution may be improper. This is not generally a prob-
lem for recursive path models, which are identified, but
the requirement for model identification is more chal-
lenging for nonrecursive path models with causal loops
or for models where common factors are analyzed as
proxies for conceptual variables.
MAXIMUM LIKELIHOOD ESTIMATION
The ML method can be applied to a wide range of mod-
els from classical path models with observed variables
only to various types of latent variable models. The
term maximum likelihood describes the principle that
estimates of a parameter maximize the chance that the
data were drawn from a target population. For a model
with multiple free parameters, the whole set of ML esti-
mators maximizes the joint probability distribution of
the data; that is, the estimates make the sample data
most probable.
For continuous outcomes, the statistical criterion
minimized in ML estimation, or the fit function—also
called the fitting function—is related to the discrep-
ancy between sample covariances and those implied by
the model for the same variables. The final set of param-
eter estimates minimizes squared differences between
the respective elements of the two matrices just men-
tioned. The ML fit function is analogous to the least
squares criterion in standard regression analysis except
that the ML fit function (1) directly concerns variables,
not scores from individual cases (although data from
cases are analyzed); and (2) it is more complex because
there are multiple predictors and outcomes—some
observed, but others may be proxies for latent variables,
such as common factors—in structural equation mod-
els compared with simple regression models.
Simultaneous methods in SEM, including ML, gen-
erally assume the analysis of unstandardized variables;
that is, either a covariance matrix or a raw data file
where the scores are not standardized (i.e., converted
to normal deviates, z) is submitted. Otherwise, certain
Pt2Kline5E.indd 132
estimates, such as for standard errors, may be incor-
rect. You should also know that (1) equality constraints
on parameter estimates are generally imposed in the
unstandardized solution only; and (2) estimates con-
strained to equality in the unstandardized solution are
typically unequal in the standardized solution. Failure
to appreciate these points about equality constraints is
a common source of confusion in SEM analyses. There
are ways to constrain standardized estimates to be
equal, but special estimation methods for standardized
variables, described later in this chapter, are needed.
Parameters in the ML method are estimated itera-
tively in nonlinear optimization algorithms that mini-
mize the fit function. The mathematics of ML estima-
tion are complex, and it is beyond the scope of this sec-
tion to describe them in detail—see Enders (2010, chap.
3) for a gentle introduction or Mulaik (2009b, chap. 7)
for a more quantitative presentation. There are points
of contact between ML estimation and single-equation
OLS estimation. For example, estimates of unstandard-
ized path coefficients for recursive path models are
basically identical. The two methods may differ slightly
in their estimates of unstandardized disturbance vari-
ances for reasons explained in the next section.
Somewhat larger differences between OLS and ML
estimation can be observed in values of standardized
path coefficients or disturbance variances (i.e., 1 – R2),
especially for more “downstream” outcomes in the
model specified as caused by other endogenous vari-
ables (and perhaps also by exogenous variables). This
is because R2 is calculated in OLS regression as the
proportion of observed (sample) variance explained,
but the ML method in SEM computer tools generally
estimates R2 as the proportion of predicted variance
explained, given the model and its parameter estimates.
Comparison of predicted variances, covariances, or
correlations with their observed counterparts informs
the assessment of model–data correspondence.
Variance Estimates
Population variance (s2) is estimated in the ML method
as S2 = SS/N, where the numerator is the total sum of
squared deviations from the mean. In OLS estimation,
s2 is estimated as s2 = SS/df, where df = N – 1. In small
samples, S2 estimates s2 with negative bias. In large
samples, values of S2 and s2 are similar, and they are
asymptotic in very large samples. Variances calculated
as s2 in OLS estimation may not exactly equal those cal-
culated in ML estimation as S2 for the same variables.
3/22/2023 3:44:09 PM

Some computer tools for SEM, such as the lavaan
package for R (Rosseel et al., 2023), automatically
rescale sample variances in matrix summaries from
s2-units to S2-units through the conversion S2 = (df/N)
s2, unless otherwise instructed by the user. Check the
documentation of your computer tool to avoid potential
confusion about this issue.
Iterative Estimation
and Starting Values
Implementation of ML estimation is typically itera-
tive, which means that the computer derives an initial
approximate solution and then attempts to improve
these estimates through subsequent cycles of calcula-
tions. The computer therefore “auditions” somewhat
different values until it finds the set of parameter esti-
mates that is most likely to have generated the data.
“Improvement” means that the overall fit of the model
to the data gradually gets better. For most just-identified
models with no degrees of freedom (df M = 0), model fit
will eventually be perfect. For overidentified models
with df M > 0, the fit of the model may be imperfect, but
iterative estimation will continue until improvements in
fit fall below a predefined value. When this happens,
the estimation has converged.
The free Wnyx computer tool for SEM (von Oertzen
et al., 2015) uses a multi-agent estimation algorithm
(Pinter, 1996) as it attempts to fit the model to the data.
For example, after a converged solution is found and
displayed onscreen, the computer continues to refine
the estimates in the background. If better estimates
are found later, the user is notified. The algorithm also
alerts the user to multiple optima, or the existence
of multiple solutions that satisfy the same fit function
nearly to the same degree. This concept is analogous
to the fungible weights method in regression, which
generates alternative solutions that are just slightly less
optimal than the least squares solution (Waller, 2008).
In contrast, most SEM computer tools display just the
best solution regardless of whether other solutions are
nearly as good. If two solutions with quite different
parameter estimates generate about the same degree
of overall fit between model and data, then little confi-
dence may be warranted in either solution.
Iterative estimation may converge faster if the com-
puter is given reasonably accurate starting values, or
initial estimates of some parameters. If these initial
estimates are grossly inaccurate—for instance, the
starting value for a path coefficient that is positive when
Pt2Kline5E.indd 133
Global Estimation and Mean Structures 133
the actual effect is negative—then iterative estimation
may fail to converge, which means that a stable solution
has not been reached. Computer programs typically
issue a warning if iterative estimation fails. When such
failure occurs, whatever estimates were derived by the
computer may warrant little confidence.
Most SEM computer tools automatically generate
their own starting values, and some programs also fea-
ture options about how starting values are calculated.
For example, a starting values option in lavaan is a
special form of the 2SLS method for models with com-
mon factors (Bollen, 1996). A different option mimics
the default starting values in Mplus, which vary accord-
ing to the type of model analyzed (Muthén & Muthén,
1998–2017). Computer default starting values normally
work fine, but they do not always lead to converged
solutions. Fortunately, computer tools for SEM gener-
ally allow the user to specify starting values for free
model parameters—see Topic Box 9.1 for suggestions.
Another tactic is to increase the computer tool’s default
limit on the number of iterations to a higher value, such
as from 100 to 1,000. Allowing the computer more
“tries” may lead to a converged solution.
Information Matrix
and Standard Errors
Part of ML estimation involves generation of the Fisher
information matrix, also called just the information
matrix or Fisher matrix. It represents the amount of
information that observed variables carry in the estima-
tion of a set of unknown free parameters in the research-
er’s model. Intuitively, it measures the variability in the
curvature or “peakedness” of the log-likelihood func-
tion that is maximized in ML estimation. The greater
the variability in curvature around the point that corre-
sponds to the converged parameter estimates, the more
precise the solution (i.e., there is more information).
The inverse of the information matrix is the asymptotic
covariance matrix of the ML parameter estimates (Abt
& Welch, 1998), a concept explained next.
Although parameters in classical frequentist statisti-
cal methods (i.e., not Bayesian) are considered as fixed
values in the population, their estimates vary over ran-
dom samples. Thus, the square roots of the diagonal
elements in the inverted information matrix are param-
eter standard errors, and the off-diagonal elements are
covariances between pairs of parameter estimates.
Standardizing these covariances yields correlations,
and a problem is indicated if any of these absolute cor-
3/22/2023 3:44:09 PM
 134 Specification, Estimation, and Testing

TOPIC BOX 9.1

Suggestions for User‑Specified Starting Values

These recommendations are for path models with continuous outcomes. Remember that starting values are
generally specified for unstandardized variables:

1. Direct effects. Think first about expected standardized direct effects. Suppose that a researcher
predicts that variable Y will increase by .33 standard deviation, given a change of a full standard
deviation in variable X while controlling for all other causes. Then .30 is a reasonable guess for
the standardized coefficient, and the starting value for the unstandardized coefficient would be
.30 (SDY /SDX).
2. Disturbance variances. Now think about standardized effect sizes in terms of the proportion of
explained variance (i.e., R2). Suppose that a researcher expects that all direct causes of Y will
explain 15% of its variance (R2 = .15). This corresponds to a proportion of unexplained variance
of 1 – .15, or .85. Thus, the starting value for the unstandardized disturbance variance would be
.85 (sY2).
3. Disturbance covariances. The starting value for a disturbance covariance is the product of the
square roots of the disturbance variances from the two corresponding outcomes and the expected
Pearson correlation between their error terms. A positive correlation (r > 0) indicates that a com-
mon unmeasured cause affects both outcomes in the same directions, but a negative correlation
(r < 0) says just the opposite (one variable increases, the other decreases, given a change in the
omitted cause). Suppose that Y1 and Y2 are two endogenous variables and that D1 and D 2 are
their disturbances. Starting values for the variances of D1 and D 2 are, respectively, 9.0 and 16.0,
and their disturbance expected correlation is .40. Given these values, the starting value for the
unstandardized disturbance covariance would be .40 (9.0 × 16.0)1/2, or 4.80.

relations is close to 1.0. Such a result would indicate
extreme linear dependency for a pair of parameter esti-
mates that could be due to problems with the data, mis-
specification of the model in computer syntax such that
the target model is not actually analyzed, or an attempt
to analyze a model that is not really identified (e.g.,
Equations 3.1–3.2). Some empirical tests for identifica-
tion based on the information matrix are described later
in the book, but they are generally more useful when
analyzing nonrecursive path models with causal loops
or complex models with common factors as proxies for
latent variables. Basic kinds of information matrices
and computer defaults or options for selecting among
them are described in Appendix 9.A.
Inadmissible Solutions
and Heywood Cases
Although usually not a problem when analyzing recur-
sive path models, a converged solution may be inadmis-
sible in ML estimation or other simultaneous methods.
This problem is most evident by a parameter estimate
with an illogical value, such as a Heywood case, named
after the statistician H. B. Heywood. These cases include
negative variance estimates (e.g., an unstandardized
disturbance variance is –13.50) or estimated absolute
correlation > 1.0 (e.g., the correlation between a pair of
common factors is 1.08). Another example of a problem
occurs when the standard error is so large that no expla-
nation seems reasonable (e.g., Table 7.3, 2SLS estimator
for Stress → Illness). Causes of Heywood cases include
(Chen et al., 2001; Gagne & Hancock, 2006):
1. Model misspecification (crucial paths or variables
are omitted).
2. The model is not identified.
3. An error in computer syntax that specifies a differ-
ent model than the one the researcher intended to
analyze.

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4. The presence of outliers, violation of regression
assumptions (e.g., heteroscedasticity), or extreme
collinearity (e.g., sample correlations close to 1.0).
5. The phenomenon empirical underidentification
occurs when the data provide too little information
to estimate one or more parameters in the model
(Kenny, 1979). An example is extremely low or high
correlations. For example, if rXY = .98 for two con-
tinuous variables, then, practically speaking, they
are the same variable. This extreme bivariate col-
linearity reduces by one the effective number of
observations below the value generated by Rule 7.2,
which, in turn, decreases the effective value of df M,
perhaps to < 0.
6. A combination of small sample sizes and only two
indicators per factor in latent variable models.
7. Analysis of scores that are very imprecise (low reli-
ability) or invalid (the target construct is not mea-
sured).
8. Bad starting values.
An analogy may help to provide context for Hey-
wood cases: ML estimation (and related simultaneous
methods) is like a religious or political zealot in that
it so strongly believes the model’s specification that
it will do anything, no matter how crazy, to force the
model on the data. Some SEM computer tools do not
permit certain Heywood cases. For example, the com-
puter may impose a lower bound—an inequality con-
straint—which precludes variance estimates < 0. But
solutions where ≥ 1 estimates have been constrained
by the computer to prevent a Heywood case should not
be trusted. It is better to try to determine the source of
the problem instead of constraining an error variance to
be ≥ 0 and then rerunning the analysis.
Always carefully inspect the solution, unstandard-
ized and standardized, for any sign that it is inadmis-
sible. In written reports, comment on the admissibil-
ity of the solution and corrective actions taken (if any)
(Chapter 3). Computer tools for SEM generally issue
warning messages about Heywood cases. For example,
an option in the lavaan function “lavInspect( )”
instructs the computer to print an error message if any
error variances are < 0. For a latent variable model, an
error message would also be generated in lavaan if
the estimated covariance matrix for the latent variables
is nonpositive definite. But computer checks for admis-
sibility are not foolproof. This means that it is possible
for a solution to be inadmissible but no warning or
error message was issued. Thus, it is the researcher, not
Pt2Kline5E.indd 135
Global Estimation and Mean Structures 135
the computer, who provides the ultimate quality control
check for solution admissibility.
Scale Freeness
and Scale Invariance
The ML method is generally both scale free and scale
invariant. Scale free means that if a variable’s scale
is linearly transformed, a parameter estimated for the
transformed variable can be algebraically converted
back to the original metric. Scale invariant means
that the value of the fit function in a particular sample
remains the same regardless of the metrics of the origi-
nal variables (Kaplan, 2009). These properties gener-
ally assume the analysis of unstandardized variables.
Major forms of the ML method for continuous out-
comes are described next.
DEFAULT ML
The default estimation method in many, if not most,
computer tools for covariance-based SEM is a basic
form of ML estimation and is referred to here as
default ML. Either a raw data file or a matrix sum-
mary of the data, such as the sample covariance
matrix, can generally be submitted as the input data in
default ML estimation. Graham and Coffman (2012)
noted that an historical name for ML estimation that
required only summary statistics is maximum Wis-
hart likelihood (MWL), named after the statistician
John Wishart. Analysis of summary statistics was
computationally more efficient in that fewer computer
resources, such as memory or processing speed, were
required. This is in part because a single likelihood
function for the whole sample was analyzed in MWL
estimation.
But modern computers with fast processors and large
memory capacities can easily analyze raw data files in
full-information ML (FIML), which estimates a like-
lihood function for each individual case. These case-
wise likelihoods (1) are eventually summed to form the
overall likelihood for the whole sample, and (2) allow
for different number of variables or items for each case
(e.g., Graham & Coffman, 2012, p. 282). This means
that subsets of cases with different patterns of missing
data (including none; i.e., complete cases) are each rep-
resented with a unique likelihood function. This prop-
erty of FIML estimation for analyzing incomplete raw
data files is elaborated on in the next section, so we
assume complete data sets for now.
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 136 Specification, Estimation, and Testing

Default ML is a normal theory method that assumes
multivariate normality (Chapter 4). Variations on this
basic requirement—that all assume independence of
the exogenous variables and disturbances—are listed
next (Bollen, 1989, pp. 126–128):
1. If all observed variables, both exogenous and
endogenous, are continuous, then their joint prob-
ability distribution should be multinomial.
2. Exogenous variables are not always continuous.
Examples include categorical variables, such as
dummy codes, that represent group membership
and power or product terms of continuous exoge-
nous variables that represent curvilinear or interac-
tive effects (Appendix 7.A). Distributions for such
variables are nonnormal. But the consistency of
default ML estimation is preserved by assuming
conditional multivariate normality for the endog-
enous variables, or that their distributions are mul-
tinormal at every level of the exogenous variables.
3. Sometimes exogenous variables are specified as
fixed, which says that (a) their values are intention-
ally selected by the researcher from the population
of all possible levels of these variables, and (b) the
endogenous variables are randomly sampled at
each level of the exogenous variables (Cohen et al.,
2003). Another view is that their variances, covari-
ances, and means do not vary over samples (Bol-
len, 1989). This means there is no need to assume
a population distribution for fixed exogenous vari-
ables; thus, unconditional multivariate normal-
ity is assumed for the endogenous variables (i.e.,
irrespective of the exogenous variables). See Topic
Box 9.2 on the specification of measured exogenous
variables as fixed versus random.
Additional requirements of default ML (and other
variations described next) include large samples, inde-
pendent scores that are not standardized, normally
distributed errors, and independence of exogenous

TOPIC BOX 9.2

Specification of Measured Exogenous Variables as Fixed

Some SEM computer tools offer a fixed-X option, where “X” means “exogenous.” This option tells the
computer that the variances, covariances, and means of exogenous variables are not free parameters.
Instead, (1) their parameters in the model are fixed to their respective sample values and, thus, (2) they
have no standard errors. Suppose that dummy codes represent membership in ≥ 2 groups for a categorical
exogenous variable (e.g., Table 7.1, Figure 7.6). Group membership is determined without error (the assign-
ment mechanism is known), and base rates of cases in each group are not expected to vary appreciably
over samples. Here it would be reasonable to specify the dummy codes as fixed exogenous variables. But
a similar specification would be unrealistic for exogenous individual difference variables, such as age,
that are expected to vary over samples. It is also true that exogenous variables measured with error (i.e.,
rXX < 1.0) are random, not fixed, variables (Bollen, 1989).
You should know that testing hypotheses about exogenous variables generally requires specifying
their parameters as free, not fixed. Suppose that two exogenous variables are predicted to be unrelated
(i.e., their population covariance is hypothesized to equal zero). Thus, it is generally necessary to (1) spec-
ify their covariance as a free parameter and (2) explicitly constrain it to equal zero in model syntax or in
the model diagram for a graphical editor. These specifications permit the eventual direct comparison of the
constrained model just described with the unconstrained model where the covariance is freely estimated. If
the relative fit to the data of the constrained versus unconstrained models is similar, then the hypothesis that
the corresponding exogenous variables are independent is supported. But if the two exogenous variables
are specified as fixed, then the computer “accepts” their observed covariance—­whatever the value, zero
or otherwise—­as the parameter value.

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variables and disturbances. When a summary matrix
is analyzed instead of a raw data file, it is assumed that
the original distributions for scores on continuous out-
comes are multivariate normal. An extra assumption
when a path model is analyzed is that the exogenous
variables are measured without error (i.e., rXX = 1.0).
This requirement can be relaxed if the researcher
applies a single-indicator respecification that controls
for measurement error. This method requires the analy-
sis of a model with common factors (Chapter 15).
ANALYZING NONNORMAL DATA
The possible implications of analyzing continuous but
severely nonnormal outcomes with default ML are
summarized next (Finney & DiStefano, 2013; Savalei,
2014):
1. Parameter estimates are generally robust against
nonnormality.
2. Values of standard errors for parameter estimates
can be very distorted by severe nonnormality, per-
haps by as much as 25–50%, given the model and
data. Specifically, leptokurtic distributions with
heavier tails and a higher peak relative to the nor-
mal curve (positive kurtosis) tend to attenuate stan-
dard errors, which increases Type I errors (H0 is
rejected too often).
3. In contrast, platykurtic distributions with lighter
tails and lower peaks relative to normal curve (nega-
tive kurtosis) tend to inflate standard errors, which
increases Type II error (H0 is not rejected often
enough). Of the two directions for distortion, it is
probably attenuation (standard errors are too small)
that occurs most of time, given severe nonnormality.
4. Values of model test statistics under ML estimation
that concern the discrepancy between sample and
model-implied covariances tend to be biased under
conditions of moderate nonnormality, and bias gets
worse with increasing nonnormality. Specifically,
leptokurtic distributions tend to inflate model test
statistics, which increases Type I errors, so cor-
rectly specified models are rejected too often.
5. Values of model test statistics are attenuated by
platykurtic distributions, which increases Type II
errors such that incorrect models are retained too
often. Inflation of model test statistics probably
happens more often than attenuation. These distort-
Pt2Kline5E.indd 137
Global Estimation and Mean Structures 137
ing effects of nonnormality on model statistics may
be even greater in smaller samples, such as N < 200.
Given severe nonnormality, one option is to nor-
malize distributions for endogenous variables through
nonlinear transformations and then analyze the trans-
formed data with default ML (Chapter 4). A potential
drawback is that variables for which normal distribu-
tions are not expected may be fundamentally altered
after transformation; that is, the target outcome is not
actually studied. Another drawback is that meaning-
ful original raw score metrics, such as survival time in
years or treatment cost in dollars, are lost after trans-
formation. The loss of original meaningful metrics can
complicate the interpretation of the results for trans-
formed variables.
A second option is to use default ML to generate
the parameter estimates, but then apply nonparametric
bootstrapping to estimate their standard errors. Non-
parametric bootstrapping assumes only that the shapes
of population and sample distributions are the same,
not that they are all normal in shape. In this approach,
standard errors are estimated in empirical sampling
distributions for parameter estimates over generated
samples randomly selected with replacement from the
original data file. Estimating standard errors is the
only role for bootstrapping in this method; otherwise,
the estimates are the same as those using default ML
but with no bootstrapping.
Nevitt and Hancock (2001) found in computer simu-
lations that bootstrapped estimates were generally less
biased than those from default ML estimation under
conditions of nonnormality and large sample sizes. But
in small samples, bias and variability in bootstrapped
estimates became highly inflated, and many bootstrap-
generated samples had nonpositive definite data matri-
ces (i.e., the analysis failed). Nevitt and Hancock (2001)
noted that “use of the bootstrap with samples of N =
100 is unwise” (p. 374). These problems are consistent
with the caution that bootstrapped estimates in small
samples can be very biased.
There is a special method for generating boot-
strapped estimates for model test statistics and corre-
sponding indexes of global model fit called the Bol-
len–Stine bootstrap (Bollen & Stine, 1993; see also
Enders, 2010). In contrast to “naïve” nonparametric
bootstrapping that randomly samples using replace-
ment from a raw data file, a transformed sample is
generated from the original data in the Bollen–Stine
bootstrap, and then cases from the transformed sample
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 138 Specification, Estimation, and Testing
are randomly sampled with replacement. This process
corrects for departures in empirical distributions from
those expected under the null hypothesis, which is the
reference distribution for model test statistics (Hancock
& Liu, 2012).
In the Bollen–Stine bootstrap, the original data are
transformed such that the covariance matrix in the
transformed sample exactly matches that predicted by
the model. This means that the model would perfectly
fit the data in the transformed sample. The bootstrapped
p value is the proportion of the bootstrapped model test
statistics that exceed the empirical value for the same
statistic in the original data. Enders (2005) described a
modified Bollen–Stine bootstrap for incomplete data
sets, which is also available in some commercial com-
puter tools for SEM, such as Amos (Arbuckle, 2021),
and is also an option in R packages for SEM, such as
bmem, semTools, and lavaan, among others.
ROBUST ML
A third option for analyzing continuous outcomes
with severely nonnormal distributions is robust ML.
The basic parameter estimates are the same as those
generated in default ML, but no transformations are
involved. This means that variables are analyzed in
their original, unstandardized metrics. If any of these
metrics are meaningful, then they are preserved in the
robust ML method. Standard errors and model test sta-
tistics are not bootstrapped in robust ML, which could
make the method a better choice than default ML with
bootstrapping in samples that are not large.
Robust ML is a corrected normal theory method
that estimates the degree of multivariate kurtosis in the
raw data and then calculates robust standard errors and
scaled model test statistics. A robust standard error
estimates what the standard error for the corresponding
point estimate would be if the distributions were nor-
mal. In the statistical literature, such estimates may be
referred to as sandwich standard errors or sandwich
estimators, where the term “sandwich” refers to the
triple matrix product where the “meat” (inner), or the
corrections for nonnormality, are pre- and post-multi-
plied by the “bread” (outer), or the naïve (i.e., default
ML) asymptotic covariance matrix of the parameter
estimates. There are various methods for generating
sandwich standard errors and corrected model test sta-
tistics, not just for different estimators, but also for the
same estimator, given different assumptions (Savalei,
2014). Robust standard errors are generally larger than
Pt2Kline5E.indd 138
their unadjusted counterparts for the same parameter
estimate, but not in all cases such as when distributions
are platykurtic.
A scaled (corrected) model test statistic is a global
significance test of the fit of the whole model to the data
matrix that is adjusted for nonnormality. In robust ML,
the uncorrected statistic is the model chi-square from
default ML estimation where the degrees of freedom
equal those for the researcher’s model (df M). Sampling
distributions for the default ML chi-square assume
multivariate normality, but this assumption is implau-
sible in the presence of severe nonnormality. In robust
ML, the degree of multivariate kurtosis in the raw data
is estimated, Next, the computer applies this estimate
to adjust the default ML chi-square for nonnormality.
Scaled model chi-squares are generally smaller than
their uncorrected counterparts (leptokurtic distribu-
tions), but not always (platykurtic distributions). Model
chi-square statistics in both default ML and robust ML
are described in more detail in the next chapter.
Asparouhov and Muthén (2016) described skew-
SEM, an ML approach to estimating nonnormal skewed
distributions that takes even greater account of informa-
tion in the data compared with robust ML. It fits entire
distributions—means, covariances, skew, kurtosis, and
higher-level moments—to a family of parametric distri-
butions known as skew t distributions, which include
the normal, skew normal, and t distributions as special
cases. The skew normal distribution is a generalization
of the normal curve with an error function that allows
for nonzero skew. Models specified in this approach
include skew parameters for observed or latent continu-
ous variables in multivariate skew t distributions. Next,
robust standard errors are estimated with sandwich esti-
mators. Although based on more distributional informa-
tion compared with standard robust ML, estimation in
skew-SEM is more complex, requires large samples,
and can fail under conditions where certain inequal-
ity constraints do not hold (Asparouhov & Muthén,
2016, pp. 7–8). The estimator is available in Mplus as
an “experimental” method, but is not yet widely used in
practice (Muthén & Muthén, 1998–2017).
FIML FOR INCOMPLETE DATA
VERSUS MULTIPLE IMPUTATION
Bentler (2010) referred to variations of the FIML esti-
mators for incomplete data as casewise ML. These
estimators work by (1) partitioning the cases in a raw
data file into subsets, each with the same pattern of
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missing data, including none (complete cases). Next,
(2) relevant statistical information, such as means and
covariances, is extracted from each subset, thus retain-
ing all cases in the analysis, whether they are complete
or incomplete. Finally, (3) parameters are estimated
after combining all available information over the sub-
sets of cases. Thus, model parameters are estimated
directly from the available data with neither deletion
of incomplete cases nor imputation of missing values.
Thus, incomplete cases are not deleted in the method
and neither are missing observations imputed with esti-
mated values; that is, the original raw data file is not
altered.
Classical (i.e., obsolete) methods for dealing with
incomplete data, such as case deletion (listwise, pair-
wise) or single imputation, assume that the data loss
mechanism is missing completely at random (MCAR)
(Chapter 4). But casewise ML methods in most SEM
computer tools rely on the less restrictive assumption
that data are missing at random (MAR). Evidence from
computer simulation studies indicates that casewise
ML results are usually more accurate compared those
in classical techniques when the missing data pattern
is MAR instead of MCAR (Enders & Bandalos, 2001;
Peters & Enders, 2002).
Early implementations of casewise ML for incom-
plete data in SEM computer tools, such as Amos 4
(Arbuckle & Wothke, 1999) and LISREL 8.5 (Jöreskog
& Sörbom, 1996), did not support the automatic inclu-
sion of auxiliary variables in the analysis. Recall that
auxiliary variables are not part of the researcher’s
model, but they are believed to appreciably covary
with incomplete variables or with causes of data loss.
Inclusion of auxiliary variables supports, but does not
confirm, the assumption that the data loss mechanism
is MAR. Accuracy of estimates in multiple imputation
can be improved through the inclusion of auxiliary
variables, even if those variables have missing data, too
(Chapter 4). The MAR assumption may be plausible
only if auxiliary variables are included in the analysis;
otherwise, casewise ML estimates can be quite biased
(Collins et al., 2001).
Graham (2003) described two different techniques
for including auxiliary variables in structural equa-
tion models through programming (i.e., syntax about
the model and variables). In the extra dependent vari-
able (DV) method, auxiliary variables are specified as
additional outcomes such that (1) they are affected by
all exogenous variables and mediators (i.e., all predic-
tors) in the model; (2) the disturbance of any auxiliary
variable is specified as correlated with the disturbance
Pt2Kline5E.indd 139
Global Estimation and Mean Structures 139
for any endogenous variable in the model; and (3) dis-
turbances for multiple auxiliary variables are specified
with one another (e.g., Graham, 2003, p. 83). The extra
DV method is well-suited for classical path models.
The saturated correlates method, which may be pre-
ferred for latent variable models, feature the specifi-
cations that each auxiliary variable covaries (1) with
all other auxiliary variables, (2) with any exogenous
observed variables, and (3) with the disturbances for
all endogenous observed variables (e.g., Graham, 2003,
p. 84)—see Graham and Coffman (2012; pp. 290–292)
for examples.
Under conditions of an MAR data loss pattern and
when auxiliary variables are included in the analysis,
estimates from casewise ML are both generally opti-
mal and asymptotically equivalent to estimates from
multiple imputation when the number of imputation is
large (Lang & Little, 2018). For example, Savalei and
Rhemtulla (2012) reported that casewise ML estimates
of the fraction of missing information, or FMI (Chapter
4), were superior to those in multiple imputation when
the number of imputations was small (e.g., ≤ 10), but
the two methods generated similar results with more
imputations. Savalei and Rhemtulla (2012) described
a method to calculate the FMI when missing data are
analyzed in the casewise ML method. In lavaan, an
option in the function “summary( )” prints the value
of the FMI in program output.
Implementations of casewise ML in some contempo-
rary SEM computer tools support the automatic inclu-
sion of auxiliary variables. For example, the function
“auxiliary( )” in semTools (Jorgensen et al., 2022)
automatically includes auxiliary variables in the analy-
sis using the saturated correlates method for models
analyzed in lavaan. Its use requires the specification
that the variances and covariances for all exogenous
variables are free parameters. Both multiple imputa-
tion and casewise ML with the automatic inclusion of
auxiliary variables are available in Mplus, too.
Researchers already very familiar with multiple
imputation may prefer it over casewise ML. After all,
the two methods tend to yield similar results in large
samples for the same model and data when auxiliary
variables are included. Otherwise, there are some rela-
tive advantages of casewise ML over multiple imputa-
tion (Allison, 2012):
1. Because multiple imputation is based on simulated
random sampling, there is no single, definitive set
of results. Outcomes in bootstrapped significance
tests and bootstrapped estimates of standard errors
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 140 Specification, Estimation, and Testing
have the same essential indeterminacy: The results
can change each time the method is applied to the
same model and data. In contrast, there is a single,
unique set of results in casewise ML.
2. For small numbers of imputations (e.g., 3–5), case-
wise ML is actually more efficient than multiple
imputation, but the difference may not be striking,
and any efficiency advantage of casewise ML is
reduced by specifying more imputations.
3. There are more potential decisions to make in
multiple imputation compared with casewise ML.
Examples include the particular algorithm for sim-
ulating draws from a population distribution, the
particular form of that distribution, the number of
imputed data sets, the number of iterations between
each imputed data set, and the difference between
the imputation model and the analysis model
(Appendix 4.A).
In contrast to the MAR assumption that observed
variables predict missingness for incomplete variables,
it is latent variables that predict missingness in the
missing not at random (MNAR) pattern (i.e., the data
loss mechanism is nonignorable; Chapter 4). There are
versions of casewise ML methods for MNAR data,
but they are not yet widely available in SEM computer
tools, except for Mplus, at the time of the writing of this
chapter. These methods are also mathematically com-
plex, and technical problems in the analysis can prevent
their successful application in a particular sample—see
Appendix 9.B for more information.
ALTERNATIVE ESTIMATORS
FOR CONTINUOUS OUTCOMES
Variations of ML estimation work fine in many applica-
tions of SEM with continuous outcomes, but you should
be aware of other methods. The alternative estimators
described next are generally simultaneous, iterative,
full information, and available in many SEM computer
tools.
Other Normal Theory Methods
The unweighted least squares (ULS) method is actu-
ally a form of OLS estimation that minimizes the sum
of the squared differences between sample and pre-
dicted covariances. It can generate unbiased estimates
Pt2Kline5E.indd 140
across random samples, but it is not as efficient as the
ML method (Kaplan, 2009). A drawback of the ULS
estimator is the requirement that variables have the
same scale (metric). This is because the method is nei-
ther scale free nor scale invariant. A potential advan-
tage is that, unlike ML, the ULS method does not
require a positive definite covariance matrix. It is also
quite robust concerning starting values. Thus, ULS
estimation could be used to generate user-specified ini-
tial estimates for a second analysis of the same model
and data but with the ML method.
Generalized least squares (GLS) is a member of
a larger family of methods known as fully weighted
least squares (WLS) estimation, and some members
of this family can be used for continuous outcomes
with severely nonnormal distributions or categori-
cal outcomes. In contrast to ULS, the GLS estimator
is both scale free and scale invariant, and under the
assumption of multivariate normality, the ML and GLS
methods yield equivalent results in very large samples.
In smaller samples, the ML method is generally more
efficient. The GLS method generally requires less
computation time and computer memory compared
with ML. For instance, unlike the ML fit function, the
GLS fit function does not require estimation in a loga-
rithmic scale (e.g., Mulaik, 2009b, pp. 157, 165). The
availability of fast processors and abundant memory in
relatively inexpensive personal computers today make
the advantage of GLS method less meaningful. I have
used the GLS method to replicate analyses published in
earlier works in which this method was used instead of
ML (Kline, 2016, pp. 440–442).
Arbitrary Distribution Estimator
Browne’s (1984) arbitrary distribution function
(ADF) method is another name for the full WLS esti-
mator that makes no distributional assumptions for any
outcome variable, so it does not require multivariate
normality. This is because it estimates the degree of
both kurtosis and skew in the raw data. Calculations
using this method are complex in part because it derives
a relatively large weight matrix as part of its fit func-
tion. The dimensions, or number of rows by number of
columns, of this matrix is v (v + 1)/2 × v (v + 1)/2, where
v is the number of observed variables when means are
not analyzed. A problem with this method is that the
size of this matrix can be so large that it is difficult for
the computer to derive its inverse (Finney & DiStefano,
2013). For example, if v = 15, then the dimensions of the
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WLS weight matrix are 120 × 120 (i.e., 15(16)/2 = 120),
which makes for a total of 1202, or 14,400 elements in
the matrix. Impractically large samples with thousands
of cases may be needed to attain converged and stable
results. Even bare-bones (i.e., uninteresting) models
may need 200–500 cases in the ADF method.
In computer simulations, Olsson et al. (2000) found
that the WLS method generated parameter estimates
and values of global fit statistics close to those obtained
in the ML and GLS methods only for larger sample
sizes (N = 1,000, 2,000) and slightly misspecified mod-
els. As the severity of misspecification increased, the
WLS method generated imprecise estimates and overly
optimistic value of fit statistics (i.e., the model–data
fit was exaggerated). The ML method was generally
less affected by variations in kurtosis, sample size,
and model misspecification than both WLS and GLS.
Results in GLS estimation were more stable than those
in the WLS method, but GLS generally required mod-
els with relatively minor misspecifications compared
with ML. Finney and DiStefano (2013) noted that the
performance of WLS estimation is poor under common
situations of relatively large measurement models (e.g.,
> 2 factors, > 8 indicators) or sample sizes < 500, so it
is not a realistic general option for nonnormal data in
many studies.
FITTING MODELS
TO CORRELATION MATRICES
The simultaneous methods described to this point gen-
erally require the analysis of unstandardized variables.
If the variables are standardized, then the results may
be inaccurate, including estimates of standard errors
and model test statistics. This can happen if the model
is not scale invariant, or if its fit depends on whether the
variables are standardized or unstandardized. Whether
a model is scale invariant is determined by a complex
pattern of features, including how common factors are
scaled and whether certain parameter estimates are
constrained to be equal (Cudeck, 1989). One symptom
of scale invariance when a correlation matrix is ana-
lyzed is the observation that some of the diagonal ele-
ments in a predicted correlation matrix do not equal 1.0.
Models where all variables are standardized have
a correlation structure, not a covariance structure,
and such models require special considerations in their
analyses. The constrained estimation or constrained
optimization method can be used to correctly fit a
Pt2Kline5E.indd 141
Global Estimation and Mean Structures 141
model to a correlation matrix instead of a covariance
matrix (Browne, 1982). This process involves the impo-
sition of nonlinear constraints on certain parameter
estimates to guarantee that the model is scale invari-
ant. For example, it is necessary to constrain the distur-
bance variances to equal to 1 – R2, or the proportion of
variance in each endogenous variable not explained by
its direct causes in the model. This constraint is non-
linear because it involves the path coefficients for each
direct cause and also their standardized variances and
correlations. It can be complicated to manually pro-
gram these constraints—see Cudeck (1989) and Steiger
(2002)—and not all SEM computer tools support non-
linear constraints. Kwan and Chan (2011) described an
alternative two-stage method to compare standardized
coefficients that reparameterizes the model so that sim-
pler linear constraints can be imposed.
Some SEM computer tools, such as the SEPATH
procedure in Statistica (TIBCO Statistica, 2022),
allow constrained estimation to be performed auto-
matically by selecting an option. In Mplus, the syntax
“matrix = correlation” specifies the analysis of
a correlation matrix, but only in single-sample analy-
ses for models where (1) all outcomes are continuous
for a version of the WLS estimator, or (2) all outcomes
are categorical. A raw data file, not a summary matrix,
must be analyzed. In lavaan, the “lavCor( )” func-
tion specifies that the model is to be fitted to a correla-
tion matrix, but the constraints must be programmed
manually. Check the documentation for your SEM
computer tool about the analysis of covariance matrices
versus correlation matrices.
The analysis of correlation matrices when the out-
comes are continuous is justifiable on at least two occa-
sions:
1. A researcher is conducting a secondary analysis
based on a source wherein correlations are reported,
but not standard deviations.
2. A theoretical reason exists to impose equality con-
straints on standardized estimates, such as when
standardized direct effects of different causes of the
same outcome are presumed to be equal. When a
covariance matrix is analyzed, equality constraints
are imposed in the unstandardized solution only.
But analyzing correlation matrices without standard
deviations (or raw scores converted to normal devi-
ates) is generally inappropriate whenever variance dif-
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 142 Specification, Estimation, and Testing
ferences are essential to understanding a phenomenon
(Bentler et al., 2001). Examples include (1) analyses of
longitudinal data when it is expected that variances will
change over time (e.g., individual differences increase
with maturation), and (2) comparison of multiple
groups expected to differ in both means and variances
for the same outcome variables.
HEALTHY PERSPECTIVE
ON ESTIMATORS
AND GLOBAL ESTIMATION
Segal’s law states that a person with one clock always
know the time, but a person with two clocks never
knows. This adage speaks to the challenge of dealing
with too much information. It may also describe how
newcomers to SEM may feel after learning about the
availability of so many different estimators or methods.
Here is some advice about how to cope:
1. Use the simplest method that you understand that
also makes reasonable assumptions.
2. Think about sample size. Certain methods, such as
WLS, need much bigger samples in order for the
results to be precise. Consider alternatives, such as
robust ML, if the sample size is not large and there
is appreciable nonnormality.
3. Remember that results can be specific to a particu-
lar method; that is, it can happen that two different
methods applied to the same model and data can
generate different patterns of results. For instance,
small differences in estimated standard errors can
make big differences in p values for significance
tests of individual parameter estimates. This is yet
another reason not to make hair-splitting distinc-
tions among p values in SEM.
If two alternative estimators that yield appreciably dif-
ferent solutions are both viable choices, then report
both sets of results instead of selecting the solution that
most favors your hypotheses (Chapter 3). To do other-
wise is model hacking.
DETAILED EXAMPLE
Listed in Table 9.1 are the analyses and annotated
script files to simultaneously estimate the parameters
Pt2Kline5E.indd 142
TABLE 9.1. Analyses, Script Files, and Packages
in R for Maximum Likelihood Estimation
of a Recursive Path Model of Illness
Analysis Script files
1. Estimates for the covariance roth-cov-ml.r
structure only (means not analyzed)
2. Estimates for the both the mean and roth-mean-ml.r
covariance structures (covariances
and means analyzed)
Note. The lavaan package was used for all analyses. Output files have
the same names except the extension is “.out.”
of the Roth et al. (1989) recursive model of illness in
Figure 7.5 with default ML. All input and output files
for this example generated in lavaan can be down-
loaded from this book’s web site. In analysis 1 in the
table, the model was analyzed without intercepts for the
endogenous variables, and the input data were a sum-
mary covariance matrix. In analysis 2, intercepts were
estimated, and the input data were the covariances and
means (Table 4.3). In both analyses, the variances and
covariance of the measured exogenous variables, exer-
cise and hardy, were specified as free parameters, and
the information matrix is the default expected matrix.
Analysis 1 in lavaan converged normally to an
admissible solution. Reported in Table 9.2 are the ML
parameter estimates for the Roth et al. (1989) path
model except for the variances and covariance of the
measured exogenous variables (exercise, hardy), which
are just the sample values (Table 4.3). As expected for
the same model and continuous data:
1. Values of unstandardized path coefficients from
ML estimation are essentially identical to those
from single-equation OLS estimation in Figure
8.1(a) when based on the same adjustment set.
2. There are slight differences in ML versus OLS
estimates of unstandardized disturbance variances
(Table 8.4).
3. Somewhat greater differences between the two
methods are apparent in standardized estimates
for illness, which is specified as affected by other
endogenous variables, fitness and stress (Figure
8.1(b)).
For example, R2 = .177 for illness in OLS estimation
based on the observed variance for this endogenous
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 Global Estimation and Mean Structures 143

variable (Table 8.4). The estimate in default ML for the
same outcome is R2 = .160 (i.e., 1 – .840; Table 9.2), but
the result just mentioned is based on the variance for
illness predicted by the model. Exercise 1 asks you to
calculate the predicted variance for illness, given the
results in Table 9.2. Hint: You can also find the pre-
dicted variances for all endogenous variables in the
output file for analysis 1 (Table 9.1).
Up to three different standardized solutions can be
printed in lavaan output:
1. Std.all: The variances of all variables, latent and
observed, are set to unity (1.0). This is the standard-
ized solution reported in Table 9.2.
2. Std.lv: The variances of the just the latent variables
(common factors) are set to 1.0. Because there are
no latent variables in the Roth et al. (1989) path
model, this solution is equivalent to the unstandard-
ized solution in lavaan output and also reported in
Table 9.2.
3. Std.nox (i.e., no X [exogenous] variables): All latent
and observed variables are standardized except for
measured exogenous variables.
The third option just listed may be preferred for cod-
ing variables, such as dummy codes for exogenous cat-
egorical variables (Appendix 7.A), because change in
a standard deviation metric is not very meaningful for
such variables. It may also be favored when continu-
ous exogenous variables have meaningful raw score
metrics, such as age in years, because such metrics are
retained in the standardized solution. Check the doc-
umentation of your SEM computer tool to see how it
derives a standardized solution. If ≥ 2 options are avail-
able, tell your readers which estimates are reported.
Effect Decomposition
In an effect decomposition, direct, total indirect, and
total effects are computed for all pairs of causal vari-
ables and their presumed outcomes. In models with
multiple indirect causal pathways between a pair of
variables, total indirect effects are estimated as sums
of the coefficients for each individual indirect effect.
An example follows.
Suppose that variable X is specified to affect Y
through two different indirect pathways,
X → W → Y and X→Z→Y

TABLE 9.2. Maximum Likelihood Parameter The product estimators for the two unstandardized
Estimates for a Recursive Path Model of Illness indirect effects just listed are, respectively, 1.50 and
4.25. The coefficient for the unstandardized total indi-
Parameter Estimate rect effect is 1.50 + 4.25, or 5.75, the sum of the coef-
Direct effects ficients over both indirect pathways. Thus, the expected
Exercise → Fitness .108 (.013) .390
increase in Y in its raw score metric is 5.75 while hold-
ing X constant and increasing W and Z to whatever val-
Hardy → Stress –.203 (.044) –.230 ues they would obtain under a 1-point increase in the
Fitness → Illness –.849 (.159) –.253 raw score metric of X. For the same variables and data,
Stress → Illness .574 (.088) .311 if the coefficient for the unstandardized direct effect of
X on Y is, say, 2.50, then the unstandardized total effect
Indirect effects of X on Y is 2.50 + 5.75, or 8.25, the sum of the coef-
Exercise → Fitness → Illness –.092 (.021) –.099 ficients for the direct effect and total indirect effects.
Hardy → Stress → Illness –.116 (.031) –.071
This result says that Y is expected to increase by 8.25
points, given an increase in X of 1-point through all
Disturbance variances direct and indirect causal pathways. Standardized total
Fitness 287.065 (21.020) .848 indirect effects and total effects have similar interpreta-
tions except in standard deviation units instead of raw
Stress 1,062.883 (77.830) .947
score units.
Illness 3,212.567 (235.241) .840 Listed in Table 9.3 is the effect decomposition for the
Roth et al. (1989) path model of illness. For example,
Note. Estimates are reported as unstandardized (standard error) stan-
dardized. Standard errors for indirect effects are Sobel standard er-
the exogenous variable hardy is specified to have a sin-
rors. Standardized estimates for disturbances are proportions of unex- gle indirect effect on illness through stress (Table 9.2).
plained variance. This sole indirect effect is also the total indirect effect

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 144 Specification, Estimation, and Testing

TABLE 9.3. Effect Decomposition for a Recursive Model of Illness

Causes
Exogenous Endogenous
Endogenous Exercise Hardy Fitness Stress
Fitness
Direct .108 (.390) 0 0 0
Total indirect 0 0 0 0
Total .108 (.390) 0 0 0

Stress
Direct 0 –.203 (–.230) 0 0
Total indirect 0 0 0 0
Total 0 –.203 (–.230) 0 0

Illness
Direct 0 0 –.849 (–.253) .574 (.311)
Total indirect –.092 (–.099) –.116 (–.071) 0 0
Total –.092 (–.099) –.116 (–.071) –.849 (–.253) .574 (.311)

Note. Reported as unstandardized (standardized).

because there are no other indirect causal pathways
between hardy and illness. The same indirect effect
is also the total effect because there is no direct effect
between these variables. Both fitness and stress have
direct effects on illness but no indirect effects through
any other variables, so these direct effects are also total
effects.
Predicted Covariances
and Correlations
The standardized total effect of one variable on another
estimates the part of their observed correlation due
to presumed causal effects. The sum of the standard-
ized total effects and all other noncausal associations
transmitted through back-door (biasing) paths, such
as common cause confounding, implied by the model
equal predicted correlations, also called fitted cor-
relations, that can be compared against correlations
observed in the sample. Predicted covariances, also
called fitted covariances, have the same general mean-
ing, but they involve the unstandardized solution.
Essentially all SEM computer tools that calculate
predicted correlations or covariances use matrix alge-
bra methods (e.g., Bollen, 1987). There is an older
method for recursive path models with continuous out-
comes that is amenable to hand calculation known as
Wright’s tracing rules (Wright, 1934). In these rules,
a predicted correlation is the sum of all standardized
causal (total) effects and noncausal associations from
all valid tracings by which the two variables are con-
nected in the model, such that the value from each valid
tracing is the product of the coefficients from the con-
stituent paths. A valid tracing is defined next (Kenny,
1979):
RULE 9.1 A valid tracing means that a variable is
not entered
1. Through an arrowhead and exited by the same
arrowhead
2. Twice in the same tracing
Thus, no valid tracing can include more than a single
unanalyzed association ( ). An alternative defini-
tion comes from Chen and Pearl (2014): A valid tracing
does not involve colliding arrowheads, such as
→← ← → or
Recall that paths blocked by a collider do not convey
statistical association between the variables at either

Pt2Kline5E.indd 144 3/22/2023 3:44:10 PM


end of the path, if the collider is not included among
covariates (Chapter 6).
Two principles follow from the tracing rule: (1) The
predicted correlation for two variables connected by all
possible paths in a just-identified portion of the model
will typically equal the observed (sample) value. If the
whole model is just-identified (i.e., df M = 0), then each
and every predicted correlation will exactly equal its
observed counterpart. (2) But if the variables are not
connected by all possible paths in an overidentified part
of the model, then predicted and observed correlations
may differ.
As an example of the application of the tracing rule
to calculate predicted correlations with the standardized
solution, look back at Figure 8.1(b) and find the variables
hardy and illness. There are two valid tracings between
them. One of them is the indirect causal pathway
Hardy → Stress → Illness
The product of the standardized coefficients from ML
estimation in Table 9.2 for this pathway is
–.230 (.311) = –.072
The other valid tracing is the noncausal path
Hardy Exercise → Fitness → Illness
and the product of the standardized coefficients1 for the
backdoor path just listed is
–.030 (.390) (–.253) = .003
The predicted correlation between hardy and illness is
the sum of the two products just calculated, or
–.072 + .003 = –.069
The sample correlation between these two variables is
–.16 (see Table 4.2), so the correlation residual is
–.16 – (–.069) = –.091
Thus, the model underpredicts the association between
hardy and illness by this amount (–.091). That the
1 Remember that the standardized estimate of the unanalyzed
association between exercise and hardy (both exogeneous) is
their observed correlation, –.030 (Table 4.3).
Pt2Kline5E.indd 145
Global Estimation and Mean Structures 145
model does not perfectly reproduce the observed corre-
lation is not surprising because there is no direct effect
between these variables (i.e., this part of the model is
not saturated).
Use of the tracing rules is error-prone because it
can be tough to spot all of the valid tracings in larger
models, and these rules do not apply to nonrecursive
models with causal loops. A more complicated ver-
sion of the tracing rule that includes the variances of
measured exogenous variables and also unstandardized
disturbance variances is needed to generate predicted
variances and covariances (Bollen, 1989, pp. 85–88;
Mulaik, 2009b, pp. 127–134). These are reasons to
appreciate the fact that many SEM computer tools auto-
matically calculate predicted correlations or covari-
ances for either recursive or nonrecursive path models
(and other kinds of structural equation models, too).
Output from lavaan for this example analysis includes
the fitted covariance matrix, fitted correlation matrix,
correlation residuals, and the three additional types of
residuals defined next (see analysis 1, Table 9.1).
Covariance, Standardized,
and Normalized Residuals
Correlation residuals are standardized versions of cova-
riance residuals, also called fitted residuals or raw
residuals, which are differences between observed and
predicted covariances. It can be difficult to interpret
covariance residuals because they are not standard-
ized. This difficulty in interpretation arises because the
metric of a covariance residual depends on the scales of
both variables that contribute to it. That is, covariance
residuals for different pairs of variables are not directly
comparable unless the original metric of all variables
is the same. For example, a covariance residual of, say,
–17.50, for one pair of variables does not necessarily
indicate greater model–data discrepancy than a covari-
ance residual of, say, –5.25 for a different pair, if scores
from those variables are not all based on the same met-
ric. In contrast, correlation residuals are standardized
and thus are directly comparable across different pairs
of observed variables regardless of their original (raw
score) metrics.
Many SEM computer tools print standardized
residuals, or ratios of covariance residuals over the
standard errors of those differences. In large samples,
this ratio is interpreted as a z (normal deviate) test. If
this test is statistically significant, then the null hypoth-
esis that the population covariance residual equals
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 146 Specification, Estimation, and Testing

zero is rejected. This test is sensitive to sample size provides an alternative, but more conservative, signifi-
for models with specification error, which means that cance test, if a significance test is needed at all.
covariance residuals close to zero could be significant Correlation residuals for this example analysis are
in a large sample. Likewise, a relatively large cova- reported in the top part of Table 9.4. There are two
riance residual could fail to be significant in a small options in lavaan for computing correlation residu-
sample. The interpretation of correlation residuals is als—see Topic Box 9.3 for descriptions. The absolute
not as closely bound to sample size but, until recently, residual for fitness and stress, –.133 (shown in bold-
significance tests for correlation residuals were gener- face), exceeds .10; thus, the model does not explain
ally unavailable. Recent, more advanced methods to very well the observed association between these two
test correlation residuals for statistical significance by variables. Exercise 2 asks you to reproduce this resid-
Maydeu-Olivares et al. (2018) and Shi et al. (2020) are ual correlation. Two other absolute correlation residu-
described in Chapters 17–18. als are close to .10, including .082 for hardy and fitness
Under the null hypothesis that the researcher’s model and –.091 for hardy and illness. (Earlier, we calculated
perfectly fits the population covariance matrix, stan- the correlation residual of –.091 using the tracing rule.)
dardized residuals should be normally distributed, but These results are generally consistent with piecewise
not correlation residuals under the same hypothesis. SEM results about sample partial correlations that cor-
Some SEM computer programs can, as an option, print respond to predicted conditional independencies for
histograms of standardized residuals. Ideally these the same model and data (see Table 7.2); that is, local
histograms would be roughly symmetrical in shape, model fit is problematic.
although some departure from symmetry is likely, espe-
cially for smaller models with relatively few pairs of
observed variables. But extremely skewed distributions TABLE 9.4. Correlation, Standardized,
of standardized residuals could suggest specification and Normalized Residuals for a Recursive
error. The LISREL program (Jöreskog & Sörbom, 2018) Path Model of Illness
can, as an option, print quantile-quantile (Q-Q) plots Variable 1 2 3 4 5
of standardized residuals, which displays the percentiles
of empirical (sample) standardized residuals against Correlation
those expected in a normal distribution. In a correctly 1. Exercise 0
specified model, the points in a Q-Q plot of standardized 2. Hardy 0 0
residuals should all fall along a diagonal line. The dis- 3. Fitness 0 .082 0
tribution is otherwise nonnormal, but actually it can be 4. Stress –.057 0 –.133 0
hard to discern the degree of nonnormality due to skew 5. Illness .016 –.091 –.038 .030 0
or kurtosis in Q-Q plots. This is because visual interpre-
tations of Q-Q plots can be rather subjective. Standardized
Some SEM computer tools can also print normal- 1. Exercise 0
ized residuals, or ratios of covariance residuals over 2. Hardy 0 0
the standard error of the sample covariance, not the 3. Fitness 0 1.710 0
standard error of the difference between sample and 4. Stress –1.128 0 –2.552 0
predicted values. (The latter is the denominator for 5. Illness .331 –1.905 –2.135 1.988 1.221
standardized residuals.) For the same covariance
residual, a normalized residual is usually less than the Normalized
corresponding standardized residual in absolute value.
1. Exercise 0
Accordingly, normalized residuals are more conserva-
2. Hardy 0 0
tive as significance tests than standardized residuals;
3. Fitness 0 1.574 0
that is, p values for normalized residuals are generally
higher than p values for the corresponding standard- 4. Stress –1.098 0   –2.541 0
ized residuals. For complex models with many com- 5. Illness   .296 –1.758   –.757 .607 .279
mon factors, the computer may be unable to calculate Note. Values in boldface for correlations residuals > .10 in absolute
the denominator of a particular standardized residual. value and for both standardized residuals and normalized residuals >
In this case, the corresponding normalized residual 1.96 in absolute value.

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 Global Estimation and Mean Structures 147

TOPIC BOX 9.3

Options in lavaan for Correlation Residuals

There are two basic lavaan options for computing correlation residuals (Rosseel et al., 2023). The speci-
fication

type = “cor.bollen”

instructs the computer to separately convert the sample covariance and model-­implied covariance matrices
to correlation matrices before residuals are calculated. This means that each matrix is separately standard-
ized based on the variances (squared standard deviations) in its own main diagonal. All variances in the
sample covariance matrix are observed, but variances for endogenous variables in the model-­implied
covariance matrix are predicted by the model, which may differ from the corresponding observed vari-
ances. A different lavaan option is

type = “cor.bentler”

which means that both the sample and model-­implied covariance matrices are standardized based on the
variances in just the sample covariance matrix. Because not all elements of the main diagonal in the model-­
implied covariance are observed variances, some values of Bentler-­type correlation residuals may not
equal zero, but values of off-­diagonal residuals for the two methods are usually similar. Unless otherwise
stated, correlation residuals in lavaan output for example analyses in this book are Bollen-­type residuals.

Standardized residuals for the example analysis are
reported in the middle part of Table 9.4. The test for
the fitness–stress covariance residual is significant at
the .05 level, z = –2.552. Other significant z tests (also
shown in boldface) indicate that the model does not
adequately explain the covariance of fitness with illness
or the covariance of stress with illness, but the corre-
sponding correlation residuals (i.e., standardized effect
sizes) are not glaringly large (respectively, –.038, .030).
As expected, values of absolute normalized residuals,
reported in the bottom part of Table 9.4, are smaller
than the corresponding absolute standardized residu-
als, and just one normalized residual, for the stress
and fitness variables, is significant, z = –2.541 (shown
in boldface). Thus, the different types of residuals in
Table 9.4 all indicate that the relation between fitness
and stress in the data is poorly predicted by the model
(among other problems already mentioned).
We will see in the next chapter that the values of
some, but not all, global fit statistics indicate problems
for the same model and data. But I would conclude now
that the fit of the example model is unacceptable, given
the results about local fit (i.e., the residuals) considered
to this point.2 Models can theoretically “pass” global
fit testing but still “fail” at the level of local fit testing.
They say the devil is in the details, and those details
regarding model fit are directly examined in local fit
testing. See Maydeu-Olivares and Shi (2017) for more
information about roles for correlation residuals and
standardized residuals in model evaluation.
INTRODUCTION
TO MEAN STRUCTURES
No intercepts for the outcome variables (fitness,
stress, and illness) were generated in analysis 1 for the
detailed example (Table 9.1). Estimation of intercepts
2 Tobe fair, the d-sep test in the piecewise SEM analysis of the
same model and data also indicated a problem (C = 19.521, p =
.034), and this test concerns global fit at the level of all model-
implied conditional independencies for the union basis set in
Table 8.2.

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 148 Specification, Estimation, and Testing
using SEM computer tools generally requires (1) the
input of the raw data or a summary covariance matrix
plus the means of all variables (i.e., a mean vector), and
(2) specification that the model has both a covariance
structure and a mean structure. A mean structure for a
path model includes intercepts of endogenous variables
and means of measured exogenous variables. In path
models, these intercepts and means are for observed
variables, but mean structures for other types of struc-
tural equation models can represent the estimation of
intercepts or means for latent variables, a topic covered
in Chapters 21–22.
A mean structure for a path model is specified by
including the constant “1” in the equation for all mea-
sured variables, exogenous and endogenous, that make
up the model’s covariance structure. (Disturbances are
not included in mean structures because their means
are assumed to equal zero.) These specifications tell
the computer to analyze both covariances and means.
If a raw data file is analyzed, the computer will append
to it in memory a new column where the score is “1”
for every case (i.e., the constant). When analyzing a
covariance matrix and mean vector instead of raw data,
some SEM computer tools, such as LISREL (Jöreskog
& Sörbom, 2018), can also analyze an augmented
moment matrix (AMM), which is an average sum of
squares and cross products matrix (SSCP) that includes
a row and column for the constant. The average sum
of squares for the constant is 1.0, and its average cross
products are the sample means—see Ghisletta and
McArdle (2012) for examples.
In lavaan, the syntax “meanstructure = true”
automatically adds a mean structure as just described.
This command instructs the computer to add the con-
stant “1” to the equations that specify the model. A more
laborious alternative is for the researcher to manually
specify the mean structure in syntax. For example, the
specification “illness ~ 1” in lavaan includes the
constant in the equation for this endogenous variable
and tells the computer to estimate its intercept. Like-
wise, the lavaan syntax “exercise ~ 1” includes the
constant in the equation for this exogenous variable and
tells the computer to estimate its mean.
The basic logic of including the constant “1” in equa-
tions for variables in a simple regression model as a
way to tell the computer to estimate intercepts and
means along with regression coefficients is demon-
strated in Exercise 3. This exercise relies on a method
called regression through the origin (RTO), where
Pt2Kline5E.indd 148
the computer is instructed to omit from the unstandard-
ized regression equation the intercept term it would
otherwise automatically calculate. In standard regres-
sion analysis (i.e., with an intercept), regressing a vari-
able on the constant “1” would cause the analysis to
fail. This is the because the denominators of regression
coefficients in a standard analysis would be zero for
predictors with no variance (i.e., the constant), and the
attempt to divide by zero generates an error condition
in computer arithmetic. Eisenhauer (2003) described
other uses for RTO regression, such as when applying
methods that correct for heteroscedasticity or autocor-
relation in time series data. Your results for Exercise 3
illustrate the two basic properties stated next:
RULE 9.2 For a continuous criterion and predictor
and assuming RTO regression,
1. If the criterion is regressed on both the predictor
and constant “1,” the unstandardized coefficient
for the constant is the intercept
2. If the predictor is regressed on the constant, the
unstandardized coefficient for the constant is the
mean of the predictor
We need modified rules for counting the numbers of
observations and free parameters for models with both
covariance and mean structures:
RULE 9.3 If v is the number of observed variables,
the number of observations when means and
covariances are analyzed equals v (v + 3)/2
The value of the expression just stated gives the total
number of variances, nonredundant covariances, and
means of observed variables. Model parameters are
defined next.
RULE 9.4 The free parameters of a model with both
covariance and mean structures include the
1. Intercepts of the endogenous variables
2. Means of the exogenous variables (excluding
error terms)
3. Number of parameters in the covariance structure
counted in the usual way for that type of model
For the path model in the ongoing detailed example,
v = 5, so the total number of observations is 5(8)/2,
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or 20 when means and covariances are analyzed (see
Table 4.3). Free model parameters include a total of
1. 3 intercepts for fitness, stress, and illness, the
endogenous variables
2. 2 means for exercise and hardy, the exogenous vari-
ables
3. 10 free parameters in the covariance structure only
as previously counted for this example.
The grand total of free parameters is thus 3 + 2 + 10,
or 15. Thus, the model degrees of freedom are df M =
20 – 15 = 5, which is the same as for example model
with just a covariance structure (i.e., means are not ana-
lyzed). That is, df = 0 for the mean structure because
there are as many observations (means of 5 variables)
as parameters (2 means, 3 intercepts). In general, ana-
lyzing means for path models in a single sample neither
changes the value of df M nor the estimates for model’s
covariance structure, if no constraints are imposed on
estimates for the mean structure.
Listed in Table 9.1 are the input and output files for
analysis 2 with means for the example path model in
lavaan. Presented in Figure 9.1 are the unstandard-
ized solutions for parameters of both the mean struc-
ture (shown in boldface) and covariance structure all
4,422.250
.108
Exercise
40.900
62.686
−75.810
1 Illness
0 24.000
Hardy
−.203
1,440.000
FIGURE 9.1. Recursive path model of illness with unstandardized parameters for the covariance structure and the mean struc-
ture. Estimates for the mean structure are shown in boldface. Values for exercise and hardy (exogenous variables) are means,
and values for fitness, stress, and illness (endogenous variables) are intercepts.
Pt2Kline5E.indd 149
Global Estimation and Mean Structures 149
displayed in their proper places. Note in the figure that
unstandardized estimates for the covariance structure
are unchanged compared with the analysis without
means (see Table 9.2). Figure 9.1 includes the special
McArdle–McDonald RAM symbol for a mean struc-
ture, the triangle shape with “1” (the constant) shown
in the center. The symbol just described is hereafter
referred to in text as “delta-1.”
Coefficients in Figure 9.1 that appear next to the
lines with single arrowheads that point from delta-1 to
the exogenous variables, exercise and hardy, are just
their respective sample means (Table 4.3). Values of
intercepts for the endogenous variables are displayed
along the lines with single arrowheads in the figure
that point from delta-1 to fitness, stress, and illness. For
example, the intercept for the regression of illness on its
parents, fitness and stress, is 114.874. Exercise 4 asks
you to interpret the intercept for illness in Figure 9.1,
and Exercise 5 concerns standardized estimates for the
mean structure.
Three points warrant special mention here:
1. The RAM delta-1 icon is a pretty common graphi-
cal symbol for a mean structure, but not all authors
use it. For example, sometimes just the covariance
structure is shown in a model diagram and infor-
287.065
DF
1
3,212.567
Fitness
−.849
DI
1
114.874
.574
Stress
1,062.883
1
DS
3/22/2023 3:44:11 PM
 150 Specification, Estimation, and Testing
mation about means or intercepts is reported in an
accompanying table. So it not absolutely necessary
to represent a mean structure in model diagrams.
2. Estimation of intercepts makes it easier to calculate
a predicted score for each case in the metric of the
corresponding outcome variable. This can be done
manually in a data editor where the weights match
those of the path coefficients and intercept for a par-
ticular outcome. The sem and gsem (generalized
SEM) commands in Stata (StataCorp, 1985–2021)
can automatically save predicted scores to the raw
data file for either observed or latent endogenous
variables (i.e., factor scores).
3. Robust ML estimation generally adds a mean struc-
ture to the model even if the original model has
just a covariance structure. In such cases, means
and intercepts are printed in the output along with
estimates for the covariance structure. The Amos
program requires explicit specification of a mean
structure when analyzing incomplete data with the
FIML (i.e., casewise ML) method (Arbuckle, 2021).
Predicted Means
Just as a model’s covariance structure generates pre-
dicted covariances that can be compared with sample
covariances, a mean structure gives rise to predicted
means, also called fitted means, that can be juxtaposed
with the observed means. A mean residual is the dif-
ference between the observed and predicted means for
the same variable. If df = 0 for the mean structure (as
in the example analysis), all mean residuals are zero;
otherwise, some predicted means may differ from their
observed counterparts. Computers use matrix algebra
to compute predicted means, but the method described
next can be applied by hand without great effort to the
unstandardized solution in smaller models with explicit
mean structures (e.g., Figure 9.1):
RULE 9.5 The predicted mean for a target variable
is the sum of the
1. coefficient for the direct pathway from the
constant, and
2. for each parent, if any, the product of the
predicted mean for that parent and the path
coefficient from the parent to the target variable,
summed over all parents
Pt2Kline5E.indd 150
Let’s try an example. For the fitness variable in
Figure 9.1, the coefficient for the direct pathway from
delta-1 is 62.686 (i.e., the intercept for regressing fitness
on exercise). It has one parent, exercise. Because exer-
cise is exogenous, its predicted mean equals 40.900, the
coefficient for the direct pathway from delta-1 to this
variable. The product of the predicted mean for exer-
cise and the path coefficients for its direct effect on fit-
ness is 40.900 (.108), or 4.417. The predicted mean for
fitness is the sum of the two coefficients just described,
62.686 + 4.417, or 67.10 at 2-decimal accuracy. This
predicted mean for fitness equals the sample mean
(Table 4.3) because the mean structure in Figure 9.1 is
just identified. Exercise 6 asks you to calculate the pre-
dicted mean for illness in the figure.
PRÉCIS OF GLOBAL ESTIMATION
Using an SEM computer tool to estimate a path model
brings with it a few amenities compared with local esti-
mation. One is that results such as effect decomposi-
tions, predicted covariances or correlations, and residu-
als (raw, correlation, standardized, or normalized) are
automatically computed and printed in the output.
Some of these results can be calculated by hand in local
estimation, but doing so for larger models is tedious.
Another advantage of using SEM computer tools is that
values of global fit statistics, described in the next chap-
ter, are automatically computed and printed in the out-
put, but this “advantage” can be a double-edged sword:
Focusing exclusively on global model fit is a common
but poor practice in SEM.
A drawback is that SEM computer tools do not typi-
cally inform the researcher about multiple estimates of
the same effect. For example, basically all SEM com-
puter programs estimate direct effects controlling for
all parents of each outcome variable. If the same direct
effect is statistically identified by other sets of covari-
ates or by instruments, the computer program will
not tell you about those other estimates. The same is
true for total effects: They are typically estimated by
SEM computer tools as sums of direct effects as just
described and total indirect effects estimated as sums
of product indicators, not through covariate adjustment
or instruments (e.g., Tables 7.3, 7.5). But knowing about
graphical identification rules can help the researcher to
avoid this limitation.
You may be thinking, is a researcher required to
3/22/2023 3:44:11 PM

use an SEM computer tool to analyze a path model?
The answer is no. The use of single-equation estima-
tors, either with covariate adjustment or instruments,
is a perfectly acceptable way to estimate the param-
eters of a path model (e.g., piecewise SEM). Doing so
is probably more familiar in biology or epidemiology
than in the social sciences such as psychology or educa-
tion. Although SEM computer tools offer conveniences,
there are also drawbacks, namely, absence of multiple
estimators of the same effect.
SUMMARY
The default method in most SEM computer tools is
maximum likelihood estimation, which is a simulta-
neous, full-information, normal-theory, and iterative
method for continuous outcomes. Major variations on
the default method include (1) robust estimation, which
estimates the degree of nonnormality in the data and
accordingly corrects the values of parameter standard
errors and model test statistics; and (2) full-information
(casewise) estimation of incomplete data sets under the
assumption that the data loss mechanism is missing at
random. A recent development is that versions of full-
information ML estimators for data that are missing
not at random are starting to appear in SEM computer
tools, but such methods are relatively complex and rely
on distributional assumptions for latent variables that
EXERCISES
1. Calculate the predicted variance for the illness vari-
able, given the results in Table 9.2.
2. Reproduce the correlation residual of –.133 in Table
9.4 for the variables fitness and stress.
3. Listed in parenthesis below for N = 5 are raw scores
on variables X, Y, and UNIT, a constant. Enter these
scores in the data editor of computer program for
general statistical analyses:
(3, 24, 1), (8, 20, 1), (10, 22, 1), (15, 32, 1),
(19, 27, 1)
Pt2Kline5E.indd 151
Global Estimation and Mean Structures 151
are not directly verifiable. Adding a mean structure to
a covariance structure tells the computer to estimate
intercepts for endogenous variables and means for
exogenous variables. Optional output from SEM com-
puter tools often includes correlation, standardized,
or normalized, or mean residuals, which can provide
invaluable information about local fit of the model at
the level of all pairs of observed variables. Evaluating
global fit and model hypothesis testing are the focus of
the next chapter.
LEARN MORE
Finney and DiStefano (2013) describe estimators for non-
normal or categorical data, Lang and Little (2018) outline
modern options in SEM for incomplete data, and Maydeu-
Olivares and Shi (2017) discuss correlation and standard-
ized residuals as effect sizes of model misfit.
Finney, S. J., & DiStefano, C. (2013). Nonnormal and
categorical data in structural equation modeling. In G.
R. Hancock & R. O. Mueller (Eds.), Structural equation
modeling: A second course (2nd ed., pp. 439–492). IAP.
Lang, K. M., & Little, T. D. (2018). Principled missing data
treatments. Prevention Science, 19(3), 284–294.
Maydeu-Olivares, A., & Shi, D. (2017). Effect sizes of
model misfit in structural equation models. Methodology,
13(Suppl.), 23–30.
a. Regress Y on X in a standard (i.e., with inter-
cept) linear regression analysis and record the
unstandardized regression coefficient, intercept,
and R2 (i.e., the squared bivariate correlation).
b. Next, regress Y on X and UNIT, but specify that
the intercept (constant) should not be included
in the equation (i.e., RTO regression). Hints:
In the options menu for SPSS Linear Regres-
sion, uncheck the box titled “Include constant
in equation.” Specify “0” in the equation of the
“lm( )” function in R to exclude the intercept
(e.g., “Y ~ 0 + X”). What is the unstandardized
coefficient for UNIT?
3/22/2023 3:44:11 PM
 152 Specification, Estimation, and Testing
c. Now regress X on UNIT in a second RTO
regression. What is the coefficient for UNIT?
d. Assume that X is a cause of Y. Draw the path
diagram with a mean structure using full RAM
graphical notation. Include values of all unstan-
dardized parameter estimates in your diagram.
Generate the predicted mean for Y.
4. Interpret the intercept for illness in Figure 9.1.
Pt2Kline5E.indd 152
5. What are the standardized estimates for the mean
structure in Figure 9.1? Assume the Std.all solution
in lavaan.
6. Calculate the predicted mean for illness in Figure
9.1.
3/22/2023 3:44:19 PM

Appendix 9.A
Types of Information Matrices
and Computer Options
There are two basic kinds of information matrices:
The expected information matrix is computed at the
estimated parameter values for the analyzed model in
a particular distribution, such as the normal curve for
data that are both complete (no missing values) and
normally distributed. The expected information esti-
mates do not depend on the raw data except through
the parameter estimates. But the observed informa-
tion matrix is generated from the likelihood functions
for the data, and thus observed information estimates
depend on both the parameter estimates and the raw
data (Savalei, 2010). Estimated standard errors in
ML estimation may be labeled in computer program
documentation or output as “expected” or “observed,”
depending on the information matrix that was their
source.
In large samples with complete data, standard errors
based on observed or expected information are asymp-
totically equivalent whether the data are normal or
nonnormal. In small samples, though, standard errors
based on observed information may be more accurate
than estimates based on expected information (Dolan
& Molenaar, 1991). In computer simulation studies of
measurement models with either 2 or 4 common factors
where each factor had, respectively, 8 or 4 indicators,
Savalei (2010) found a slight advantage for standard
errors based on observed information at smallest sam-
ples sizes (N = 100, 200) for complete normal data, but
that advantage was even more pronounced for complete
nonnormal data.
Savalei (2010) noted that things are more com-
plicated for incomplete data because observed ver-
sus expected information is no longer asymptotically
equivalent, so the choice between the two can make a
bigger difference. The pattern of missing data is also
an issue—specifically, expected information can be
readily computed only if data are missing completely
at random (MCAR), which means that the data loss
mechanism is independent of both observed variables
(i.e., the data) and unobserved (latent) variables. But if
the pattern is missing at random (MAR), which means
Pt2Kline5E.indd 153
Global Estimation and Mean Structures 153
that data loss depends on the observed variables but not
also on latent variables—including the theoretically
complete versions of incomplete variables in the data
set—the expected information matrix may be incorrect
unless the precise nature of the MAR pattern is known
(Kenward & Molenberghs, 1998). In Savalei’s (2010)
simulation study, standard errors based on observed
information were generally more accurate for MCAR
data, and the advantage for observed over expected
information was even greater for MAR data, under
conditions of both normal and nonnormal distributions.
Savalei (2010) noted that (1) whether standard errors
are based on observed or expected information is not
reported in most SEM studies, and (2) most researchers
probably rely on computer program defaults. For true
models analyzed in large samples with complete and
normally distributed data, there is little expected dif-
ference between observed and expected standard errors
and none in model test statistics. But in smaller samples
or when the data are incomplete or nonnormal, the dis-
tinction between observed and expected information
can have greater impact. We will revisit this issue in
the next chapter when different kinds of model test sta-
tistics are introduced.
Analysis options are described next for lavaan
(Rosseel et al., 2023), but there are similar choices in
Mplus (Muthén & Muthén, 1998–2017) and some other
SEM computer tools. The keyword “ML” in lavaan
specifies default ML as the method for continuous out-
comes with normal distributions. If there are no miss-
ing data, standard errors are based on the expected
information matrix, but this default can be changed to
the observed information matrix through the command
information = “observed”
The default treatment of missing data in lavaan is list-
wise deletion, but the specification
missing = “ML”
instructs the computer to (1) base standard errors on
the observed information matrix, and (2) use casewise
ML (i.e., FIML estimation) that assumes the data loss
mechanism is MCAR or MAR.
A second option in lavaan for normally distrib-
uted, continuous outcomes is method “MLF.” Param-
eter estimates using this method are the same as those
in default ML, but the “MLF” method approximates
3/22/2023 3:44:19 PM
 154 Specification, Estimation, and Testing
the information matrix using computationally simpler
algorithms. Specifically, it relies on the covariances
of the first-order derivatives of the ML log-likelihood
function to estimate covariances based on the second-
order derivatives (i.e., the information matrix). May-
deu-Olivares (2017b) referred to the approximation just
described as cross-products information. In lavaan,
the specification
information = “first.order”
Pt2Kline5E.indd 154
corresponds to standard errors based on cross-prod-
ucts information for the “MLF” method. In very large
samples with no missing data, expected, observed, and
cross-products information are asymptotically equiva-
lent (Greene, 2012). But in smaller samples or for larger
models, “MLF” standard errors are probably not as
accurate as those based on information matrices (i.e.,
estimator “ML”)—see Maydeu-Olivares (2017b) for
more information.
3/22/2023 3:44:19 PM

Appendix 9.B
Casewise ML Methods
for Data Missing Not
at Random
Special estimation methods for MNAR data generally
require the analysis of two models, one for the data loss
mechanism with auxiliary variables and the other for
the outcomes. Such missing data models also rely on
generally untestable assumptions about the distribu-
tions for observed variables with missing data versus
latent variable representations of those outcomes with
no missing data (Enders, 2010, chap. 10; Tang & Ju,
2018). Some of these methods are based on FIML esti-
mators (Morikawa et al, 2017; Riddles et al., 2016), and
they are starting to appear in SEM computer tools. An
example follows.
Muthén et al. (2011) described the analysis of latent
growth models for a longitudinal clinical trial where the
data were MNAR with two different methods imple-
mented in Mplus (Muthén & Muthén, 1998–2017).
These methods represent data not only as outcomes but
also as binary missing response indicators (0, 1) at each
measurement occasion. Use of the pattern-mixture
modeling method (“type = dropout” in Mplus), a
series of dummy variables (codes) represents the mea-
surement occasion(s) when dropout occurred for each
Pt2Kline5E.indd 155
Global Estimation and Mean Structures 155
case. Because dropout could occur at different points
in time (including none), the dummy variables partition
the sample into subgroups based on patterns of com-
plete or incomplete data. Latent variables that represent
initial status and subsequent changes are regressed on
the dropout dummy variables (e.g., Muthén et al., 2011,
p. 20). Thus, random means for these latent variables
are estimated as mixtures over the various patterns of
missingness.
In Diggle–Kenward selection modeling (Diggle
& Kenward, 1994) (“type = sdropout” in Mplus),
latent growth variables are regressed on discrete-time
survival indicators, which equal 0 before dropout, 1
when dropout occurs, and missing for subsequent occa-
sions. They are part of a logistic regression model for
dropout. Outcomes are represented both as observed
for some cases before dropout and as latent for other
cases after dropout (e.g., Muthén et al., 2011, p. 21).
Random means are estimated given the logistic model
for dropout. Both pattern-mixture modeling and the
selection model assume normality for outcomes, but
part of these assumptions concern latent variables or
particular dropout models, so they are not directly test-
able. Thus, Muthén et al. (2011) recommended sensitiv-
ity analysis of different models that vary somewhat in
their assumptions. If the results vary appreciably over
models, then the findings are not robust. Estimators for
MNAR data are thus complex and require diligence
in their application (i.e., they are not panaceas)—see
Gottfredson et al. (2014) for more information, cau-
tions, and examples.
3/22/2023 3:44:19 PM
 10

Model Testing and Indexing

Introduced in this chapter are the two main categories of global fit statistics: model test statistics and approxi-
mate fit indexes. They correspond to, respectively, model testing and model fit indexing (Hayduk, 2014). The
outcome of model testing is the binary decision about whether to reject or retain null hypotheses about the
model based on p values in significance testing. In contrast, model fit indexing is based on continuous
measures of model–data correspondence; thus, it is more analogous to quantitative effect size estimation as
opposed to dichotomous significance testing. Because global fit statistics in both categories measure only
average or overall model–data correspondence, their values may fail to indicate poor local fit, or pairs of
observed variables for which the model inadequately explains their observed (sample) associations. Models
with poor local fit should not be retained regardless of their global fit. How to adjudge global fit without
neglecting local fit is the main goal of this chapter. A second aim is to describe two methods for planning
sample size in SEM: power analysis and accuracy in parameter estimation, also called precision in planning.

MODEL TESTING assumptions or share the same weight matrix (among

Model testing corresponds to the classical school in
statistics, which deals mainly with inferential tests of
single hypotheses and emphasizes decision rules that
should be followed by all (Little, 2013). Most research-
ers in psychology and related disciplines are trained in
the classical school, which also makes them generally
familiar with the basic logic and rules of significance
testing, if not always correct in their understanding of
its results (i.e., p values; Kline, 2013a). Model testing
is based on the chi-square test described by Jöreskog
(1969) for evaluating CFA measurement models in
large samples. Shortly afterward, LISREL III—the
first commercially available version for use on main-
frame computers—was published (Jöreskog & Sör-
bom, 1976), and the only global fit statistic it printed
was the model chi-square, its degrees of freedom
(df M), and p value. Because different global estima-
tion methods do not all rely on the same distributional
other differences), values of the model chi-square and
p—and sometimes df M, too—can vary over methods
for the same model and data. This is why the subscript
in the symbol for the model chi-square used from this
point on usually indicates the estimation method. For
instance, chiML refers to the model chi-square in the
default ML method. Chi-squares for the robust ML
method are considered later.
MODEL CHI‑SQUARE
Depending on the SEM computer tool, chiML is calcu-
lated using one of the two different ways listed next:
(N – 1) FML  or  N (FML) (10.1)
where FML is the value of the fit function minimized
in default ML estimation. In very large samples, the

156

Pt2Kline5E.indd 156 3/22/2023 3:44:19 PM


two products in Equation 10.1 are asymptotic and,
assuming multivariate normality, both follow central
chi-square distributions with degrees of freedom equal
to df M. Under the assumptions just stated, both expres-
sions in the equation are called the minimum fit chi-
square. In smaller samples, the factor by which FML is
multiplied (i.e., N – 1 vs. N) can explain variations in
chiML over different SEM computer tools for the same
model, data, and estimation method. Some computer
tools, such as lavaan, allow the user to choose either
expression in Equation 10.1 for computation of chiML
(the default is N (FML); Rosseel et al., 2023).
The value of chiML for a just-identified model equals
zero, but technically it is not defined for models with
no degrees of freedom. If chiML = 0, the model per-
fectly fits the data: Each observed variance or covari-
ance exactly equals its predicted counterpart. If the fit
of an overidentified model that is incorrectly specified
becomes increasingly worse, chiML increases in value;
thus, chiML is a badness-of-fit statistic (i.e., the higher
the value, the worse the fit).
Another way to view chiML is as a likelihood ratio
test that compares the difference in fit between the
researcher’s overidentified model, represented by the
null hypothesis H0, and whatever unspecified model,
represented by the alternative hypothesis H1, that
would generate a predicted covariance matrix that
exactly matches the sample covariance matrix. Sup-
pose that chiML > 0 and df M = 5 for the researcher’s
model (H0). Adding five more free parameters to this
model would make it just-identified—thereby making
its covariance implications perfectly match the data
covariance matrix, even if that model were incorrectly
specified—and reduce both chiML and df M to zero. An
unrestricted model with perfect fit corresponds to H1 as
do all equivalent versions of that model. Thus, chiML
can also be defined as
L 
−2 ln  0  =−2 ln L 0 + 2 ln L 1 (10.2)
 L1 
 
where L 0 is the likelihood function maximized in ML
estimation for the researcher’s model under H0, and L1
represents the same quantity for an unrestricted model
with perfect fit under H1.
Exact‑Fit Hypothesis
In large samples and assuming multivariate normal-
ity, the null hypothesis tested by chiML for overidenti-
Pt2Kline5E.indd 157
Model Testing and Indexing 157
fied models (df M ≥ 1) is the exact-fit hypothesis. For
models with just a covariance structure (means are not
analyzed), the exact-fit hypothesis can be expressed as
H0: S = S(q
q) (10.3)
which predicts no difference between the population
covariance matrix, S, and the model-implied covari-
ance, S(q
q), where q represents the model parameters.
Another expression is
H0: S – S(q
q) = 0c (10.4)
where 0c is the zero matrix of population covariance
residuals where every element is zero.
For models with both covariance and mean struc-
tures (means are analyzed along with covariances), the
exact-fit hypothesis is
H0: S = S(q
q), m = m(q
q) (10.5)
where m(qq) represents the vector (1-dimensional array)
of model-implied means and m is mean vector in the
population. An equivalent definition is
H0: S – S(q
q) = 0c, m – m(q
q) = 0m (10.6)
where 0m is the zero vector of population mean residu-
als in which every element is zero.
The exact-fit hypothesis is an example of a nil
hypothesis that predicts no difference between popu-
lation and model-implied covariances or means. Hay-
duk (2014) noted that “nil” in this case does not mean
“unimportant” because the model and parameter esti-
mates represent the researcher’s hypotheses, and he
suggested notable-null hypothesis as an alternative
description. Semantics aside, I agree that the exact-fit
hypothesis is not a trivial statement.
You should know that the chi-square test concerns
not just the researcher’s model, but also all equivalent
versions that explain the data just as well despite mak-
ing contradictory causal claims. There may also be
near-equivalent models with similar fit to the data, but
not identical. Unfortunately, the existence of equiva-
lent or near-equivalent models is rarely acknowledged
in published SEM studies. How to generate equiva-
lent versions of path models with manifest variables is
explained in Chapter 11, and these same principles can
be applied to structural models with observed variables
or common factors, too.
3/22/2023 3:44:19 PM
 158 Specification, Estimation, and Testing
Effect of Sample Size
Unless the sample size is small, the value of chiML
for true models is not affected by sample size. This is
because the quantity estimated by FML for true models
is approximately df M/N (Hayduk, 2014), which basi-
cally removes the effect of sample size in the formula
for chiML (see Equation 10.1). Thus, the expected value
of chiML over random samples is df M. This means that
1. chiML ≤ df M is expected in roughly half of random
samples drawn from a population where the model
has perfect fit.
2. p values for chiML are ≥ .05 in about 19 out of 20
samples.
3. The exact-fit hypothesis will be rejected for correct
models in less than 1 out of 20 samples when testing
at the .05 level (i.e., a Type I error).
If N < 200 or so, then the expected values of chiML tend
to exceed those of df M even when the data are multi-
variate normal (Curran et al., 1996). Thus, values of
chiML are generally too high and their p values are too
low for true models analyzed in small samples.
For misspecified models—those that do not per-
fectly fit the population covariance matrix—the value
of chiML is affected by sample size. This is because
FML > df M/N for such models, so sample size is not can-
celled out in the derivation of chiML (Equation 10.1).
Instead, given constant values of FML and df M, the
value of chiML increases and its p value decreases as N
gets larger for incorrect models. This characteristic of
chiML is not an aberration. This is basically how all sig-
nificance tests work when the null hypothesis is false:
Values of test statistics are determined by products of
sample size and effect size, and effect size in this case
means the amount of departure from perfect fit (i.e.,
FML).
Logic of the Chi‑Square Test
In practice, it is rarely known whether the researcher’s
model is true. With this reality in mind, the logic of
the model chi-square test is summarized next: Assum-
ing the model has perfect fit in the population, if the p
value for chiML (df M) is less than the criterion level of
statistical significance, such as a = .05, then the exact-
fit hypothesis is rejected and the model fails the chi-
square test; otherwise, the model passes the chi-square
test (i.e., p ≥ .05). For example, the critical value of
Pt2Kline5E.indd 158
chiML (5) at the .05 level is 11.071.1 Thus, the exact-fit
hypothesis would be rejected at the .05 level if
chiML (5) ≥ 11.071
(the test is failed), but the exact-fit hypothesis is retained
(the test is passed) if
chiML (5) < 11.071
Issues in applying the model chi-square test are
listed next and discussed afterward:
1. Passing the chi-square test does not mean that the
model also has satisfactory local fit.
2. It is less impressive when models with lower df M
pass the chi-square test compared with models with
greater df M.
3. Passing the chi-square test says basically nothing
about predictive accuracy for individual outcomes
(e.g., R2) or about accuracy of predictions for indi-
vidual cases.
4. It can happen in very large samples that a model
fails the chi-square test, but the residuals indi-
cate trivial discrepancies between observed and
expected values in local fit.
5. It is illogical to ignore a failed model chi-square
test while touting statistically significant parameter
estimates.
6. Unfortunately, there is little or no correspondence
between chi-square test outcomes and the types or
severities of specification error.
7. The conventional standard of a = .05 may not be
optimal for the chi-square test in SEM.
It can, and does, happen—especially in smaller sam-
ples where the power of the chi-square test to detect
appreciable model–data discrepancies is low—that
passing models have poor local fit (i.e., the residuals are
problematic). This is because chiML —and basically all
other global fit statistics—collapse many discrepancies
into a single measure (Steiger, 2007). Thus, a model
could adequately explain associations for some, but not
all, pairs of observed variables. Such models should not
be retained even though they passed the chi-square test.
1 You can use the chi-square calculator at https://statpages.info/
pdfs.html
3/22/2023 3:44:19 PM

Models with very few degrees of freedom can have
near-perfect fit, such as
chiML (1) = .250, p = .617
Such models may have so many free parameters rela-
tive to the number of observations that they can hardly
fail to explain the data to a close degree; that is, they
are overparameterized. This explains the general pref-
erence for models with greater degrees of freedom.
Specifically, obtaining relatively high p values in exact-
fit testing is more impressive for models with greater
rather than fewer degrees of freedom. In this instance,
models with a greater number of degrees of freedom
have withstood a more stringent test of model–data dis-
agreement over more dimensions (i.e., df M) than mod-
els with fewer degrees of freedom (Raykov & Marcou-
lides, 2006).
Knowing that model and data are consistent within
the limits of sampling error (e.g., p = .75) does not indi-
cate that the equations for endogenous variables have
relatively high R2 values. In fact, global model fit and
R2 for individual outcomes are essentially independent.
For example, disturbances in structural models with
perfect global fit can still be large (i.e., R2s are low),
which means that the model accurately captures the
relative lack of predictive validity in the data. Model-
predicted variances for endogenous variables include
both explained and error variance or, respectively, R2
and 1 – R2 in standardized terms. Thus, a model can
closely predict the variance of an endogenous vari-
able even though R2 for that outcome is close to zero.
Global model fit also says little about person-level fit,
or whether the model generates accurate predictions for
cases. Rensvold and Cheung (1999) described methods
to assess the impact of individual records on global fit,
and Coffman and Millsap (2006) demonstrated how
latent growth models with relatively poor global fit can
nevertheless closely match records at the case level.
For models that fail the chi-square test in very large
samples, it can happen that the residuals indicate rel-
atively small or even trivial local fit problems. If so,
the researcher might reasonably argue to retain the
model. McIntosh (2012) cautioned against a fallacy that
could motivate authors of SEM studies to report, but
then almost immediately discount, a failed model chi-
square test: The myth is that a significant model chi-
square in a large sample means that deviations from
exact fit must be trivial in magnitude. Perhaps that is
true, but without examining the residuals, the infer-
Pt2Kline5E.indd 159
Model Testing and Indexing 159
ence that “big N, small p” implies trivial model–data
discrepancies has no basis. Unfortunately, many—and
perhaps most—authors who dismiss failed model chi-
square tests report nothing about local fit (e.g., Seixas
et al., 2018).
It is illogical to ignore covariance evidence against
the model—a failed chi-square test—but then tout
the statistical significance of individual parameter
estimates as supporting the researcher’s hypotheses
(Markland, 2007). To do so is another form of confir-
mation bias, in this case disregarding evidence against
the whole model that could foster the publication of
false claims (Hayduk, 2014). The solution is to take
seriously the results of the model chi-square test while
also transparently reporting all evidence about model
fit, including the residuals.
Although p values are continuous measures of depar-
ture from exact fit, they do not reflect either whether
the specification error is smaller or larger or the nature
of such error. One reason is equivalent models, which
all have identical chi-square p values even though
those equivalent values represent contradictory causal
hypotheses. Just about any just-identified model (df M =
0) will perfectly fit the data, although that model—and
all equivalent versions, too—could be very wrong. So
even perfect fit does not rule out severe misspecifica-
tion (Hayduk, 2014). By the same logic, slight discrep-
ancies between model and data in local fit testing do
not rule out possible serious specification error, such as
reversal of true causal effects.
Although p < .05 is a common standard in signifi-
cance testing, it is not a golden rule (Wasserstein et
al., 2019), and in SEM the convention p < .05 for the
chi-square test may be too lax. True models are just as
likely to have a p value in the region of .05 as in the
.95 range. This is also true for .25 region and the .75
region. These statements reflect the fact that p values
are uniformly distributed under the null hypothesis;
that is, all values are equally likely over the interval
[0, 1.0] (Hung et al., 1997). So, striving for correctly
specified models in SEM is striving for models with
p values that should ideally be considerably > .05
(­Hayduk, 1996).
Accept–Support Testing and Power
The model chi-square test is an accept–support test,
where it is the failure to reject the null hypothesis that
supports the researcher’s model. This is the opposite of
a more conventional reject–support test, where reject-
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 160 Specification, Estimation, and Testing
ing the null hypothesis supports the researcher’s pre-
dictions. Of the two, accept–support testing is logically
weaker because the failure to disprove an assertion (the
exact-fit hypothesis) does not substantiate the truth of
that assertion (Steiger, 2007). Specifying lower crite-
rion values for statistical significance in reject–support
testing, such as p < .001, guards against false claims.
This is because Type I error means in this context that
the researcher’s theory is wrong. But in accept–sup-
port testing, we should worry more about Type II error
because false claims in this circumstance arise from
not rejecting the null hypothesis.
Potential consequences of low power are also differ-
ent: In accept–support testing with chiML, low power
means that there is little chance of detecting a false
model. This fact implies that analyzing a model in a
sample that is too small (i.e., low power) makes it more
likely that the model will be retained, which favors
the researcher’s hypotheses. In reject–support testing,
though, the penalty for low power due to an insufficient
sample size is that the researcher’s hypotheses are less
likely to be supported. The implications of low power
are another reason why insisting on p < .05 as a gold
standard in accept–support testing for SEM is generally
a mistake.
Other Factors That Affect
the Model Chi‑Square
Listed next and considered afterward are factors other
than sample size and specification error that can affect
values of chiML:
1. Violation of multivariate normality.
2. Model size.
3. Correlation size.
4. Measurement error (unique variance) and high mul-
ticollinearity.
5. Interactive effects.
Depending on the pattern and severity of nonnormal-
ity, the value of chiML can be either increased so that
model fit appears worse that it really is or decreased so
that model fit looks better than it really is (Finney &
DiStefano, 2013). This is the reason why it is so impor-
tant to screen your data for severe nonnormality when
using default ML. Corrected model chi-squares asso-
ciated with methods that do not assume normality are
described later in this chapter.
Pt2Kline5E.indd 160
The model size effect concerns the potential impact
of fitting models with relatively large numbers of vari-
ables, such as ≥ 30, in smaller samples, such as N <
200, on values of global fit statistics (Shi et al., 2019).
Values of chiML tend to be inflated under the condi-
tions just stated for normally distributed data (Herzog
et al., 2007; Kenny & McCoach, 2003). This means
that (1) the actual rate of Type I error is higher than
the nominal level set by the researcher, such as .05;
and (2) the chi-square test will reject too many true
models. In Monte Carlo simulations, Moshagen (2012)
reported evidence that the model size effect is more a
function of the size of covariance matrix, or the num-
ber of observed variables, than of the total number
of free parameters, df M, or type of model (e.g., path
vs. measurement models) in sample sizes of N = 200.
Empirical rates for the rejection of true factor analy-
sis models were generally > .90 for models with 60 or
more observed variables.
Bigger correlations among observed variables gener-
ally lead to higher values of chiML for incorrect mod-
els. This happens because larger correlations allow a
greater potential for discrepancies between observed
and predicted correlations (and covariances, too). Ana-
lyzing variables with relatively high proportions of
unique variance—which could be due to score unreli-
ability—generally results in loss of statistical power.
Thus, the chi-square test could potentially “reward” the
selection of measures with poor psychometrics because
low power in this case favors the model. This is the reli-
ability paradox: Imprecise factor measurement sup-
ports the retention of misspecified models, but use of
more precise indicators is potentially punished because
the model is easier to reject (Hancock & Mueller, 2011;
Heene et al., 2011). Grewal et al. (2004) noted that infla-
tion of Type II error (the exact-fit hypothesis is retained
for false models) may be especially severe when
1. Absolute correlations between exogenous variables
exceed .90.
2. Reliability coefficients are < .70.
3. Proportions of explained variance for individual
endogenous variables are relatively low, such as
R2 < .25.
4. The ratio of sample size to the number of free
parameters is < 3:1.
Mooijaart and Satorra (2009) reported that the
model chi-square test is relatively insensitive to inter-
3/22/2023 3:44:19 PM

action misspecification; that is, the test is generally
unable to detect the presence of true interaction effects
between pairs of exogenous variables. This happens
because central chi-square sampling distributions for
chiML are not necessarily distorted when severe inter-
action misspecification occurs. Thus, models with no
interactive effects could appear to fit the data based on
the model chi-square test even when there are strong
interactive effects in the population. The insensitiv-
ity to interactive effects also holds for corrected chi-
squares in the robust ML method. Presented in Topic
Box 10.1 is a resumé of strengths and limitations of the
model chi-square test.
Normed Chi‑Square
A brief mention of a statistic known as the normed chi-
square (NC) is needed mainly to discourage you from
ever using it. In an attempt to reduce the sensitivity of
the model chi-square to sample size, some researchers
in the past divided this statistic by its expected value,
such as chiML/df M, which reduced the value of this ratio
for df M > 1 compared with chiML. There are three prob-
lems with the NC:
1. chiML is affected by N only for false models.
2. df M has nothing to do with N.
3. There were never clear-cut guidelines about maxi-
mum “acceptable” values of the NC (e.g., < 2.0?—
< 3.0?).
Because there is little statistical or logical foundation
for the NC, it should have no role in model evaluation.
SCALED CHI‑SQUARES
AND ROBUST STANDARD ERRORS
FOR NONNORMAL DISTRIBUTIONS
Recall that (1) parameter estimates are the same in
default ML and robust ML, but (2) robust ML methods
generate scaled model chi-squares and robust standard
errors that correct for nonnormality (Chapter 9). An
early method by Satorra and Bentler (1988, 1994) that
requires complete data generates the Satorra-Bentler
scaled chi-square by applying a scaling correction
factor, c, to the unscaled model chi-square. The value
of c reflects average multivariate kurtosis in the raw
data. The specific relation is
Pt2Kline5E.indd 161
Model Testing and Indexing 161
chi ML
chi SB = (10.7)
c
Distributions of chiSB over random samples only approx-
imate central chi-square distributions but have asymp-
totically correct means. A different mean-adjusted
chi-square by Asparouhov and Muthén (2005) is not
based on chiML. Instead, in very large samples their
scaled chi-square equals Yuan and Bentler’s (2000) T2*,
which accommodates nonnormal or missing data. The
degrees of freedom for both chiSB and T2* are df M.
Mean- and variance-adjusted chi-squares have
different scaling factors, and over random samples they
generally follow central chi-square distributions with
asymptotically correct means and variances. They
require more computing resources than methods for
generating mean-adjusted chi-squares, but over large
samples mean- and variance-adjusted chi squares
should be more accurate (Asparouhov & Muthén, 2013;
Maydeu-Olivares, 2017b). The degrees of freedom for
the mean- and variance-adjusted chi-square gener-
ated in the Asparouhov and Muthén (2010) method are
df M. Satorra and Bentler (1994) described an alterna-
tive method where the rescaled chi-square has an esti-
mated degree of freedom that may not be an integer
(e.g., 15.752). In simulation studies where population
continuous variables were categorized into 2–7 catego-
ries, Savalei and Rhemtulla (2013) reported relatively
small differences (< 1%) in the performance between
the method that does not require an estimated df (Aspa-
rouhov & Muthén, 2010) and the method that estimates
df (Satorra & Bentler, 1994).
Described next are options for the robust ML method
in lavaan. Most of these methods are also available
in Mplus—see Maydeu-Olivares (2017b) and Muthén
and Muthén (1998–2017). There is also the option in
lavaan
mimic = “Mplus”
that reproduces results from Mplus. Syntax keywords
for other methods in lavaan are described next:
1. Option “MLM” is for complete data sets only and
generates the mean-adjusted Satorra-Bentler scaled
chi-square.
2. Option “MLR” can be applied in complete or
incomplete data sets, and it generates a mean-
adjusted chi-square based on the Yuan-Bentler T2*
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 162 Specification, Estimation, and Testing

TOPIC BOX 10.1

Resumé of the Chi‑Square Test

Strengths of the model chi-­square test are summarized next:

1. It is a statistically principled argument, one based on sampling theory, the population inference
model, and a frequentist view of probability, all of which are well established and generally famil-
iar to many researchers.
2. Although rarely seen in SEM studies, it possible to specify criterion levels of statistical significance
using methods that balance the relative costs of Type I versus Type II error. For example, if test-
ing at p < .55 gives the desired balance of error for the exact-fit test, then it should replace the
“default” of p < .05—see Mudge et al. (2012) and Aguinis et al. (2010) for more information.
3. The chi-­square test may be especially useful in “typical” sample sizes in SEM studies, say, N =
200–300. Such sample sizes are not at all “large,” especially for complex models with many
variables. But a failed exact-test fit, especially if the power of that test is relatively low, could signal
the presence of serious model–data discrepancy at the level of local fit.

Listed next are limitations of the chi-­square test:

1. While introducing the chi-­square test, Jöreskog (1969) himself mentioned a drawback: If the inter-
est in factor analysis is mainly the estimation of major factors that explain most of the observed
variation, then the presence of minor factors, over which the researcher may have little or no
control, could cause the model to fail the significance test. Such models could still be of practical
value, and the criteria for evaluating the utility of imperfect models depends at least as much on
rational considerations as on statistical results.
2. The basic assumptions of the chi-­square test are implausible in many, and probably most, studies:
Few researchers analyze correct models over truly random samples. If the basic assumptions of
a significance test are untenable, then p values from that test may be untrustworthy (Cumming &
Calin-­Jageman, 2017; Kline, 2013a). Thus, making hairsplitting distinctions among continuous p
values subject to error is hard to defend. For example, observing p = .04 versus p = .06 should
not encourage researchers to make very different claims about the model even when testing at the
.05 level (Hayduk, 2014).
3. It is possible—­but not guaranteed—­in very large samples that failing the chi-­square test signals
departures from perfect fit that would be considered inconsequential or trivial, but only careful
inspection of the residuals will address this question.
4. The outcome of the chi-­square test is the binary decision to retain or reject the exact-fit hypothesis,
nothing more. For reasons already explained, these two outcomes do not directly translate to the
decision to, respectively, retain or reject the model. Indeed, there is no global fit statistic of any
kind in SEM that can be reliably interpreted or applied in this way.

Pt2Kline5E.indd 162 3/22/2023 3:44:19 PM


statistic. Because this method accommodates miss-
ing data, it is the most flexible option listed here.
3. Option “MLMV” is for complete data sets only and
computes a mean- and variance-adjusted scaled chi
square.
4. Option “MLMVS” generates a mean- and variance-
adjusted chi-square with a correction for heterosce-
dasticity by Satterthwaite (1941). Model degrees of
freedom are estimated, and the method is for com-
plete data sets.
The default information matrix in lavaan for cal-
culating standard errors in robust ML methods is
expected, but the observed information matrix is used
when there are missing data (i.e., option “MLR”). The
user can override the default for incomplete data and
specify the use of the expected matrix.2 There are also
separate options in lavaan to specify methods for cal-
culating robust standard errors. For example, the com-
mand “robust.huber.white” specifies robust stan-
dard errors corrected for heterogeneity of the type gen-
erated in the “MLR” estimator while “robust.sem”
specifies “classical” robust standard errors without
such corrections (options “MLM,” “MLMV,” and
“MLMVS”). Researchers should avoid “shopping”
for the combination of scaled chi-squares and robust
standard errors that best supports their hypotheses. If
the results vary appreciably over different options, then
that fact should be disclosed.
MODEL FIT INDEXING
Model fit indexing involves the application of approxi-
mate fit indexes, which are not significance tests, so
there is no inherent binary decision about whether to
retain or reject a null hypothesis just as there is generally
no demarcation of the limits of sampling error (Hayduk,
2014). Instead, these indexes are intended as continu-
ous measures of model–data correspondence. Some are
scaled as badness-of-fit statistics where, just like the
model chi-square, higher values indicate worse fit, but
others are goodness-of-fit statistics where higher val-
2 Maydeu-Olivares (2017b) reported that standard errors in the
“MLR” method of Mplus were generally more accurate when
based on observed information except when sample average
absolute correlation residuals exceeded .08 or so.
Pt2Kline5E.indd 163
Model Testing and Indexing 163
ues indicate better fit. Values of some goodness-of-fit
indexes are more or less standardized so that their range
is 0–1.0, where a value of 1.0 indicates the best result.
Unlike the model chi-square test, there is no single,
unifying, or coherent theoretical framework for apply-
ing or interpreting values from approximate fit indexes.
Thus, model fit indexing is more like what Little (2013)
called the modeling school, which deals with the eval-
uation of entire statistical models in a context where
the decision rules are fuzzier and less clear cut. This
approach can provide flexibility because not all statisti-
cal models are alike and models must be adapted to dif-
ferent kinds of research questions. Consequently, there
is greater ambiguity about rules for evaluating statisti-
cal models. As we will see, though, flexibility in model
fit indexing has not always translated to good practice.
Another matter is the philosophical question of
whether perfection (i.e., the exact-fit hypothesis) is a
reasonable standard for statistical models, which are
probably all wrong at least to some degree; that is, mod-
els are generally imperfect approximations that help
researchers to structure their thinking about the target
phenomenon. If that approximation is too coarse, the
model will be rejected, but an overly complex model
that closely mirrors the phenomenon of interest is also
of little scientific value. Box (1976) elegantly said
Since all models are wrong the scientist cannot obtain a
“correct” one by excessive elaboration. On the contrary . . .
[the researcher] should seek an economical description of
natural phenomena. Just as the ability to devise simple but
evocative models [emphasis added] is the signature of the
great scientist so overelaboration and overparameteriza-
tion is often the mark of mediocrity. (p. 792)
Box (1976) went on to say
Since all models are wrong the scientist must be alert to
what is importantly wrong [emphasis added]. It is inap-
propriate to be concerned about mice when there are tigers
abroad. (p. 792)
In his comments on Box (1976), Hayduk (2014) objected
to the blanket assertion that “all models are wrong”
because no one will ever see all possible models in all
conceivable research situations. Hayduk (2014) also
noted that “tigers” in SEM correspond to model mis-
specification while emphasizing the need to detect
what is importantly wrong with our models.
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 164 Specification, Estimation, and Testing
Brief History of Approximate
Fit Indexes
The first approximate fit indexes were introduced in LIS-
REL V by Jöreskog and Sörbom (1981). Among them
are the goodness-of-fit index (GFI) and the adjusted
goodness-of-fit (AGIF) index. As their names sug-
gest, both indexes are goodness-of-fit statistics where
higher values indicate better fit, and they estimate the
proportion of variance in the sample covariance matrix
explained by the model-implied (predicted) covari-
ance matrix. The GFI is analogous to R2 in multiple
regression analysis for a single criterion. The AGFI is a
correction to the GFI based on df M and the number of
observed variables. For models where df M ≥ 1, AGFI <
GFI, and the difference between their values becomes
larger as df M decreases (i.e., the “penalty” is greater
for models with fewer degrees of freedom). Thus, the
AGFI is analogous to an adjusted R2 that controls for
N and number of predictor variables in regression. The
theoretical range for both the GFI and AGFI is 0–1.0,
where the result 1.0 indicates perfect model fit, but their
values can be < 0 for models with extremely poor fit
(West et al., 2012).
An anecdote from Sörbom (2001) about a 1985
workshop with Karl Jöreskog provides some context for
the approximate fit indexes just described:
We had just added GFI and AGFI to the program. In his
lecture Karl would say that the chi-square is really all
you need. One participant then asked, “Why have you
then added GFI?” Whereupon Karl answered, “Well,
users threaten us saying they would stop using LISREL
if it always produces such large chi-squares. So we had to
invent something to make people happy. GFI serves that
purpose. (p. 10)
A less generous interpretation of Sörbom’s (2001)
story is that the GFI and AGFI were added to mollify
researchers (i.e., LISREL’s customers) whose factor
models routinely failed the chi-square test and who
were reluctant to report those failures (Hayduk, 2014).
But some of those “failures” could have happened in
very large samples, so the same issues raised earlier
about the meaning of the chi-square test in this context
are relevant. I think there was also legitimate academic
interest in developing continuous measures of model–
data discrepancy as adjuncts to the chi-square test in
SEM. There are similar justifications in more tradi-
tional statistical analyses for estimating effect size as
Pt2Kline5E.indd 164
quantitative magnitudes of target phenomena that could
supplement or even replace binary significance testing
(Kelley & Preacher, 2012).
The addition of the GFI and AGFI to LISREL coin-
cided with over three decades of extensive research and
publications about approximate fit indexes in SEM.
Literally dozens, if not hundreds, of approximate fit
indexes have been developed—see Bentler and Bonett
(1980), Hu and Bentler (1995), Sun (2005), West et
al. (2012), and West et al. (2023) for summaries over
different points in time. There are also contempo-
rary reports of new fit indexes. An example is Falke
et al. (2020), who developed an estimation accuracy
fit index (EAFI) that takes into account both global
model fit and the precision of factor measurement in
latent variable models. Another is Gomer et al. (2019),
who described effect size measures for SEM that are
generalizations of standardized mean differences (d)
statistics, or ratios of the expected differences in the
ML fit function under null versus alternative hypoth-
eses over standard deviations of those functions that are
relatively insensitive to sample size.
Types of Approximate Fit Indexes
Although neither exhaustive nor mutually exclusive,
perhaps most approximate fit statistics can be classi-
fied into the types listed next—see Tanaka (1993) for
descriptions of other dimensions along which fit statis-
tics can vary:
1. Absolute fit indexes, such as the GFI, measure how
well the model explains the data with no other point
of reference.
2. Parsimony-adjusted indexes compare df M to the
maximum possible number of degrees of freedom
available in the data (Mulaik, 2009b). As the ratio
of the two quantities just stated approaches 1.0,
there is greater relative parsimony of using the data
to estimate model parameters. Although the AGFI
features a “penalty” for model complexity, it is not
a parsimony-adjusted fit statistic as just defined.
3. Incremental (relative, comparative) fit indexes
directly compare the fit of the researcher’s model
to that of a baseline model, which is typically an
independence (null) model that assumes covari-
ances of zero among observed exogenous or endog-
enous variables. The researcher can choose a dif-
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ferent baseline model, although hand calculation of
the index may be required if the desired baseline
model differs from the computer default baseline
model.
4. Noncentrality fit indexes estimate the degree to
which the exact-fit hypothesis is false, given the
model and data, and these quantities approximate
parameters in noncentral chi-square distribu-
tions that also describe sampling distributions for
approximate fit indexes of this type.
5. Predictive fit indexes, also called information-
theoretic fit indexes, are derived from information
theory and they estimate model fit in hypotheti-
cal replication samples of the same size that are
randomly drawn from the same population as the
original sample. They are used in SEM mainly to
compare alternative models based on the same vari-
ables and fitted to the same data, but where those
models are not hierarchically related; that is, one
model is not simply a subset of the other. Predictive
fit indexes are covered in the next chapter.
Not all approximate fit indexes have withstood the
test of time. For example, parsimony-adjusted indexes
never really “caught on” among applied researchers, so
they remain relatively obscure. Others fit indexes were
found wanting in computer simulation studies of their
statistical properties. This includes both the GFI and
AGFI, which are affected by sample size and the num-
ber of indicators in factor analysis models, among other
problems (Sharma et al., 2005).
Modern SEM computer tools vary widely in the num-
ber of approximate fit indexes printed in the program out-
put. Some programs, such as Amos and LISREL, print
relatively long lists of approximate fit indexes (> 12).
But other computer tools, such as lavaan and Mplus,
print values of just a few approximate fit indexes, about
4–5 each. The availability of so many approximate fit
indexes in computer output risks cherry-picking, or the
selective reporting of values for those indexes that favor
the researcher’s model. A way to avoid cherry-picking is
to report just a core, minimalist set of indexes while also
thoroughly examining the residuals.
Recommended Core Set
Among various approximate fit indexes, I think that a
core set consists of only three that are printed by most
Pt2Kline5E.indd 165
Model Testing and Indexing 165
SEM computer tools. They were selected for review
next because
1. They are reported in many published SEM studies.
2. Reviewers of submissions to journals may inquire
about them, if they are not reported in manuscripts.
3. They are all standardized in that their scales are not
based on those of the observed or latent variables.
4. At least of one them (RMSEA) has a broader statis-
tical rationale and interpretive framework for inter-
val estimation, hypothesis testing, and planning for
sample size.
But there is an important caveat: Researchers should
not blindly apply thresholds or cutting points, either
static or dynamic, to values of approximate fit indexes
that supposedly differentiate between models with
“good” fit to the data versus models with poor fit. Such
thresholds for approximate fit indexes, although seen
often in literature, are generally invalid; that is, they do
not work for all models and data sets, and their misuse
can lead to bad decisions, especially if the residuals are
ignored. These ideas are elaborated later in this chapter.
The core set of three approximate fit indexes is listed
next:
1. Steiger–Lind Root Mean Square Error of
Approximation (RMSEA) (Steiger, 1990) and its
90% confidence interval. The RMSEA is an abso-
lute fit index and a noncentrality fit index. It fea-
tures a penalty for model complexity, but it is not a
parsimony-adjusted index. The RMSEA is scaled as
a badness-of-fit index where zero is the best result;
there is no theoretical maximum value. Under cer-
tain conditions, distributions of the RMSEA follow
noncentral chi-square distributions.
2. Bentler Comparative Fit Index (CFI) (Bentler,
1990). The CFI is an incremental fit index and a
noncentrality fit index. It is also a goodness-of-fit
statistic scaled over the interval 0–1.0, where 1.0
is the best result. There is no penalty for model
complexity. The computer default baseline model
against which the researcher’s model is compared
can be respecified, if a different standard is desired.
3. Standardized Root Mean Square Residual
(SRMR) (Jöreskog & Sörbom; 1981). The SRMR
is an absolute fit index and a badness-of-fit statistic
3/22/2023 3:44:20 PM
 166 Specification, Estimation, and Testing
that is scaled in the metric of the correlation residu-
als. A result of zero indicates no difference between
observed and predicted correlations (i.e., perfect
fit), so it is a badness-of-fit statistic.
The RMSEA and CFI include the model chi-square
and its degrees of freedom in their formulas. This
means that they share the distributional assumptions of
their corresponding test statistic, and if those assump-
tions are untenable, then values of both the approximate
fit index and the corresponding test statistic (and its p
value) may be inaccurate. Both indexes were originally
defined for continuous outcomes with normal distribu-
tions analyzed with default ML; that is, the test statistic
is chiML. If the data are appreciably nonnormal, though,
then values of chiML, RMSEA, CFI can all be severely
distorted.
Some SEM computer tools perform ad hoc cor-
rections for nonnormality that replace chiML with a
rescaled chi-square, such as chiSB, when the RMSEA
and CFI are computed. Although intuitive, such ad
hoc corrections may estimate different parameters
compared with the original versions based on chiML.
Nonnormality-corrected versions of the RMSEA and
CFI that estimate the same parameters as their coun-
terparts based on chiML are described by, respectively,
Brosseau-Liard et al. (2012) and Brosseau-Liard and
Savalei (2014).
.20
.15
Probability density
.10
.05
0
0 5.0 10.0
Chi-square
FIGURE 10.1. Distributions of central and noncentral c2 for 5 degrees of freedom and where the noncentrality parameter (d)
equals 0 for central c2 and d = 6.107 for noncentral c2.
Pt2Kline5E.indd 166
RMSEA
Assuming multivariate normality, a true model, and
large random samples, the sampling distribution for
chiML is central c2 (df M). If df M = 5, for example, the
sampling distribution is c2 (5), which is depicted in Fig-
ure 10.1 with a solid line. If the model is false, however,
then chiML follows the noncentral distribution
c2 (df M, d) (10.8)
where (1) the expected value is df M + d, and (2) d (low-
ercase Greek letter delta) is the unnormalized (raw)
noncentrality parameter that indicates the degree to
which the exact-fit hypothesis is false. If d = 0, then the
exact-fit hypothesis is true and the distribution is cen-
tral c2 (df M), but d > 0 means that the exact-fit hypoth-
esis is false.
An estimator of d that avoids negative values is
d̂ = max (chiML – df M, 0) (10.9)
In other words, if chiML ≤ df M, its expected value under
the exact-fit hypothesis, then d̂ = 0; otherwise, d̂ equals
the amount by which chiML exceeds df M. For example,
if
chiML (5) = 11.107
δ=0
δ = 6.107
15.0 20.0 25.0 30.0
3/22/2023 3:44:20 PM

then d̂ = 11.107 – 5, or 6.107. If we treat this value as the
population raw noncentrality parameter (d), then chiML
is distributed over random samples as c2 (5, 6.107),
which is depicted in Figure 10.1 with the dashed line.
The normalized noncentrality parameter is less
affected by sample size:
dˆ
dˆ nor = (10.10)
N −1
Another interpretation is that d̂nor is a part of a function
called population discrepancy that estimates errors of
approximation, or the difference between the sample
predicted covariance matrix and the population covari-
ance matrix when the model is fitted to the population
covariance matrix. Any discrepancy reflects deficien-
cies in the model that have nothing to do with sampling
error (Mulaik, 2009b). In contrast, error of estimation
involves the differences between sample and popula-
tion estimates of the model parameters. It reflects sam-
pling error because data matrices vary over samples.
The sum of errors of approximation and errors of esti-
mation contribute to overall discrepancy between the
population covariance matrix and the sample model-
implied covariance matrix (see Equations 10.3–10.4 for
the chi-square test).
Dividing the normalized noncentrality parameter in
Equation 10.10 by df M as a correction for model com-
plexity yields an estimate of the normalized centrality
parameter for each model degree of freedom. Note that
the effect of correcting for df M diminishes as N becomes
increasingly larger (Mulaik, 2009b). Next, taking the
square root of the ratio just described scales the result
in the metric of the correlation residuals and gives us
the final composition for the RMSEA, designated next
as ê (lowercase Greek letter epsilon):
dˆ nor dˆ
=eˆ = equation models based on the RMSEA and CFI as an
df M df M ( N − 1)
(10.11)
max (chi ML − df M , 0)
= rized next:
df M ( N − 1)
Equation 10.11 is not an unbiased estimator of e, the
population parameter, due to the restriction that ê ≥ 0,
but it is an optimal estimator (Steiger, 2000). Also,
bias in estimating e from ê decreases with sample size.
Exercise 1 asks you to compare the meaning of the best
result for the RMSEA (ê = 0) with that of the corre-
sponding outcome chiML = 0 for the same model and
data.
Pt2Kline5E.indd 167
Model Testing and Indexing 167
The statistic ê as a point estimate of e is subject to
sampling error. The interval estimate for the parameter
e is the 90% confidence interval computed in noncen-
tral chi-square distributions that takes the form
[êL, êU] (10.12)
where êL and êU, are, respectively, the lower and upper
bounds. If ê = 0, then êL = 0 and the whole interval
is a one-sided confidence interval where êU > ê. This
explains why the confidence level is 90% instead of the
more typical 95%, the conventional level for two-sided
confidence intervals. If ê > 0, then êL ≥ 0 and the value
of ê does not typically fall at the exact center of the con-
fidence interval. Over random samples where N > 200
and for models with continuous outcomes that are not
severely misspecified, 90% confidence intervals for e
as just described are reasonably accurate (Curran et al.,
2003).
Browne and Cudeck (1993) suggested that ê ≤ .05 is
a favorable result, but results of later computer simula-
tion studies by Chen et al. (2008) indicated little support
for a universal threshold of .05—or any other value—
regardless of whether ê is used alone or jointly with its
90% confidence interval. Browne and Cudeck (1993)
also suggested that ê ≥ .10 may indicate poor model
fit, but there is no guarantee. From the perspective of
interval estimation, it would make more sense to apply
this particular heuristic to êU, the upper bound of the
confidence interval, than to ê, the point estimate. This
is because the whole confidence interval establishes
limits on the amount of sampling error associated with
ê, and êU provides a more conservative result (it less
favors the model) because êU > ê. Options for signifi-
cance testing based on ê and its 90% confidence inter-
val are described in Appendix 10.A. Also described
there is a method for equivalence testing of structural
alternative to the standard chi-square (exact-fit) test.
Other characteristics of the RMSEA are summa-
1. Interpretation of ê, êL, and êU relative to specific
fixed thresholds requires that the RMSEA fit statistic
follows noncentral chi-square distributions over large
random samples. Olsson et al. (2004) found in computer
simulation studies that empirical distributions of ê for
smaller models with relatively less specification error
generally followed noncentral chi-square distributions;
otherwise, the empirical distributions did not generally
3/22/2023 3:44:20 PM
 168 Specification, Estimation, and Testing
match up with noncentral distributions, especially for
models with greater specification error. These results
and others (Chen et al., 2008; Curran et al., 2003; Yuan,
2005; Yuan et al., 2007) question the generality of uni-
versal thresholds for the RMSEA.
2. Breivik and Olsson (2001) found in Monte Carlo
studies that the RMSEA tends to impose a harsher pen-
alty for complexity on smaller models with relatively
few variables. This is because smaller models tend to
have fewer degrees of freedom, but larger models have
more “room” for higher df M values. Results of both
theoretical analysis and Monte Carlo simulations by
Kenny et al. (2015) indicated that the RMSEA is not
very accurate for models with only a few degrees of
freedom, such as df M = 1, especially when the sample
size is not large. Specifically, RMSEA values were
generally inflated, which could result in the overrejec-
tion of correct models. They recommended not calcu-
lating the RMSEA for models with very low df values
in small samples. Instead, researchers should attempt,
if possible, to identify missing model parameters (i.e.,
fixed to zero in the original models) and directly esti-
mate them—see Kenny et al. (2015) for examples.
3. Nevitt and Hancock (2000) evaluated in computer
simulation studies the performance of robust forms of
the RMSEA corrected for nonnormality, one of which
is based on the Satorra–Bentler scaled chi-square. This
population-corrected robust RMSEA generally out-
performed the uncorrected version (Equation 10.11),
which tends to be inflated under conditions of nonnor-
mality. Brosseau-Liard et al. (2012) found that a differ-
ent robust index, one by Li and Bentler (2006) called the
sample-corrected robust RMSEA that also generates
adjusted confidence intervals, better reduced bias due
in nonnormality in smaller samples than the popula-
tion-corrected version. Robust versions of the RMSEA
including the Li–Bentler statistic just described are
printed using lavaan for robust ML methods.
4. Methods to estimate the statistical power of the
various null hypotheses described in Appendix 10.A
based on the RMSEA are elaborated on later in this
chapter. These methods can also generate the minimum
sample sizes required to obtain target levels of statisti-
cal power (e.g., what N is needed for power ≥ .90?). An
alternative to power analysis in planning for sample size
is accuracy in parameter estimation (AIPE)—also
called precision for planning—which involves obtain-
ing narrow (precise) confidence intervals (Rothman &
Pt2Kline5E.indd 168
Greenland, 2018). In the AIPE method by Kelley and
Lai (2011), the researcher specifies e, the population
RMSEA, and a sufficiently narrow confidence interval
for sample estimates of this parameter. Next, the com-
puter generates the minimum sample sized required for
the specified degree of precision. Their AIPE method
for the RMSEA is also described later in this chapter.
CFI
The CFI measures the proportionate reduction in the
raw noncentrality parameter for the researcher’s model,
or
d̂M = max (chiML – df M, 0) (10.13)
compared with the baseline model, or
d̂B = max (chiB – df M, 0) (10.14)
where chiB is the default ML chi-square for baseline
model with degrees of freedom equal to df B. The equa-
tion is
dˆ B − dˆ M dˆ
CFI = = 1− M (10.15)
dˆ B dˆ B
So defined, the range of the CFI is 0–1.0. The best result
is CFI = 1.0, which happens whenever the chi-square
for the researcher’s model does not exceed its expected
value, or chiML ≤ df M. The result CFI = .90 says that
the researcher’s model reduces the raw noncentrality
parameter by 90% compared with the baseline model
when both are fitted to the same data.
The baseline model is usually an independence
(null) model that assumes covariances of zero among
all measured endogenous variables (and also with the
exogenous variables). The null model in Mplus uses
the sample covariances among the exogenous vari-
ables, but other computer programs, such as LISREL,
fix the covariances between pairs of measured exog-
enous variables to zero, too (Jöreskog & Sörbom, 2018;
Muthén & Muthén, 1998–2017). Check the definition of
the baseline model in the documentation of your SEM
computer tool. The value of the CFI and other incre-
mental fit indexes depend in part on the independence
model analyzed along with the researcher’s model.
Independence models as just described are unrealis-
tic in probably many studies, where the assumption of
3/22/2023 3:44:21 PM

zero covariances is implausible. As a result, Miles and
Shevin (2007) described the CFI and related indexes as
answering the question, “How well is my model doing,
compared with the worst model [i.e., the null model;
emphasis added] that there is?” (p. 870). Some computer
tools, such as lavaan, permit the user to define a base-
line model that replaces the default baseline model in
automatic calculations of chiB, df B, and values of incre-
mental fit indexes such as the CFI. Otherwise, calcu-
lation of the CFI for a user-defined baseline model is
accomplished by (1) specifying that baseline model in
program syntax, (2) fitting it to the data, and (3) comput-
ing the value of the CFI by hand using Equation 10.15.
The independence model is more difficult to define
for models with mean structures. For example, an inde-
pendence model where both covariances and means
for measured variables are all fixed to zero may be
extremely unrealistic. An alternative for outcomes that
are not repeated measure variables allows for means
to equal their observed (sample) values. For repeated
measures, though, the null model should set means as
equal (i.e., no change in level over time), such as when
means from the same variable are fixed to equal the
value at the first measurement. The same is true for the
variances, which should be set as equal in a compa-
rable way (i.e., no change in variability over time). The
baseline model just described is the longitudinal inde-
pendence model (Little et al., 2007). If the observed
means or variances change appreciably over time,
there is more potential information to be extracted by
a researcher’s model over the independence model as
just defined; otherwise, there is less information to be
recovered by the researcher’s model (Little, 2013).
Hu and Bentler (1995) suggested that CFI ≥ .95 is
a favorable result, a benchmark generally consistent
with results from some later Monte Carlo studies, such
as Hu and Bentler (1999). But results from even more
recent simulation studies failed to support the general-
ity of any specific cutoff for the CFI over variations in
models and degrees of nonnormality in the data (Fan &
Sivo, 2005; Yuan, 2005). Robust forms of the CFI for
nonnormal described by Brosseau-Liard and Savalei
(2014) are printed by lavaan for robust ML methods.
Some researchers prefer the Tucker–Lewis Index
(TLI)—an incremental fit index originally described
by Tucker and Lewis (1973) for factor analysis models
and then later generalized to covariance-based SEM by
Bentler and Bonnett (1980) and renamed as the non-
normed fit index (NNFI)—over the CFI. The TLI is
also a parsimony-adjusted index that compares df M to
Pt2Kline5E.indd 169
Model Testing and Indexing 169
df B, the maximum possible number of degrees of free-
dom available in the data as represented by the baseline
model. An equation is
(chi B / df B ) − (chi ML / df M )
TLI = (10.16)
(chi B / df B ) − 1
where the quantity “1” is the expected value of c2/df
under the exact-fit hypothesis. Values of the TLI can
potentially fall below zero if the baseline model (not
the researcher's model) fits very well—which is not
likely to happen in practice—or TLI values can exceed
1.0 if the researcher’s model closely fits the data (West
et al., 2012). Values of the TLI are relatively unaffected
by sample size (Marsh & Balla, 1994). Kenny (2020)
noted that (1) both the CFI and TLI are affected by cor-
relation size, that is, higher average correlations among
measured variables are associated with higher CFI and
TLI values, and vice versa. Also, (2) values of the CFI
and TLI are highly correlated, so only one of these two
fit indexes should be reported.
SRMR
Neither the model chi-square nor degrees of freedom
values contribute to the SRMR; instead, it is based solely
on the residuals. It is a standardized version of the root
mean square residual (RMR), which is the square root
of the unweighted average squared covariance residual.
Perfect model fit is indicated by RMR = 0, and increas-
ingly higher values mean worse fit. But interpreting
RMR > 0 can be tough unless all the observed variables
have the same raw score metrics. The SRMR is com-
puted as the square root of the average squared covari-
ance residual standardized by the product of the stan-
dard deviations for the two corresponding measured
variables. It approximates the square root of the average
squared correlation residual, but the two statistics may
not be exactly equal in the same analysis. If SRMR =
0, then the model has perfect fit. It is easier to interpret
SRMR > 0 because correlation residuals are already
standardized, so the SRMR has a common meaning
regardless of the original (unstandardized) metrics. If
SRMR = 1.0, then the correlation residuals are as large
as the elements in the sample correlation matrix, which
indicates extremely poor model fit (West et al., 2012).
Pavlov et al. (2021, pp. 114, 127) described slight differ-
ences in the computation of the SRMR by Mplus com-
pared with some other SEM computer programs, such
as LISREL, and they described how to generate SRMR
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 170 Specification, Estimation, and Testing
values in Mplus that are directly comparable with those
computed in LISREL.
A value of the SRMR < .08 is generally considered
as favorable (Hu & Bentler, 1999), but averages like the
SRMR can hide appreciable variation among individ-
ual correlation residuals. Suppose that the correlation
residuals range from .02 to .04 and that SRMR = .03,
or less than .08. Here, the residuals are uniformly low
and relatively close to zero in value. These results seem
to favor the model. Now imagine that SRMR = .03, but
now the residuals range from –.12 to .18. Here it is obvi-
ous that some absolute correlations residuals are > .10,
which could indicate more serious local fit problems.
Thus, it is better in written reports to describe the cor-
relation residuals—or even better, present the whole
matrix—rather than to rely solely on an average value
such as the SRMR.
THRESHOLDS FOR APPROXIMATE
FIT INDEXES
A natural question about continuous approximate fit
indexes involves the range of values indicating “accept-
able” or even “good” model fit. Well, unfortunately, there
is no simple answer to this question because there is no
direct correspondence between values of approximate
fit indexes and the seriousness or types of specification
error, just as for the chi-square test. Also, many interpre-
tive guidelines or rules of thumb for the RMSEA, CFI,
and SRMR, among other indexes, seen in the literature
or web pages about SEM are untrustworthy; that is, there
is little evidence that they actually differentiate between
model “good” versus “poor” fit to the data across the
wide range of models and data analyzed in different dis-
ciplines.
Fixed Thresholds
Most interpretive guidelines about fixed thresholds
stem from a series of computer simulation studies con-
ducted in the 1980s and 1990s on the distributional
characteristics of approximate fit indexes under vary-
ing data and model conditions. Gerbing and Ander-
son (1993) reviewed many of these early studies, and
more recent examples include Hu and Bentler (1998)
and Marsh et al. (1996). The most influential early
simulation study is undoubtedly Hu and Bentler (1999),
who studied 3-factor, 15-indicator CFA models under
varying conditions of (1) sample size; (2) distributional
characteristics (normal vs. nonnormal) for indicators,
Pt2Kline5E.indd 170
factors, or errors; (3) whether some indicators mea-
sured one or two factors; and (4) types of specification
errors in sample models. They determined cutoff points
for approximate fit indexes that detected most incor-
rect models while “accepting” most correct models for
individual approximate fit indexes and combinations of
two such statistics.
Based on their simulation results, Hu and Bentler
(1999) suggested RMSEA < .06 as a heuristic based
on this single index, which is similar to the threshold
described by Browne and Cudeck (1993) for the same
fit statistic (≤ .05). Evidence that this threshold is not
universal over variations in models and data was cited
earlier. Hu and Bentler (1999) also suggested a heu-
ristic for the CFI and SRMR as a set. Their rationale
was that the CFI seemed to be most sensitive to mis-
specified factor loadings, whereas the SRMR seemed
to be most sensitive to misspecified factor covariances.
Their combination rule or two-index strategy for
concluding that there is a “relatively good fit” between
model and observed data based on these indexes was
CFI ≥ .95 and SRMR ≤ .08. This combination rule was
not supported in later Monte Carlo studies by Fan and
Sivo (2005), who suggested that the original Hu and
Bentler (1999) findings about the CFI and SRMR for
factor analysis models were artifacts due to confound-
ing between types of misspecification and severity of
misspecification for simpler versus more complex mod-
els. Results of other simulation studies also do not sup-
port the respective thresholds just listed (Yuan, 2005).
To be clear, Hu and Bentler (1999) never intended
their fixed thresholds for the RMSEA, CFI, SRMR,
and other approximate fit indexes to be treated as any-
thing other than rules of thumb. One reason is that it
is impossible in Monte Carlo studies to evaluate the
whole constellation of model and data analyzed in real
studies. It is also true that values of basically all global
fit statistics (including the model chi-square) can be
affected by a host of nuisance factors, such as sample
size, the number of indicators per factor models, and
magnitudes of indicator-factor associations, that are
unrelated to the actual extent of model misspecification
(Beauducel & Wittman, 2005; Greiff & Heene, 2017;
Yuan, 2005). The commonly used cutoff values are
also generally insensitive to violations of assumptions
about uncorrelated errors in CFA models (Heene et al.,
2012). Researchers rarely analyze models known to be
correct in the population, which is the starting point
in simulation studies. Fixed thresholds are associated
with ML estimation for continuous outcomes, and there
is evidence that they do not generalize to other methods
3/22/2023 3:44:21 PM

or when analyzing ordinal outcomes (Nye & Drasgow,
2011; Xia & Yang, 2019).
Blind reliance on fixed thresholds for approximate
fit indexes that supposedly indicate “good” model fit is
regrettably widespread. Presented next is a hypotheti-
cal example of the kind of reporting that is both overly
telegraphic and deficient; yet it is seen in far too many
SEM studies:
The final model had good fit to the data, c2 (20)
= 5.605, p = .001, CFI = .964, SRMR = .075,
and RMSEA = .057 (Hu & Bentler, 1999).
The parenthetical citation in this example highlights the
fact that values of the RMSEA, CFI, and SRMR all fall
on the “good” side of the Hu and Bentler (1999) rules.
But there are serious problems here: Not only is the
failed chi-square test ignored, but also the 90% confi-
dence interval for the RMSEA is not reported and there
is no mention of the residuals. There is also no explana-
tion of how the decision to retain the model is related
to the string of numerical values stated in the text for
this example. That is, the reader is given no explanation
about why model fit is deemed to be “good.”
The hypothetical example just considered matches
reality, too: Among 75 published SEM studies reviewed
by Ropovik (2015), a model was retained in 97% of the
studies, but out of these models, 80% failed the chi-
square test. Most authors of these studies ignored the
failed chi-square test or neglected to mention that fact
at all, and about half of these authors relied on approxi-
mate fit indexes to justify retaining the model but with
no explicit justification. Although universal agreement
among SEM specialists is rare, I believe the consensus
is that uncritical reliance on fixed thresholds is not up
to standard.
Dynamic Thresholds
Dynamic (flexible) thresholds for CFA measurement
models are intended to avoid the limitations of fixed
thresholds for approximate fit indexes by tailoring cut-
off points to more specific combinations of models and
data. Such adjustments take into account the sample
size, numbers of factors or indicators, magnitudes of
factor loadings and error variances, and data nonnor-
mality, all of which can distort values of approximate
fit indexes (West et al., 2023). Dynamic thresholds are
not intended to serve as the sole basis for retaining or
rejecting models; instead, such thresholds estimate
what the value of a fit index should be for a correctly
Pt2Kline5E.indd 171
Model Testing and Indexing 171
specified model, given model and data characteristics
in a particular study (Niemand & Mai, 2018).
The method by Niemand and Mai (2018) generates
one-sided confidence intervals—lower-bound intervals
for goodness-of-fit statistics, upper-bound intervals for
badness-of-fit statistics—for approximate fit indexes
over a range of correctly specified CFA models and
sample sizes for normal or nonnormal data. The widths
of these intervals can be varied over different levels of
acceptable Type I error, and the lower or upper mar-
gins of the intervals define the flexible thresholds for
specific fit statistics. For instance, in relatively small
samples (N < 300) or for very large models, such as
100 indicators for 20 factors, flexible thresholds for the
CFI are generally < .95, the Hu and Bentler (1999) fixed
cutoff for the same index. Over the variations in models
and data, the hit rates for flexible cutoff values were
generally higher than for fixed cutoff values. There
is a website where the researcher describes the CFA
model, the degree of nonnormality, and the amount of
accepted uncertainty.3 Tailored cutoff values are gener-
ated for the RMSEA, CFI, TLI, and SRMR.
A different method, also for CFA and other kinds of
structural equation models models, by McNeish and
Wolf (2020) conducts Monte Carlo simulations for both
the researcher’s model with standardized parameter
estimates and a misspecified version of that model with
an additional parameter. Precision of factor measure-
ment is estimated from the standardized factor load-
ings. Distributions of the RMSEA, CFI, and SRMR are
generated for both models, and the algorithm identifies
values of each index that (1) reject at most 10% of the
researcher’s model, but (2) reject at least 90% of the mis-
specified models, if any such values exist. Otherwise,
the model and data are insufficient for unambiguous
discrimination between true and misspecifed versions.
There is a web-based Shiny application (interactive web
site), Dynamic Model Fit, where the researcher submits
a text file that specifies the sample size, CFA model, and
the standardized estimates (Wolf & McNeish, 2020).4
It is too early to tell whether flexible thresholds for
approximate fit indexes will have a lasting impact in
SEM research. As of this writing, they were available
for some, but not all kinds of structural equation mod-
els. Although dynamic thresholds may have advantages
over fixed thresholds, dynamic thresholds are not sub-
stitutes for carefully examining all information about
3 https://flexiblecutoffs.org/
4 https://www.dynamicfit.app/
3/22/2023 3:44:21 PM
 172 Specification, Estimation, and Testing
model fit, including the model chi-square test and the
residuals. That is, the same mistakes that have been
made with fixed thresholds for approximate fit indexes
should not be repeated with dynamic thresholds—see
West et al. (2023) for additional discussion of these
issues. Depaoli et al. (2023) described model fit evalu-
ation assessment from a Bayesian perspective in which
theoretical posterior distributions for various fit statis-
tics can be analyzed.
RECOMMENDED APPROACH
TO FIT EVALUATION
The method outlined next is consistent with reporting
standards for SEM (Appelbaum et al., 2018) and also
calls on researchers to report more information about
model fit than has been true in past experience:
1. If you use a simultaneous estimation method,
report the model chi-square with its degrees of freedom
and p value. There are some analyses, such as when
outcome variables are dichotomous and path coeffi-
cients are estimated using methods for binary logistic
or probit regression, where a model chi-square may
be unavailable—see Muthén and Muthén (1998–2017,
chap. 3) for examples—but these are exceptional cases.
2. If the model fails the exact-fit test, then (a)
directly say so and, regardless of sample size, (b) ten-
tatively reject the model. Next, (c) diagnose both the
magnitude and possible sources of misfit (inspect local
fit). The rationale is to detect statistically significant but
slight model–data discrepancies that explain the fail-
ure. This is most likely to happen in a large sample. The
initial decision to reject the model could be rescinded,
but only based on local fit evidence along with explana-
tion about why observed model–data discrepancies are
actually inconsequential.
3. If the model passes the exact-fit test, you still have
to inspect local fit. The rationale is to detect model–
data discrepancies that are not statistically significant
but still great enough to cast doubt on the model. This
most likely occurs in a small sample. If evidence about
local fit indicates appreciable discrepancies, then the
model should be rejected even though it passed the chi-
square test.
4. Report a matrix of residuals, such as correlation,
standardized, or normalized residuals, in the body of
Pt2Kline5E.indd 172
the manuscript. If the model is so large that doing so
would be unwieldy, then (a) provide such tables in the
supplemental materials and (b) describe in the manu-
script the pattern of residuals, such as the locations of
larger residuals and their signs. Look for patterns that
may be of diagnostic value in understanding how the
model may be misspecified. Any report of the results
without information about the residuals is deficient.
Unfortunately, incomplete reporting in this area is the
norm rather than the exception. For example, in our
review of 144 published SEM studies in the area of
organizational management, residuals were mentioned
in only about 17% of these works (Zhang et al., 2021).
5. If you report values of approximate fit indexes,
then include those for the minimal set described earlier
in this chapter. But do not try to justify retaining the
model by depending solely on thresholds, either fixed
or dynamic, for such global fit statistics. This is espe-
cially true if the model failed the exact-fit test and the
pattern of residuals suggests a specification error that
is not trivial.
6. If you respecify the initial model, explain the
rationale for doing so. You should also explain the role
that diagnostic statistics, such as residuals, played in
the respecification. That is, point out the connections
between the numerical results for the model, relevant
theory, and modifications to the original model (Chap-
ter 3). If you retain a respecified model that still fails
the exact-fit test, then demonstrate that model–data
discrepancies are truly slight; otherwise, you have
neglected to show that there is no appreciable covari-
ance evidence against the model.
7. Statistical evidence about model fit is important,
but it is not the sole factor in deciding whether to retain
a model. For example, the parameter estimates should
make sense, given the research problem. Models with
reasonable prospects for fitting data sets in future repli-
cations generated by the same causal processes should
be preferred over models that fit a particular data set
well. This is especially true for complex, overparam-
eterized models that could potentially fit just about any
arbitrary data. Such models are (a) less falsifiable than
more parsimonious models and (b) less likely to gener-
alize over variations in samples and settings (Preacher
et al., 2013).
8. If a model is retained, then the researcher should
explain why that model should be preferred over equiv-
alent or near-equivalent versions that, respectively,
3/22/2023 3:44:21 PM

explain the same data exactly as well or nearly as well.
This step is much more logical than statistical, and it
also involves describing what might be done in future
research to differentiate between any serious compet-
ing models. Complete reporting about equivalent or
near-equivalent models is rare; thus, conscientious
readers can really distinguish their own SEM analyses
by addressing this issue. The generation and assess-
ment of equivalent versions of structural models are
covered in the next chapter.
9. If no model is retained, then your skills as a
scholar are needed to explain the implications for the
theory tested in your analysis.
At the end of the day, regardless of whether or not
you have a retained a model, the real honor comes from
following, to the best of your ability, a thorough evalu-
ation process to its logical end. The poet Ralph Waldo
Emerson put it this way: The reward of a thing well
done is to have done it (Mikis, 2012, p. 294).
Tips for Inspecting the Residuals
Although it is critical to report on the residuals, you
should know that just as with outcomes from the chi-
square test and values of approximate fit indexes, there
is no dependable or trustworthy connection between the
size of the residuals and the type or amount of model
misspecification. For example, the degree of specifica-
tion error indicated by a relatively small correlation
residual may be slight and yet may be severe. One rea-
son is that values of residuals and other diagnostic sta-
tistics, including modification indexes—defined in the
next chapter—are themselves affected by misspecifica-
tion. An analogy in medicine is a diagnostic test for a
disease that is less accurate in patients who have that
illness. A second reason is error propagation in global
estimation where misspecification in one part of the
model distorts estimates in other parts of the model. A
third is equivalent models, which have identical residu-
als but also contradictory patterns of causal effects. But
we do not generally know in advance which parts of the
model are incorrect, so it can be difficult to understand
exactly what the residuals are telling us.
Inspecting the pattern of residuals can sometimes be
helpful. Suppose that a pair of variables X and Y where
rXY > 0 are connected by indirect causal pathways only.
The residual for that pair is positive, which says that
the model underpredicts their association. In this case,
Pt2Kline5E.indd 173
Model Testing and Indexing 173
the hypothesis of no direct causal effect between X and
Y may be cast in doubt, and a possible respecification
is to add a direct causal effect between them. Another
possibility consistent with the same positive residual is
to specify a disturbance correlation, if both variables
are endogenous. But just which type of effect to add to
the model (causal vs. noncausal) or their directionali-
ties (e.g., X causes Y versus Y causes X) are not things
that residuals can tell us. Just as there is no magic in
global fit statistics, there is also none in diagnostic
statistics, at least none that would relieve researchers
from the burden of having to think very carefully about
respecification.
GLOBAL FIT STATISTICS
FOR THE DETAILED EXAMPLE
The previous chapters dealt with the ongoing analysis
of the Roth et al. (1989) recursive path model of illness
(Figure 8.1), and we reviewed default ML parameter
estimates (Table 9.2) and residuals, including correla-
tion, standardized, and normalized residuals (Table
9.4). The residuals indicated local fit problems, espe-
cially for the variables fitness and stress. Next, we con-
sider evidence about global fit. One of the lessons of
this example is that some, but not all, global fit statis-
tics signal problems about model fit in this example.
Another is that through selective reporting of these
results, a researcher could potentially justify reten-
tion of the model if the residuals are ignored, which I
believe would be a poor decision in this case.
Listed for analysis 1 in Table 10.1 is the lavaan
syntax file for fitting the Roth et al. (1989) path model
in Figure 8.1 to the data in Table 4.3 for estimation
in default ML. The output file includes parameter
estimates, global fit statistics, residuals, and modifi-
cation indexes.5 Reported in Table 10.2 are values of
the global fit statistics described earlier. The model
just fails the chi-square test at the .05 level, chiML (5)
= 11.107, p = .049. This outcome for a global signifi-
cance test of the whole model is consistent with prob-
lems apparent in the residuals. Exercise 2 asks you to
reproduce the model chi-square from the log-likelihood
values for H0 (researcher model) and H1 (unrestricted
model) reported in the table.
Values of approximate fit indexes in Table 10.2 sug-
gest a mixed picture. The value of the RMSEA is .057,
5 Analysis 1 in Table 10.1 is the same as analysis 1 in Table 9.1.
3/22/2023 3:44:21 PM
 174 Specification, Estimation, and Testing

TABLE 10.1. Analyses, Script Files, and Packages in R for

Computing Global Fit Statistics, Power, and Precision
for a Recursive Path Model of Illness
Analysis Script files R packages
1. Global fit statistics, residuals, and roth-cov-ml.r lavaan
modification indexes
2. Power and precision estimates for roth-power-precise.r semTools
whole model and individual parameters lavaan
WebPower
MBESS

Note. Output files have the same names except the extension is “.out.”

which does not seem terrible, but the upper bound of its
90% confidence interval, .103, is high enough to war-
rant concern. Outcomes of significance tests based on
the RMSEA are also mixed. For example, the model
passes the close-fit test but fails both the not-close-fit
test and also the poor-fit test—see Appendix 10.A. The
tested path model reduces the raw noncentrality param-
eter by 96.1% compared with the baseline model (CFI
= .961), which in lavaan allows the two exogenous
variables, exercise and hardy, to covary, but all other
variables are assumed to be independent. The value of
the CFI in this analysis does not suggest a glaring prob-
TABLE 10.2. Values of Global Fit Statistics
for a Recursive Path Model of Illness
N 373
ln L0 –9,429.689
ln L1 –9,424.135
lem. For Exercise 3, you are to reproduce the RMSEA
and CFI values from other information in Table 10.2.
Exercise 4 involves fitting the baseline model for this
example to the data and reproducing the result chiB (9)
= 165.608 in the table.
Through the use of selective reporting and relying on
fixed thresholds for approximate fit indexes, it could be
possible to justify retaining the model in this example
by (1) ignoring the failed chi-square test; (2) neglect-
ing to inspect the residuals; and (3) touting RMSEA <
.06, CFI > .95, and SRMR < .08 (i.e., thresholds from
Hu & Bentler, 1999) while not reporting the unfavor-
able upper bound of the confidence interval based on
the RMSEA, or .103. For reasons explained (i.e., the
residuals in Table 9.4), though, I believe that a decision
to retain the model in this example would be a mistake.
POWER AND PRECISION

Model chi-square This presentation emphasizes a priori (prospective)

power, which is estimated before the data are collected.
chiML 11.107, p = .049
Some granting agencies require estimates of a priori
dfM 5
power as part of the research plan, which makes sense:
Approximate fit indexes Why fund the proposal if there is little chance in signif-
icance testing of detecting the effect of interest (i.e., low
RMSEA (ê) [90% CI] .057 [.003, .103]
power)? Results from power analysis can also provide a
CFI .961
rationale for the proposed sample size in a grant appli-
SRMR .051
cation (i.e., power is high, given the planned N)—see
Baseline (independence) model National Institute of Health (2018) for examples.
In contrast, a retrospective (post hoc, observed)
chiB 165.608, p < .001
power analysis is conducted after the data are col-
dfB 9
lected. This means that sample statistics are treated
Note. The measured exogenous variables, exercise and hardy, are al- as they though were population parameters; that is,
lowed to covary for the independence model. observed effects sizes are assumed to be population

Pt2Kline5E.indd 174 3/22/2023 3:44:21 PM


values. There are three problems: (1) Statistics merely
estimate parameters, and those estimates are subject
to many potential kinds of distortion (Anderson et al.,
2017). (2) It is a common but false belief that higher
observed power implies stronger evidence for null
hypotheses that are not rejected (Hoenig & Heisey,
2001). (3) The method is more like an autopsy than
a diagnostic procedure because if observed power is
low, it is too late because the data are already collected
(Kline, 2013a). For all these reasons, observed power is
not considered further.
In SEM, a priori power is estimated by specifying in a
computer tool (1) characteristics of the population model
based on theory or results from prior empirical studies;
(2) specific null and alternative hypotheses about indi-
vidual parameters or the whole model; (3) a criterion
level of statistical significance, a; and (4) a planned sam-
ple size. One variation specifies a target level minimum
level of power, such as ≥ .90, and the computer estimates
the minimum sample size required to obtain target
power. A total of three different methods are described
next. The first two methods (Satorra–Saris, MacCal-
lum–RMSEA) were originally described for models
with continuous outcomes estimated with default ML,
but the third method (Monte Carlo simulation) can be
applied to models with categorical or continuous out-
comes or estimated with default ML or other methods:
1. The Satorra–Saris method (Satorra & Saris,
1985) estimates the power of the likelihood ratio test for
a single parameter. Suppose that a researcher believes
that the population unstandardized direct effect of X on
Y is 5.0. Using this and other a priori values of param-
eters in the researcher’s model, the method then gener-
ates the model-implied population covariance matrix
under the alternative hypothesis that corresponds to the
full model with the parameter X → Y. Next, the reduced
model without X → Y (it is fixed to zero) that corre-
sponds to the null hypothesis is fitted to the predicted
matrix. The statistical discrepancy between the null
model without the target parameter and the data matrix
predicted by the alternative model with that model
parameter estimates a noncentrality parameter for the
model chi-square, which in turn is converted to the esti-
mated power of the likelihood ratio test for the model
parameter of interest. The method must be repeated for
every individual model parameter for which an esti-
mate of power is desired. A variation allows for restric-
tions on multiple model parameters in the null model
(Saris & Sattora, 1993).
Pt2Kline5E.indd 175
Model Testing and Indexing 175
2. The MacCallum–RMSEA method by MacCal-
lum et al. (1996) and later extended by Hancock and
Freeman (2001), among others, is based on the popu-
lation RMSEA and noncentral chi-square distributions
for tests of the exact-fit hypothesis (e0 = 0), the close-
fit hypothesis (e0 ≤ .05), the not-close-fit hypothesis
(e0 ≥ .05), or the poor-fit hypothesis (e0 ≥ .10) for the
whole model (Appendix 10.A). The analysis for any of
the null hypotheses just listed is conducted by specify-
ing N, a, df M, and a suitable value for e1 under the alter-
native hypothesis. For example, e1 could be specified for
the close-fit hypothesis as .08, which exceeds the fixed
threshold value of .05 for “close fit” but is lower than the
threshold for “poor fit.” For the not-close-fit hypothesis,
e1 could be specified as .01, a value that represents even
better approximate fit than e1 = .05. Another option is to
determine the minimum sample size needed to reach
a target level of power, given a, df M, e0, and e1. In con-
trast to the Satorra–Saris method, the researcher is not
required to specify numerical values for model param-
eters in the MacCallum–RMSEA method.
A limitation of the MacCallum–RMSEA method is
the reliance on fixed threshold values for e0 that may
not be very meaningful. (Recall the earlier discus-
sion about limitations of fixed thresholds for sample
RMSEA statistics.) For example, Kim (2005) studied
a total of four approximate fit indexes, including the
RMSEA and CFI, in relation to power estimation and
determination of sample size requirements for target
levels of power. Kim (2005) found that estimates of
power and minimum sample sizes varied as a function
of choice of the index, number of observed variables
and df M, and magnitude of covariation among the vari-
ables. This result is not surprising given that (1) differ-
ent approximate fit indexes reflect different aspects of
model–correspondence, and (2) little direct correspon-
dence exists between values of various fit statistics and
df M or types of model misspecification. As Kim (2005)
notes, a value of .95 for the CFI does not necessarily
indicate the same misspecification as a value of .05 for
the RMSEA.
3. The Monte Carlo simulation method is a mod-
ern and flexible alternative that assumes neither con-
tinuous outcomes nor default ML estimation (i.e., nor-
mality is not required except if the method is default
ML). It estimates the proportion of generated samples
where the null hypothesis that some parameter of inter-
est is zero is correctly rejected. The method can also
be applied to estimate the power of significance tests
3/22/2023 3:44:21 PM
 176 Specification, Estimation, and Testing
for the whole model based on various global fit sta-
tistics; that is, different criteria can be simultaneously
analyzed.
As in the Satorra–Saris method, the researcher
using the Monte Carlo method specifies the model
with values of its parameters based on theory or prior
research. Next, the computer generates simulated ran-
dom samples, given the model and its parameters as
specified. Finally, the model is estimated in each of
the generated samples, and results for global fit sta-
tistics and parameter estimates are aggregated and
saved to a file. The method can be repeated under
different scenarios concerning varying sample sizes,
parameters, or a, among other possibilities (Bandalos
& Leite, 2013; Hancock & French, 2013; Leite et al.,
2023). There are also special Monte Carlo methods
for estimating power in models with multiple indirect
effects (Thoemmes et al., 2010).
There are increasingly more computer tools for
power analysis in SEM. For example, some SEM
software, such as Mplus and LISREL, have built-in
capabilities for Monte Carlo simulation (Myers et al.,
2011). Wang and Rhemtulla (2021) described a Shiny
app, pwrSEM, for estimating power for tests of single
parameters through simulations of models where com-
mon factors have multiple indicators.6 The MacCal-
lum–RMSEA method is implemented in the semTools
package for R (Jorgensen et al., 2022), and there are
freely accessible calculating web pages for the meth-
od.7 The R package WebPower (Zhang et al., 2023) has
capabilities for all three SEM power analysis methods
just described. There are also versions of WebPower
for Andoid devices and for online use within a Web
browser (Zhang & Yuan, 2018).8 The R package pow-
erMediation can estimate power for tests of mediation
effects in logistic, Poisson, and Cox (proportional haz-
ards) regression and also for the Sobel test with con-
tinuous variables (Qiu, 2021). See Feng and Hancock
(2023) for descriptions of additional procedures and
computer tools for a priori power analysis in SEM.
The Kelley–Lai precision method by Kelley and
Lai (2011) generates the minimum sample sizes needed
to estimate e, the parameter for the RMSEA statistic,
within a target margin of error, w, specified by the
6 https://yilinandrewang.shinyapps.io/pwrSEM/
7 http://quantpsy.org/rmsea/rmsea.htm
8 https://webpower.psychstat.org/
Pt2Kline5E.indd 176
researcher. The input for the method includes df M,
the confidence level (i.e., 1 – a), w, and a presumed
population RMSEA value, e*. The value of e* could be
specified based on the findings of prior empirical stud-
ies conducted with a similar population, meta-analytic
results, or fixed thresholds of the kind described ear-
lier for the RMSEA, such as e* = .05 for “close fit”
(Appendix 10.A). Kelley and Lai (2011) suggested val-
ues for w over the range .02–05, where .02, .035, and
.05, respectively, correspond to the qualitative descrip-
tors “minimum” (unnecessarily narrow), “ideal,” and
“maximum” (unnecessarily imprecise). If uncertainty
remains about values for e* or w, the method can be
repeated over a range of plausible alternative values.
Results of Monte Carlo studies by Kelley and Lai
(2011) over varying types of models, degrees of mis-
specification, and sample sizes indicate that their
RMSEA-based precision method was most accurate
when the specified value e* is closer to the real value e
and when sample RMSEA statistics follow noncentral
chi-square distributions. (Recall that this is probably
unlikely in small samples; Curran et al., 1996, 2003.)
There are tables in Kelley and Lai (2011, p. 24) for
looking up minimum sample sizes over a range of e*
and w values for models where df M = 30 or 60. Their
precision method is also implemented in the MBESS
package for R (Kelley, 2022). A limitation is that the
method assumes normally distributed, continuous out-
comes (i.e., it is based on default ML estimation).
Power and Precision Estimates
for the Detailed Example
The annotated script file and output file for estimating
power and precision in the continuing example listed
in Table 10.1 for analysis 2 can be downloaded from
the book’s website. All analyses assumed continuous
outcomes and default ML, but the WebPower package
can also simulate nonnormal distributions analyzed by
robust ML.
Reported in Table 10.3 are power estimates for the
exact-fit, close-fit, not-close-fit, and poor-fit hypotheses
in the MacCallum–RMSEA method at a = .05 for the
recursive path model of illness. Results for the original
sample size, N = 373, are presented in the fifth column
of the table, and low power is apparent for all tests. For
example, if the model does not have exact fit in the pop-
ulation, there is only a .338 chance over random sam-
ples of detecting this outcome with the chi-square test.
Only the test of the poor-fit hypothesis has somewhat
3/22/2023 3:44:21 PM

TABLE 10.3. Power Analysis Results Based on the MacCallum–RMSEA
Method for a Recursive Path Model of Illness
Fit hypothesis Type e0 e1
Exact AS 0 .05
Close AS .05 .08
Not close RS .05 .01
Poor RS .10 .05
Note. AS, accept–support; RS, reject–support. The criterion level of statistical significance is a = .05.
higher power at the original sample size, or .613; that
is, if the model does not have poor fit in the population,
the significance test based on the RMSEA would be
correct 61.3% of the time. The minimum sample sizes
needed in order for power to be at least .90 for test of
the exact-fit and poor-fit hypotheses are, respectively,
1,319 and 758 (last column in the table). Exercise 5
asks you to interpret results for the test of the close-fit
hypothesis in Table 10.3.
Displayed in Figure 10.2(a) are standardized val-
ues for all parameters of the Roth et al. (1989) recur-
sive model of illness. These values are not empirical
estimates; instead, they are based on plausible values,
given the variances of the observed variables in the
model (see Table 4.3). Also, the standardized path coef-
ficients in Figure 10.2(a) are generally more conserva-
tive than their empirical counterparts (see Figure 8.1).
They are treated here in this pedagogical example as
a priori standardized parameters in the Monte Carlo
simulation method. Following guidelines for starting
values outlined in Topic Box 9.1, values for the unstan-
dardized parameters in Figure 10.2(b) are based on
the corresponding standardized parameters in 10.2(a).
Computer simulations were conducted with the unstan-
dardized values over 1,000 generated samples at a =
.05, N = 373, and default ML.
Estimated power for significance tests of individual
variances or covariances, such as the three disturbance
variances in Figure 10.2(b), were all basically 1.0 (i.e.,
significant test outcomes are practically guaranteed,
assuming the model as specified is true). Power esti-
mates for tests of individual coefficients for direct or
indirect effects are reported in Table 10.4 along with
values of coverage, or the proportion of 95% confi-
dence intervals that contain the parameter over gener-
ated samples—all are < 1.0, but are still generally high.
For example, estimated power exceeds .90 for 3 out of 4
significance tests of direct effects and for 1 out of 2 tests
Pt2Kline5E.indd 177
Model Testing and Indexing 177
Power at N = 373 Minimum N for power ≥ .90
.338 1,319
.317 1,997
.229 1,527
.613   758
of indirect effects in the model—see the table. Other
results are less satisfactory. For instance, the power for
the Sobel test of the indirect effect of exercise on illness
through fitness is only .349.
Results in Tables 10.3 and 10.4 reflect an overall
trend in SEM that power for significance tests of the
whole model may be low when there are relatively few
degrees of freedom (here, df M = 5), even for a sample
size that is large enough (N = 373) for reasonable power
in tests for individual model parameters (Wang &
Rhemtulla, 2021). In general, for models with only one
or two degrees of freedom, sample sizes in the thou-
sands may be required in order for power at the model
level to be > .80 or so (MacCallum et al., 1996, p. 144).
If an analysis in global fit testing has a low probability
of rejecting a false model or detecting a true model, this
fact should temper the researcher’s enthusiasm for their
preferred model.
Although the Kelley–Lai precision method is not
based on significance testing, it does concern the whole
model instead of individual parameters in the model.
The result in this method is that a sample size of
N = 2,760 is needed so that the width of 95% confidence
intervals in samples is no greater than w = .035, assum-
ing the population RMSEA is e* = .04 (see the output
file for analysis 2 in Table 10.1). This target sample size
is just over 7 times larger than that in the original study,
or N = 373 (Roth et al., 1989).
SUMMARY
Although optimal strategies for global fit testing are
still debated in the SEM literature, there is reasonable
agreement that some widespread practices are inad-
equate. One such practice involves ignoring a failed
exact-fit (chi-square) test in samples that are not very
large, and another is the claim for “good” fit based
3/22/2023 3:44:21 PM
 178 Specification, Estimation, and Testing

(a) Standardized parameters

.95

1.00 DF .90

.20
Exercise Fitness DI
−.10

.10 1.00 Illness

−.20 .20
Hardy Stress
.95

DS

(b) Unstandardized parameters

304.00
4,500.00 DF
1 3,600.00

.05
Exercise Fitness DI
−.35 1

251.00 1,400.00 Illness

−.18 .38
Hardy Stress
1.045.00
1
DS

FIGURE 10.2. Standardized and unstandardized parameters for Monte Carlo simulations of a recursive path model of ill-
ness.

on values of approximate fit indexes that exceed—or, TABLE 10.4. Power Analysis Results Based
in some cases, fall below—fixed thresholds based on on the Monte Carlo Method for Individual
prior computer simulation studies while ignoring the Direct or Indirect Effects in a Recursive Path
Model of Illness
residuals. A problem with fixed thresholds is that val-
ues of approximate fit indexes depend in part on factors Effect Power Coverage
that have little to do with the approximate truth of the Direct effects
model. Perhaps flexible thresholds for approximate fit Exercise → Fitness .962 .938
indexes will turn out be more accurate, but they would
Hardy → Stress .988 .949
still be no substitutes for direct and thorough inspec-
Fitness → Illness .520 .957
tion of the residuals for possible sources of misspecifi-
Stress → Illness .975 .938
cation. If the statistical power to reject a false model
(e.g., exact-fit test) is low, then little support for the Indirect effects
researcher’s model is indicated even if power for tests Exercise → Fitness → Illness .349 .931
of individual parameters is adequate. The next chap-
Hardy → Stress → Illness .906 .931
ter deals with comparisons among multiple structural
equation models all fitted to the same data. Note. The criterion level of statistical significance is a = .05.

Pt2Kline5E.indd 178 3/22/2023 3:44:22 PM


LEARN MORE
The classical work by Box (1976) is a must-read for research-
ers who test statistical models, Greiff and Heene (2017) warn
against overreliance on fixed thresholds for approximate fit
indexes, and Hayduk (2014) cautions against ignoring the
model chi-square test in SEM.
EXERCISES
1. Interpret chiML = 0 versus RMSEA = 0 for the same
model and data.
2. Calculate chiML from the log-likelihood values in
Table 10.2.
3. Calculate the RMSEA and CFI from information
reported in Table 10.2.
Pt2Kline5E.indd 179
Model Testing and Indexing 179
Box, G. E. P. (1976). Science and statistics. Journal of the
American Statistical Association, 71(356), 791–799.
Greiff, S., & Heene, M. (2017). Why psychological assess-
ment needs to start worrying about model fit. European
Journal of Psychological Assessment, 33(5), 313–317.
Hayduk, L. A. (2014). Shame for disrespecting evidence:
The personal consequences of insufficient respect for
structural equation model testing. Medical Research
Methodology, 14(1), Article 124.
4. In lavaan, specify the baseline model, fit it to the
data, and generate chiB (9) = 165.608 in Table 10.2.
5. Interpret results for the test of the close-fit hypoth-
esis in Table 10.3.
3/22/2023 3:44:26 PM
 180 Specification, Estimation, and Testing
Appendix 10.A
Significance Testing Based
on the RMSEA
If the lower bound of the 90% confidence interval
equals zero (i.e., êL= 0), the model chi-square test will
not reject at the .05 level the exact-fit hypothesis
H0: e0 = 0 (10.17)
The p value for an accept–support test of the exact-fit
hypothesis equals that of c 2ML(df M) for the same model
and data.
Some SEM computer tools also print p values for the
test of the close-fit hypothesis, or the one-tailed null
hypothesis
H0: e0 ≤ .05 (10.18)
Failure to reject the close-fit hypothesis supports the
researcher’s model; otherwise, a model could fail the
more stringent exact-fit test but pass the less demand-
ing close-fit test. Hayduk et al. (2005) described such
models as close-yet-failing models. Passing the close-
fit test does not justify ignoring a failed exact-fit test.
As noted by Hayduk (2014, p. 3), “Even extremely
close covariance fit—whether . . . assessed by an index
value or a confidence interval around an index [i.e.,
RMSEA]—may have resulted from a model containing
multiple serious misspecifications,” and this is true for
reasons explained earlier in the chapter.
The not-close-fit hypothesis is an inversion of the
close-fit hypothesis. It is expressed as
H0: e0 ≥ .05 (10.19)
If the upper bound of the 90% confidence interval is
less than .05 (i.e., êU < .05), then the hypothesis of not-
close-fit is rejected, which supports the researcher’s
model. This means that (1) the test of the not-close-
hypothesis is a reject–support test, and (2) low power
works against the researcher’s model. Greater power
here implies a higher probability of detecting a reason-
ably correct model, or at least one that predicts a cova-
riance matrix that approximates the sample data matrix
within the limits of close fit.
Pt2Kline5E.indd 180
If the upper bound of the 90% confidence interval
equals or exceeds a value that might indicate poor fit,
such as êU ≥ .10, then the model may warrant less confi-
dence. For example, the poor-fit hypothesis
H0: e0 ≥ .10 (10.20)
is a reject–support test of whether the researcher’s
model is just as bad or even worse than a poor-fitting
population model. The test of the poor-fit hypothesis
can serve as a kind of reality check against the test of
the close-fit hypothesis. The tougher exact-fit test can
serve this purpose, too.
Do not expect results for these various significance
tests to be consistent for the same model and data.
Based on the results from lavaan and listed next for
the detailed example,
chiML(5) = 11.107, p = .049
e = .057, 90% CI [.003, .103], pe0 ≤.05 = .336
we can say for this example that the recursive path
model of illness
1. fails the exact-fit test because p < .05 and êL > 0;
2. passes the close-fit test because pe0 ≤.05 > .05;
3. fails the not-close-fit test because êU > .05; and
4. fails the poor-fit test because êU > .10.
The only way to resolve these apparent contradictions
in significance testing is to consider the entire 90%
confidence interval, which says for this example that
the point estimate of ê = .057 is so imprecise that it is
just as consistent with the close-fit hypotheses as it is
with the poor-fit hypothesis. A larger sample may be
needed to obtain more precise results.
Yuan et al. (2016) noted that the failure to reject the
null hypothesis in the standard chi-square test (Equa-
tions 10.3, 10.5) does not imply that the model is cor-
rectly specified or that the degree of misspecification
is properly controlled. Instead, the interpretation is
simply that there is insufficient covariance evidence
to reject the exact-fit hypothesis at a predefined level
of sampling error. As an alternative, Yuan et al. (2016)
described equivalence testing, which is based on T-size
indexes that define a minimum tolerable degree of mis-
specification based on the observed value of chiML for
the researcher’s model. Because chiML is part of the for-
mulas for both the RMSEA and CFI (Equations 10.11,
3/22/2023 3:44:26 PM

10.15), the corresponding indexes in equivalence test-
ing are T-size RMSEA and T-size CFI, which are des-
ignated next as, respectively RMSEAt and CFIt.
For normally distributed data, the value of RMSEAt
is just êU, the upper bound of the 90% confidence inter-
val based on the RMSEA for the target model. If
RMSEA < RMSEAt
then we can say that with 95% confidence that the size
of the misspecification is no more than the amount indi-
cated by RMSEAt. That is, if the researcher can tolerate
a misspecification of RMSEAt, then they can proceed
with the target model with 95% confidence (Yuan et al.,
2016). There is a similar rationale for CFIt, except that
the observation
CFI > CFIt
indicates that the population value for the CFI exceeds
that of CFIt, with 95% confidence (Marcoulides &
Yuan, 2017).
The Yuan et al. (2016) method also converts the
conventional fixed thresholds for the RMSEA and CFI
Pt2Kline5E.indd 181
Model Testing and Indexing 181
used to describe varying degrees of model–data corre-
spondence for normally distributed data into dynamic
thresholds. For example, the fixed thresholds (.01, .05,
.08, and .10) for the RMSEA supposedly distinguish
between, respectively, excellent, close, fair, mediocre,
and poor model fit. Each of the four static cutoff val-
ues just listed is converted to dynamic values, desig-
nated as RMSEAe, based on the sample size and the
model degrees of freedom. Corresponding dynamic
thresholds for the CFI, or CFIe, are also derived.
Equivalence testing involves the specification of pairs
of one-sided null hypotheses, one for the RMSEA and
the other for the CFI, each of which contrasts the sam-
ple values with their respective dynamic thresholds.
If the observed values of RMSEA and CFI both fall
within their respective “fair” rescaled benchmarks or
worse, then model fit is deemed to be unacceptable. I
urge great caution in applying this part of the method
because the unscaled (fixed) thresholds for the RMSEA
and CFI are basically qualitative “T-shirt” descriptors
for model–data correspondence that probably do not
generalize to all models or data.
3/22/2023 3:44:26 PM
 11

Comparing Models

Researchers often compare alternative structural equation models comprised of the same variables and fitted
to the same data. The most frequent context occurs when a single initial model is tested over a series of steps.
At each step, the initial model is respecified either by adding ≥ 1 free parameters, which generally improves
fit, or by dropping (fixing to zero) ≥ 1 free parameters, which generally worsens fit. A pair of alternative
models so specified are called nested models, because the simpler of the two models, or the constrained
model, is a proper subset of the more complex model, or the unconstrained model. A different context occurs
when there are ≥ 2 initial models such that (1) each model is based on a different theory, and (2) the alterna-
tive models are not nested in their relation to each other. In both contexts, the choice between competing
models should be guided at least as much by conceptual bases as statistical considerations. A related topic
is the evaluation of equivalent models that fit the same data just as well as the researcher’s model but with dif-
ferent configurations of paths between the same variables. Although identical in both global fit and local fit,
there may be rational grounds to prefer one equivalent model over another. Given the widespread neglect of
equivalent models in the literature, readers can greatly distinguish their own SEM studies by directly address-
ing this issue in written reports.

NESTED MODELS 3. The free parameters of the constrained model are a

Two nested structural equation models are hierarchi-
cally related such that all conditions listed next are
true (Lai et al., 2016; Levy & Hancock, 2007):
1. The constrained model of the pair is generated by
placing ≥ 1 restrictions on the unconstrained model.
Thus, the degrees of freedom for the constrained
model (C) exceed those for the unconstrained
model (U), or dfC > df U.
2. The quantity dfC – df U equals the number of restric-
tions imposed on the unconstrained model to gener-
ate the constrained model. It also equals the differ-
ence in the number of free parameters over the two
models.
subset of those in the unconstrained model. It is also
true that the fixed parameters of the unconstrained
model are a subset of those in the constrained
model.
4. Over the two models, chiU ≤ chiC; that is, restrict-
ing the unconstrained model either increases the
chi-square for the resulting constrained model or
there is no change. This means that probability dis-
tributions that could be implied by the constrained
model are also implied by the unconstrained model,
which could also imply additional distributions
inconsistent with the constrained model.
A hierarchical relation as just defined corresponds to
parameter nesting (Bentler & Satorra, 2010), where a

182

Pt2Kline5E.indd 182 3/22/2023 3:44:26 PM


free parameter in the unconstrained model is (1) fixed
to zero, which eliminates the corresponding effect in
the constrained model, or is (2) added to a constraint
specified by the researcher that reduces the effective
number of free parameters, but the corresponding
effect remains in the constrained model. Consider the
unconstrained path model U with the direct effects
listed next:
X → Y1 → Y2 and X → Y2
The respecification X → Y2 = 0 drops this path from
model U and generates the constrained model C1,
which is nested under model U. A different respecifica-
tion of model U imposes the equality constraint
X → Y2 = Y1 → Y2
which tells the computer that the unstandardized direct
effects of X and Y1 on Y2 are identical, so only one path
coefficient is needed, not two. The constrained model
just defined, C2, has one less free parameter than
model U and is also nested under U even though C2 has
all paths included in U. Next, we consider how to test
hypotheses about nested models as just defined.
BUILDING AND TRIMMING
Nested models fitted to the same data are compared in
one of two ways. Both represent specification searches
for correct models. In model building or a forward
search, the initial model is a relatively bare-bones, con-
strained model that represents only the most essential
hypotheses, given the substantive theory. Less central
hypotheses are intentionally left out of the initial model
(i.e., the researcher prioritizes the hypotheses). If the fit
of the initial model is poor—which might be of little
surprise—then free parameters that represent excluded
hypotheses are added to the initial model over a series
of steps in order of importance (i.e., initially excluded
hypotheses should be prioritized, too).
As models are built, fit generally improves (chiML
decreases) as free parameters are added, even if those
respecifications are wrong. That is, observing succes-
sively lower chiML values as more and more parameters
are specified as free in model building is not evidence
by itself that the model is becoming increasingly more
correct. This means that closer to fit does not automati-
cally mean closer to truth in model building. This real-
Pt2Kline5E.indd 183
Comparing Models 183
ity highlights the need for solid ideas when building
(or trimming) models. Building could hypothetically
continue until df M = 0, at which point a just-identified
model would perfectly fit the data.
In model trimming or a backward search, the
researcher begins with a more complicated, uncon-
strained model and then, over a series of steps, restricts
it by eliminating free parameters (a previously free
parameter is fixed to equal zero) or by imposing con-
straints in estimation (e.g., two previously free param-
eters are fixed to equality). Hypotheses should be pri-
oritized but now in reverse order of importance; that
is, free parameters are fixed or equality-constrained
for effects of lower priority before doing so for effects
of higher theoretical importance.1 The initial model in
trimming should be consistent with the data; otherwise,
there is little point in constraining it further. As a model
is trimmed, its overall fit to the data usually becomes
worse (chiML gets larger). The logical stopping point
for trimming occurs in the model just before the point
where the next, more constrained model does not fit the
data, but model trimming requires good ideas for guid-
ance just as much as model building.
The goal of both model building and model trimming
is to find the model that has a properly specified cova-
riance structure (and mean structure, too, if present)
and is theoretically justifiable. Ideally, the outcome of
building versus trimming for the same variables and
data would converge to the same model, but this is not
guaranteed. A risk in both approaches is hypothesiz-
ing after the results are known, or HARKing (Kerr,
1998), where a model retained in a purely exploratory
specification search is falsely presented as though it
was hypothesized from the beginning. An antidote
for HARKing is to preregister the analysis plan (i.e.,
the planned steps for model building or trimming and
rationale; Chapter 3).
Relative strengths of model building versus trim-
ming are summarized next:
1. The starting point in model building is a simpler
model, which may be easier for SEM novices to
determine whether it is statistically identified com-
pared with a more complex initial model (trim-
1 The alternative of dropping from the model effects with higher
priority first leaves the less important effects in the model with-
out the possibility of dropping them in a linear sequence of
trimming, if removing those high priority effects appreciably
degrades fit.
3/22/2023 3:44:26 PM
 184 Specification, Estimation, and Testing
ming). This could prevent a frustrating round of
effort to diagnose a failed analysis, if the initial
model is not identified. It is also easier make a mis-
take in syntax or in a drawing editor when specify-
ing a more complicated model.
2. Model trimming may be a better option for mea-
surement models where observed variables are
specified as indicators of a smaller number of com-
mon factors. This point is elaborated in Chapters
15 and 22, but trimming may be more successful
than building if the measurement model is correctly
specified first (Chou & Bentler, 2002; Chou & Huh,
2012).
EMPIRICAL VERSUS THEORETICAL
RESPECIFICATION
Models can be built or trimmed according to one of two
different standards, theoretical (rational) or empirical.
The first provides tests of specific, a priori hypotheses.
Let’s revisit the unconstrained path model U with the
direct effects listed next:
X → Y1 → Y2 and X → Y2
If the researcher believes that the direct effect of X on
Y2 is purely indirect through Y1, then it is possible to
test this hypothesis by constraining the coefficient for
the path X → Y2 to zero (the path is trimmed). If the fit
of the model so constrained is not appreciably worse
than the unconstrained one with the path X → Y2 as a
free parameter, the hypothesis about a purely indirect
effect is supported, assuming the corresponding direc-
tionality specifications are correct. The main point
here, however, is that respecification of a model to
test nested versions of it is guided by specific hypoth-
eses. Jöreskog (1969) made the same point about model
building instead of trimming:
When to stop fitting additional parameters cannot be
decided on a purely statistical basis. This is largely a mat-
ter of the experimenter’s interpretations of the data based
on substantive theoretical and conceptual considerations.
Ultimately the criteria for goodness of the model depends
on the usefulness of it and the results it produces. (p. 201)
Model building guided by substantive hypotheses is
analogous to hierarchical multiple regression, where
the researcher specifies the order of predictor entry into
Pt2Kline5E.indd 184
the equation. Model trimming corresponds to entering
all predictors into the regression equation at the first
step but then manually removing predictors over subse-
quent steps, again based on the researcher’s hypotheses
(Chou & Huh, 2012).
This is not the case for empirically based respecifi-
cation, in which free parameters are deleted or added
based on statistical criteria. For example, if the sole
basis for trimming paths is that their coefficients are not
statistically significant, then respecification is guided
by completely empirical considerations. The compara-
ble strategy in multiple regression is backward elimina-
tion, where the computer—not the researcher—selects
the predictor with the smallest partial correlation with
the outcome variable for removal from the equation,
if a criterion for statistical significance is satisfied
(e.g., p ≥ .05). Empirical model building corresponds
to forward selection in regression analysis, where the
computer enters the predictor with the largest partial
correlation, again based on a statistical criterion (e.g.,
p < .05). The distinction between theoretically or
empirically based respecification in SEM has implica-
tions for interpreting the results of model building or
trimming, which are considered after a model compari-
son test is introduced.
CHI‑SQUARE DIFFERENCE TEST
The chi-square difference statistic, chiD, can be used
to test the statistical significance of the decrement in
global fit as free parameters are constrained in model
trimming or the improvement in fit as free parameters
are added in model building. As its name suggests,
chiD is simply the difference between the chiML of two
nested models fitted to the same data. Its degrees of
freedom, df D, equal the difference between the respec-
tive values of df M. The chiD statistic tests the equal-
fit hypothesis for two hierarchically related models;
specifically, smaller values of chiD lead to the failure
to reject the equal-fit hypothesis, but sufficiently large
values result in its rejection. In model trimming, rejec-
tion of the equal-fit hypothesis suggests that the model
has been restricted too much. But the same outcome in
model building supports retention of the free parameter
that was just added at that step. Ideally, the least con-
strained of the two models compared with chiD should
fit the data reasonably well; if not, then it makes little
sense to compare the relative fit of two nested models,
neither of which adequately explains the data.
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Suppose for an overidentified model 1 that
chiML1 (5) = 18.300, p = .003
A direct effect is added to the model as a free parameter
(df M is reduced by 1), and the result for model 2 is
chiML2 (4) = 9.100, p = .059
Given both results,
df D = 5 – 4 = 1
chiD (1) = 18.300 – 9.100 = 9.200, p = .002
which says that the overall fit of model 2 with an addi-
tional path is statistically better than that of model 1 at
the .05 level. Model 2 also passes the chi-square test
at the .05 level (p = .059), but the residuals must be
inspected before deciding whether to retain this least-
constrained model. That is, a model that “passes” the
chi-square difference test is not automatically retained
without considering all information about fit, both
global and local.
In the example just considered, the chi-square dif-
ference test is univariate because it concerned a single
free parameter (df D = 1). When two nested models that
differ by two or more free parameters are compared
(df D ≥ 2), the chi-square difference test is a multi-
variate test of all added (or deleted) paths together. If
p < .05 for chiD in this case, at least one of the cor-
responding parameters may be statistically significant
at the .05 level if tested individually, but this outcome
is not guaranteed.
In robust ML estimation, the difference between
scaled chi-squares adjusted for nonnormality (e.g.,
chiSB) for two nested models cannot generally be inter-
preted as a statistic that tests the equal-fit hypothesis.
This is because such differences do not approximate
central chi-square distributions under conditions of
nonnormality. Described in Topic Box 11.1 are meth-
ods to calculate a scaled chi-square difference statis-
tic, chiSD, which follows approximate chi-square distri-
butions. Exercise 1 asks you to conduct the scaled chi-
square difference test for a pair of nested models. The
researcher in robust estimation can always compare
the relative fit for two nested models, each fitted to the
same data based on each model’s set of approximate fit
indexes (RMSEA, CFI, SRMR, etc.), but these compar-
isons are not significance tests, and there are few clear-
Pt2Kline5E.indd 185
Comparing Models 185
cut guidelines, so interpreting any differences may be
quite subjective in this context. If the simpler model has
obviously worse correspondence with the data based
on values of approximate fit indexes, the more complex
model would be preferred. This assumes that the local
fit of the more complex model is acceptable.
The interpretation of chiD (unscaled difference) or
chiSD (scaled difference) as a test statistic depends in
part on whether the new model is derived empirically
or theoretically. For example, if individual paths that
are not statistically significant are dropped from the
model, it is most likely that the chi-square difference
statistic will also not be significant. But if the deleted
path is also predicted in advance to be zero, then the
difference test is of utmost interest. If respecification is
driven entirely by empirical criteria such as statistical
significance, the researcher should worry—a lot, actu-
ally—about capitalization on chance for two reasons.
First, it can and does happen in significance testing
that a result in a particular sample is significant due
only to sample-specific variation; that is, the signifi-
cant outcome is a Type I error unlikely to be found in
another sample. Similarly, the coefficient for a path that
corresponds to a true nonzero causal effect may not be
significant, and its exclusion would be a Type II error.
Second, overreliance on significance testing in
a single sample can lead to the garden of forking
paths, which refers to the existence of multiple ways
to approach hypothesis testing combined with analysis
plans that are contingent on the data in a particular sam-
ple (Gelman & Loken, 2014). Researchers often make
several informal decisions about things such as how
data are processed, which covariates are analyzed, or
how cases are included versus excluded that altogether
generate many possible choices. These “forking paths”
can proliferate even more if results of earlier analy-
ses influence what is analyzed in later analyses. For
example, observing a significant result at a particular
step, the researcher may decide to conduct additional
tests aimed at “explaining” that result. In SEM, larger
models may present the possibility for a relatively large
number of respecifications, each of which leads to even
more alternatives that could further change the model
in building or trimming. At the end of the analysis, the
findings can be so specific to a particular sample and
the series of decisions behind those findings that repli-
cation is unlikely. A way to protect against this problem
is to base respecification more on theoretical guidance
than on outcomes in significance testing (Chou & Huh,
2012).
3/22/2023 3:44:27 PM
 TOPIC BOX 11.1

Scaled Chi‑Square Difference Tests

The Satorra and Bentler (2001) method calculates by hand a scaled chi-­square difference statistic when
comparing two hierarchical models in robust ML estimation. It is assumed next that model 1 is constrained
relative to model 2 (i.e., df M1 > df M2), the unscaled chi-­squares are chiML, and the scaled chi-­squares are
chiSB, the Satorra-­Bentler test statistic:

1. Calculate the unscaled chi-­square difference statistic and its degrees of freedom in the usual way,
that is:

chiD = chiML1 – chiML2  and  df D = df M1 – df M2 (11.1)

2. Recover the scaling correction factor, c, for each model, as follows:

chiML1 chiML2
c1 =   and  c2 = (11.2)
chiSB1 chiSB2
3. Calculate the scaled chi-­square difference statistic chiSD, as follows:
chiD
chiSD = (11.3)
(c1 dfM1 − c 2 dfM2 ) / dfD
where the probability for chiSD (df D) in a central chi-­square distribution is the p value for the scaled
chi-­square difference test.

It can happen in small samples or when the more constrained model is very wrong that the denomi-
nator of chiSD in the method just described is < 0, which invalidates the test. Satorra and Bentler (2010)
described a revised scaled chi-­square difference test that avoids negative values, but it requires numerical
information that may not be available in the output of all SEM computer tools. Bryant and Satorra (2012)
provided syntax for EQS, Mplus, and LISREL for implementing the new difference test. Asparouhov and
Muthén (2013) described the implementation of the scaled chi-­square difference test in Mplus, which is
based on the Satorra and Bentler (2001) statistic when it is greater than zero, and otherwise it is equal
to the strictly positive Satorra and Bentler (2010) statistic. Other options include the freely available pro-
gram SBDIFF.EXE for Windows platform computers (Crawford, 2007), and a calculating web page for
generating chiSD is available (https://www.thestatisticalmind.com/). The “difftest” option in Mplus auto-
matically computes values of scaled chi-­square difference statistics for robust ML estimators and special
WLS methods for ordinal outcomes (Muthén & Muthén, 1998–2017) described in a later chapter, and the
“lavTestLRT( )” method in lavaan performs a similar function (Rosseel et al., 2023).
In a recent computer simulation study of nested 2-factor CFA models with continuous indicators (5 or
10 per factor) and correlated errors over generated samples that varied in size (N = 100, 200, 500, 1,000)
and degrees of nonnormality, Pavlov et al. (2020) compared the accuracies of three scaled chi-­square dif-
ference tests, two based on mean-­adjusted test statistics (Satorra & Bentler, 2001, 2010) and the third based
on mean-and-­variance adjusted statistics (Asparouhov & Muthén, 2013), all as implemented in Mplus. All
three scaled difference tests just mentioned outperformed the test based on chiD, the unscaled chi-­square
difference statistic, which increasingly favored the more complex of two nested CFA model as nonnormality
increased, model size increased, or sample size decreased, when in fact the two models had comparable
fit. Scaled difference tests based on mean-and-­variance adjusted chi-­squares were generally more accurate
than the methods based on mean-­adjusted chi-­squares, especially for larger measurement models.

186

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MODIFICATION INDEXES
AND RELATED STATISTICS
The issue of capitalization on chance in SEM is espe-
cially relevant when the researcher uses an automatic
modification option available in some SEM computer
tools such as LISREL (Jöreskog & Sörbom, 2021).
These completely exploratory procedures drop or add
parameters according to empirical criteria such as sta-
tistical significance at the .05 level of a modification
index (MI) or score test, which is calculated for con-
strained parameters (including those fixed to zero) in
the researcher’s model. A modification index is actu-
ally a univariate Lagrange Multiplier (LM) (named
after the Italian mathematician and astronomer J.-L.
Lagrange), which is expressed as a chi-square statistic
with a single degree of freedom. It approximates the
amount by which chiML would decrease if a particular
fixed-to-zero or equality-constrained parameter were
freely estimated; that is, an MI estimates chiD (1) for
freeing a single parameter. Thus, the greater the value
of an MI, the greater the predicted improvement in
global fit if that effect were added to the model. Like-
wise, a multivariate LM estimates the effect of allowing
≥ 2 constrained parameters to be freely estimated.
The automatic modification procedure in LISREL
(option “AM”) will respecify the model by freeing at
each step the single constrained parameter with the
largest MI value. It will continue to add parameters if
any MI is statistically significant at the level specified
by the researcher, such as .05; otherwise, the procedure
stops, and the model at the last step is the final model.
Except for an option that prevents specific param-
eters from being changed, automatic modification in
­LISREL is purely empirical and directly analogous to
forward selection in multiple regression, which selects
predictors entirely based on significance test outcomes.
I cannot recommend automatic modification, espe-
cially in small samples where the method may so
heavily capitalize on chance that the final model has
little, if any, prospect for replication. Two early com-
puter simulation studies by MacCallum (1986) and Sil-
via and MacCallum (1988) offer pertinent cautionary
tales about automatic specification searches. They took
known structural equation models, imposed specifica-
tion errors on them, and evaluated the erroneous mod-
els using data generated from populations in which the
known models were true. In MacCallum (1986), models
were respecified using empirically based methods, such
as MI values. Most of the time the changes suggested
Pt2Kline5E.indd 187
Comparing Models 187
by purely statistical methods were wrong, which means
that they did not typically recover the true model. This
pattern was even more apparent in small samples (e.g.,
N = 100). Silvia and MacCallum (1988) followed a simi-
lar procedure except that the use of automatic modifica-
tion was guided by theory, which improved the chances
of recovering the true model. See Chou and Huh (2012,
pp. 239–243) for additional examples of specification
searches guided by theory.
There are three additional cautions about MI statis-
tics:
1. The computer may print the value of an MI for an
“illegal” parameter, such as a covariance between a
measured exogenous variable and a disturbance. If
you actually tried to add that parameter, the analy-
sis would fail.
2. Values of MI statistics may be printed for parame-
ters that, if actually freed, would make the respeci-
fied model not identified.
3. Each individual MI assumes that the model as
analyzed is correctly specified except for the con-
strained parameter associated with that index.
These assumptions are contradictory over a whole
set of MI values for the same model.
The first and second cautions just listed are explained
by the fact that MI values estimate chiD (1) for free-
ing the corresponding parameter. These estimates are
not derived by the computer actually freeing the cor-
responding model parameter and rerunning the analy-
sis. Instead, the computer uses a shortcut method based
on linear algebra that “guesses” at the value of chiD
(1), given the data matrix and estimates for the more
restricted (original) model.
The Wald test (after mathematician Abraham Wald),
based on the statistic W, is used in model trimming. A
univariate W estimates the amount by which the over-
all chiML would increase if a particular freely estimated
parameter were fixed to zero (trimmed); that is, a uni-
variate W estimates chiD (1) for dropping (not adding)
the corresponding effect from the model. A value of W
that is not significant at, say, the .05 level predicts a dec-
rement in global model fit that is not significant at the
same level. Model trimming that is empirically based
would thus delete paths with W statistics that are not
significant but, as mentioned, actually doing so may just
capitalize on chance. A multivariate W approximates
chiD for constraining ≥ 2 parameters in the model.
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 188 Specification, Estimation, and Testing
All the diagnostic test statistics just described are
affected by sample size. Accordingly, even a trivial
change in global model fit due to adding or dropping
a free parameter could be statistically significant in a
large sample. In addition to noting the level of signifi-
cance of an MI, the researcher should also consider the
absolute magnitude of the change in the coefficient for
the parameter if it is allowed to be freely estimated, or
the expected parameter change, which depending on
the SEM computer tool used may be available in both
unstandardized and standardized form. If the expected
change (i.e., from zero) is considered trivial, the statisti-
cal significance of the MI may reflect the sample size
more than it does the magnitude of the corresponding
effect (Kaplan, 2009).
INTELLIGENT AUTOMATED
SEARCH STRATEGIES
Automatic modification in LISREL is a “dumb” empir-
ical search strategy: It frees model parameters one
at a time based solely on p values from MI statistics.
There are “smart” empirical search strategies in SEM
based on heuristics in artificial intelligence that employ
automated rule-based methods to store and manipulate
extant information in order to deduce new information,
or model respecifications. Examples of a few intelli-
gent causal discovery methods are described next—see
Marcoulides and Ing (2012) for more information.
The genetic algorithm is an adaptive heuristic
search method that respecifies models through succes-
sive “generations” from parent model to child models.
Generation and evaluation of child models follows
genetic principles where “bad” solutions are allowed
to die (be eliminated) and where the whole population
undergoes evolutionary changes over iterations of the
procedure (Chou & Yang, 2013). Ant colony optimi-
zation methods aim to maximize fit by converging on
the correct model in ways that mimic how ants forage
for food by accumulating pheromones on the shortest
route, stimulating other ants to take the same path.
In test construction, for example, virtual “ants” select
items instead of routes where each item has a corre-
sponding “pheromone level” that determines the prob-
ability of being selected. Potential items are evaluated
through several cycles of selection (Olaru et al., 2019).
Tabu search can be seen as a variation on the method
of best-subsets regression, where the computer in
regression analysis attempts to find the optimal subset
Pt2Kline5E.indd 188
of predictors for a single outcome based on statisti-
cal criteria set by the researcher (Sheather, 2009). To
avoid repetition, the method employs a Tabu list where
recent selections are recorded as a simulated short-term
memory, which may prevent the method from termi-
nating with a solution that is a local-but-suboptimal
maxima (i.e., there are better solutions). Marcoulides
and Falk (2018) described a package for R, ShortForm
(Raborn & Leite, 2020), that performs Tabu search and
ant colony optimization for CFA models. A different R
package, autoSEM (Jacobucci, 2016), performs genetic
algorithm, ant colony, and Tabu specifications searches
for CFA models.
These intelligent specification searches tend to work
best in very large data sets that allow for the possi-
bility of replication. Applied in small samples, related
methods such as machine learning can yield rates of
correct classifications that departure appreciably from
expected rates in very large samples (Combrisson &
Jerbi, 2015). Such methods also work better when
guided by good hypotheses about presumed causes,
so in this way smart specification searches are not
magic. Brandmaier and Jacobucci (2023) described
two machine learning approaches as adjuncts to the-
ory-based model building: regularized SEM, which
is described in Chapter 17 in the context of applying
SEM in small samples, and SEM trees. Briefly, the
latter is a multivariate search technique that com-
bines features of exploratory and more confirmatory
analyses. It recursively partitions a dataset into sub-
sets that explain the greatest differences in relation to
target parameters in the researcher’s model. Doing so
supports detection of heterogeneity among the cases
with respect to potential covariates (Brandmaier et
al., 2013). If appreciable heterogeneity is detected, the
sample is split into subgroups and a multiple-group
analysis is performed, the logic of which is explained
in the next chapter. Bollen (2022) described machine
learning and related computational methods as poten-
tially setting new directions for SEM, but time will
tell whether this possibility is fulfilled.
MODEL BUILDING
FOR THE DETAILED EXAMPLE
Recall that the Roth et al. (1989) recursive path model
of illness (Figure 8.1) does not have acceptable fit (e.g.,
Tables 8.2, 9.4, and 10.2). Reported in Table 11.1 are
values of MI statistics for all parameters that could be
3/22/2023 3:44:27 PM
 Comparing Models 189

added to the original path model, yet remain recursive.
These results are from analysis 1 in Table 10.1 using
lavaan. Values of the modification indexes in Table
11.1 are listed in descending order by magnitude. This
means that freeing parameters at the top of the list
would lead to greater estimated reductions in chiML
than freeing parameters lower in the list. Also reported
in Table 11.1 for each effect are (1) estimated parameter
changes, both unstandardized and standardized; and
(2) chiD (1), or the actual reduction in the model chi-
square after the corresponding parameter is freely esti-
mated. Although MI statistics only estimate chiD (1),
that approximation for this example is generally close.
The respecification in Table 11.1 that would reduce
chiML by the largest estimated amount that is also sta-
tistically significant (MI = 5.372, p = .021) is to add the
direct effect
Stress → Fitness
In the original model, the direct effect just listed is
constrained to zero (Figure 8.1). The estimated change
after freeing this parameter in the unstandardized
solution is –.061; that is, an increase in stress of 1 point
in its raw score metric predicts a decrease in fitness by
.061 points in its original units, while controlling for
the other direct cause of stress, hardy. In the standard-
ized solution, the estimated parameter change is –.111,
which says that for every increase in stress of 1 full
standard deviation, the level of fitness is expected to
decrease by .111 standard deviations, again while con-
trolling for hardy.
But a different respecification, adding to the original
model a direct effect between stress and fitness but in
the opposite direction, or
Fitness → Stress
is predicted to reduce the model chi-square by nearly
the same predicted amount that is also significant (MI =
5.110, p = .024)—see Table 11.1. A third respecification
that would reduce the model chi-square by a smaller
expected but still significant amount is to allow the dis-
turbances of fitness and stress to covary (MI = 3.907,
p = .048). Exercise 2 asks you to interpret the results
in Table 11.1 for the parameter just mentioned. All
remaining respecifications in the table are predicted to
reduce the model chi-square by smaller amounts, none
of which is statistically significant.
Now, which respecified model just described is cor-
rect—if any? It does make sense that fitness could
affect the experience of stress: People who are in bet-
ter physical shape may better withstand stress (Fit-
ness → Stress). But is it also not plausible that stress
could affect fitness (Stress → Fitness), or that fitness
and stress may have common unmeasured causes (cor-
related disturbances)? Without theory as a guide, there
is no way to meaningfully select among the three alter-
native respecifications just mentioned or among even
others. Also, the respecifications in Table 11.1 with MI
values that are not significant at the .05 level were all
calculated with no additional paths between fitness and
stress, but the omission of a parameter that involves
both variables could be a specification error. This is a

TABLE 11.1. Modification Indexes, Estimated Parameter

Changes, and Actual Chi-Square Difference Statistics
for a Recursive Path Model of Illness
Estimated parameter change
Effect MI p Unstandardized Standardized chiD (1)
Stress → Fitness 5.372 .021   –.061 –.111 5.424
Fitness → Stress 5.110 .024   –.207 –.114 5.170
DF DS 3.907 .048 –56.529 –.102 3.972
Hardy → Fitness 2.939 .087    .040 .082 2.950
Hardy → Illness 2.466 .116   –.125 –.077 2.477
Exercise → Stress 1.276 .259   –.029 –.057 1.278
Exercise → Illness .578 .447    .036 .039 .578

Note. MI, modification index.

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 190 Specification, Estimation, and Testing
limitation of any MI statistic: Specification error else-
where in the model could affect its accuracy. Exercise 3
involves (1) fitting the path model in Figure 8.1 but with
the added path Fitness → Stress to the data in Table 4.3,
and (2) describing global and local fit for this version of
a respecified model.
COMPARING NONNESTED MODELS
Next, we consider fitting two different models, each
composed of the same variables, to the same data but
now where those two models are not hierarchically
related as defined earlier; instead, they are nonnested
models.2 A frequent context is when researchers com-
pare ≥ 2 models each of which is based on a differ-
ent theory. The values of chiML from two nonnested
models can be informally compared, but the difference
between them cannot be interpreted as a test statistic;
namely, the chi-square difference test (unscaled or
scaled) does not apply. This is because the difference
between the test statistics from nonnested models do
not follow central chi-square distributions. Although
there have been efforts to develop significance tests for
comparing nonnested models, including approaches
based on bootstrapped empirical distributions for the
RMSEA (Raykov, 2001), Bayesian estimation model
correctness probabilities (Rust et al., 1995), or arbitrary
distribution theory extensions of the likelihood ratio
test (Golden, 2003), such methods are not widely used
or result in complications in interpretation (Levy &
Hancock, 2007).
A more practical alternative is the family of predic-
tive fit indexes, also called information-theoretic crite-
ria (Chapter 10). These fit indexes are not significance
tests because their probability distributions over differ-
ent types of models and data are generally unknown.
Instead, their values reflect both model fit and model
complexity such that these two attributes are balanced
against each other. This means that a penalty for com-
plexity is imposed so that model fit is adjusted for the
number of free parameters. For example, given two
different nonnested models with similar fit to the same
data, the least complex model will be favored as the
2 Itis also theoretically possible to compare nonnested models
based on different subsets of variables measured in the same
sample, but such comparisons become less and less meaningful
as the common set of variables gets smaller to the point where no
variables are shared.
Pt2Kline5E.indd 190
one most likely to generalize over replication samples.
In this example, the value of the information criterion
for the simpler model will be lower because a greater
penalty for complexity was imposed on the fit of the
more complex model. Thus, the model with the low-
est information criterion is preferred. In contrast, the
chi-difference test indicates whether the more complex
of two nested models is statistically better or that there
is insufficient covariance evidence to prefer either one
(Merkle et al., 2016). Two widely reported predictive fit
indexes are described after a research problem is intro-
duced next.
Presented in Figure 11.1 are two recursive path
models of recovery after cardiac surgery evaluated
by Romney et al. (1992). The psychosomatic model
in Figure 11.1(a) represents the hypotheses that patient
morale transmits the effects of neurological dysfunc-
tion and diminished socioeconomic status (SES) on
illness symptoms and poor social relationships. The
conventional medical model of Figure 11.1(b) repre-
sents a different pattern of causal relations among the
same variables. Specifically, both illness symptoms
and neurological dysfunction are specified as exog-
enous variables with direct effects on diminished SES,
low morale, and poor relationships. Among these three
endogenous variables, diminished SES is hypothesized
to indirectly affect poor relationships through its prior
impact on low morale. There are additional indirect
effects in the conventional medical model from exog-
enous to endogenous variables. The models in Figure
11.1 are not nested, so the chi-square difference test
cannot be used to directly compare them. Exercise 4
asks you to calculate df M for Figure 11.1(b).
AIC and BIC
One of the best known predictive fit indexes based on
ML estimation is the Akaike Information Criterion
(AIC), named after the statistician Hirotugu Akaike.
Confusingly, at least three different formulas for the
AIC are presented in the SEM literature. The first is
from Akaike (1974, p. 719):
AIC = – 2 ln L 0 + 2q (11.4)
where L 0 is the likelihood function maximized in ML
estimation for the researcher’s model and q is the num-
ber of free model parameters. Note that the penalty for
complexity in Equation 11.4, 2q, becomes relatively
smaller as the sample size increases (Mulaik, 2009b).
3/22/2023 3:44:27 PM
 Comparing Models 191

(a) Psychosomatic model

DPR
1

Diminished DLM Poor

SES 1 Relationships

Low DIS
1
Morale

Neurological Illness
Dysfunction Symptoms

(b) Conventional medical model

DDS
1

Diminished
SES

Diminished DLM
SES 1

Low
Morale

Neurological DPR
Dysfunction 1

Poor
Relationships

FIGURE 11.1. Alternative nonnested recursive path models of adjustment after cardiac surgery.

The second formula is
AIC2 = chiML + 2q (11.5)
which increases the model chi-square by a factor of
twice the number of freely estimated parameters.
Another way to express AIC2 is to substitute Equation
10.2 for chiML in Equation 11.5, or
the key is that the relative change in the statistic over
different nonnested models fitted to the same data is the
same in both versions, and this change is a function of
model complexity.
A third version for the Akaike information statistic
is
AIC3 = chiML – 2df M (11.7)

AIC2 = –2ln L 0 + 2ln L1 + 2q (11.6)
where L1 is the ML likelihood function maximized for
any just-identified version of the researcher’s model that
perfectly fits the data. Thus, the AIC2 adds the constant
2ln L1 to the AIC for any model (compare Equations
11.4 and 11.6). Although their formulas are different,
where the degrees of freedom are subtracted from the
model chi-square. Thus, more complex models with
fewer degrees of freedom are penalized with smaller
reductions in their test statistics. The formula for AIC3
can also be expressed as
AIC3 = AIC0 – AIC1 (11.8)

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 192 Specification, Estimation, and Testing
where AIC0 is the value of the AIC (Equation 11.4)
for the researcher’s model and AIC1 is the correspond-
ing statistic for all just-identified versions of the same
model (Mulaik, 2009b). Again, the relative differ-
ence in AIC3 for the same two nonnested models is
unchanged compared with AIC and AIC2. The AIC
and AIC3 can assume values < 0, but AIC2 values are
always > 0. Check the documentation of your SEM
computer tool to determine how it calculates Akaike’s
information criterion.
A different information theory index that takes
direct account of sample size is the Bayes Information
Criterion (BIC) (Raftery, 1993; Schwarz, 1978). The
formula is
BIC = – 2 ln L 0 + q ln N (11.9)
Compared with the AIC (Equation 11.4), the BIC
imposes a greater relative penalty for model complex-
ity. Suppose that the number of freely estimated param-
eters is q = 10 and that N = 300. The AIC penalty equals
2(10), or 20.000 (Equation 11.4), but the BIC penalty
for the same model is 10 (ln 300), or 50.038, more than
twice as large compared with the AIC. Relative values
of BIC penalties increase more slowly as sample size
increases; that is, its penalty is asymptotic over ever
larger samples (Mulaik, 2009b). A second formula for
the BIC is
BIC2 = chiML + q ln N (11.10)
where the model chi-square is increased by the same
penalty factor, or q ln N (Preacher & Merkle, 2012).
The relative difference between the BIC and BIC2 for
the same two nonnested models remains the same, so
they will both favor the same model (if there is a dif-
ference).
Although not obvious in their respective formu-
las, the AIC and BIC are actually based on different
standards when comparing nonnested models, and
thus they may not be interchangeable in their applica-
tion. For instance, the AIC estimates a constant plus
the relative distance between the fitted likelihood for
the researcher’s model and the unknown likelihood
of the true model. In contrast, the BIC is a function of
the posterior probability of a model being true from a
more Bayesian perspective. The difference in the BIC
for two models estimates the Bayes factor (BF), or the
ratio of the likelihoods of the same data under each of
two competing models. In Bayesian estimation, BF val-
Pt2Kline5E.indd 192
ues are widely used to compare alternative hypotheses
or models (Dienes, 2016). Both the AIC and BIC are
based on distributional assumptions and asymptotic
calculations that may not hold in real-world studies
(Dziak et al., 2020).
When the AIC and BIC disagree in their selection
among competing models, the AIC tends to favor more
complex models than the BIC. If overfitting (i.e., the
model is overly complex) is the most likely error, then
the BIC may be preferred. But if there is greater con-
cern about selecting a model that is too small (underfit-
ting), then the AIC has advantages (Dziak et al., 2020).
For example, a goal in exploratory factor analysis is
to correctly estimate the number of latent variables
(Preacher et al., 2013). If estimating too many factors
is considered a more serious error than estimating too
few factors, then the BIC may be a better choice than
the AIC when comparing alternative factor models that
are not nested. But if estimating too few factors is the
more serious specification error, then the AIC may have
the advantage. The results of simulations by Lin et al.
(2017) with mediation path models are generally con-
sistent with this pattern: Under conditions with smaller
misspecified parameters, the AIC was generally more
accurate because the BIC tended to favor overly par-
simonious models due to its greater penalty. As the
magnitude of misspecification increases, the BIC was
more accurate because the AIC favored overly complex
models due to its relatively smaller penalty.
Listed in Table 11.2 for analysis 1 are the script and
outputs file for fitting in lavaan the two nonnested
path models in Figure 11.1 to the data summarized
in Table 11.3 from a sample of N = 469 patients with
cardiovascular problems. Romney et al. (1992) did not
TABLE 11.2. Analyses, Script Files,
and Packages in R for Maximum Likelihood
Estimation of Two Nonnested Path Models
of Adjustment After Cardiac Surgery
Analysis Script file
1. Compare two nonnested romney-nonnested.r
path models, psychosomatic
model and conventional
medical model
2. Equivalent versions of the romney-equivalents.r
conventional medical model
Note. The lavaan package was used for all analyses. Output files have
the same names except the extension is “.out.”
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 Comparing Models 193

TABLE 11.3. Input Data (Correlations, Standard Deviations) for Analysis

of Nonnested Recursive Path Models of Recovery after Cardiac Surgery
Variable 1 2 3 4 5
1. Low Morale —
2. Illness Symptoms .53 —
3. Neurological Dysfunction .15   .18 —
4. Poor Relationships .52   .29 –.05 —
5. Diminished SES .30   .34   .23 .09 —

SD 3.75 17.00 19.50 3.50 24.70

Note. Correlations are from Romney et al. (1992); N = 469. Standard deviations for variables 1–5 are from,
respectively, Lawton (1975), Derogatis et al. (1976), Hinson et al. (2005), Fraley et al. (2000), and Stevens
and Featherman (1981).

report standard deviations, and the analysis of a cor- of the chiML part of the BIC (Equation 11.7) increase
relation matrix with default ML is not recommended. with sample size for misspecified models that are not
For this pedagogical example, I specified the standard just-identified. Also, model selection uncertainty, or
deviations in Table 11.3 based on actual measures of sampling variation in rank order of models based on
the variables in Figure 11.1, so these values are not BIC values, did not generally decrease with increasing
arbitrary—see the table note for citations. Analyses sample size. Within tthe range of sample sizes analyzed
for both models converged to admissible solutions. The by Preacher and Merkle (2012) (N = 80–5,000), there
syntax and output files for this analysis can be down- was considerable variation in model rankings. Their
loaded from this book’s website. results suggest that caution should be exercised about
Values of selected fit statistics for the two alterna-
tive Romney et al. (1992) path models are listed in
Table 11.4. It is no surprise that the global fit of the TABLE 11.4. Values of Selected Fit Statistics
more complex conventional medical model (df M = 3) for Two Nonnested Recursive Path Models
is better than that of the simpler psychosomatic model of Adjustment after Cardiac Surgery
(df M = 5). But is the fit advantage of the more com- Model
plex model enough to offset the penalty for having Conventional
more fewer degrees of freedom imposed by predictive Psychosomatic medical
fit indexes? Yes: the conventional medical model has Statistic Figure 11.1(a) Figure 11.1(b)
lower values on both the AIC and BIC, so it is pre-
dfM 5 3
ferred over the psychosomatic model. The same pref-
erence is indicated by the relative values of AIC2 and q 10 12
BIC2 in the table. Exercise 5 asks you to reproduce ln L0 –8,572.844 –8,554.222
the values of the predictive fit indexes in Table 11.4, chiML 40.488, p < .001 3.245, p = .355
and Exercise 6 asks you to evaluate the local fit of the
conventional medical model (see the output file for AIC 17,165.687 17,132.444
analysis 1; Table 11.2) AIC2 60.488 27.245
Results of computer simulations by Preacher and BIC 17,207.193 17,182.251
Merkle (2012) indicated that model selections based on
BIC2 101.994 77.052
the BIC are subject to sampling errors in unexpected
ways, perhaps so much so that claims of model supe- RMSEA [90% CI] .123 [.090, .159] .013 [0, .080]
riority may not hold up. (This caution also applies to CFI .907 .999
the AIC and related information criteria.) One reason SRMR .065 .016
is that, unlike most statistics, variation in the BIC actu-
ally increases with sample size. This is because values Note. q, number of free parameters; CI, confidence interval; N = 469.

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 194 Specification, Estimation, and Testing
declaring a particular model selected by the BIC or
related indexes as the clear “winner” over rival models.
More recently, Lubke and Campbell (2016) described
nonparametric bootstrapping as a method to quan-
tify model selection uncertainty by fitting alternative
models in generated samples, and Lubke et al. (2017)
extended the bootstrap method to analyses of alterna-
tive models over multiple groups and mixture model
comparisons. Results from both studies just mentioned
seem promising, and the general problem of model
selection is gaining attention in the SEM literature
(Levy & Hancock, 2011; Merkle et al., 2016), but so
far there is no magic statistical bullet for selecting the
correct model among nonnested alternatives in single
samples when no replication data are available—see
also Preacher and Yaremych (2023), who described
additional strategies and information criteria for model
selection in SEM.
EQUIVALENT MODELS
If a retained model is selected from nested or non-
nested alternatives, equivalent versions should be con-
sidered. Equivalent models have the same degrees of
freedom (they are equally complex) but feature differ-
ent causal directionalities among the same variables.
The most general form is observational equivalence,
which means that one model generates every probabil-
ity distribution that can be generated by another model
(Hershberger & Marcoulides, 2013). Levy and Hancock
(2007) used the term completely overlapping to note
that equivalent models share all the same distributions.
A particular form for linear models fitted to covariance
matrices is covariance equivalence, which means that
every covariance matrix predicted by one model can
also be generated by another model. Two covariance
equivalent models also generate the same residuals and
conditional independencies, or sets of vanishing cor-
relations (Pearl, 2009). The latter property refers to
d-separation equivalence. A related idea is moment
equivalence, which occurs when two different models,
regardless of the data, generate the same (1) predicted
covariances, means, and correlations; (2) residuals; and
(3) values of global fit statistics (Hershberger & Mar-
coulides, 2013).
In the SEM literature, the Lee–Hershberger replac-
ing rules for generating equivalent versions of recur-
sive structural models are probably the most familiar
(Lee & Hershberger, 1990). Their use assumes that
Pt2Kline5E.indd 194
any model generated by them is identified. There are
two parts to the replacing rules. The first involves just-
identified (saturated) blocks of variables in a part of the
structural model with all possible paths:
RULE 11.1 Within a saturated block of variables
with no incoming effects, any direct effect can
be reversed or substituted for a covariance or an
equality-constrained reciprocal effect
The second part of the replacing rules involve pairs of
endogenous variables with a path between them:
RULE 11.2 Let X and Y be two endogenous
variables with uncorrelated disturbances and the
same direct cause(s): Any direct effect can be
reversed or substituted for a disturbance covariance
or an equality-constrained reciprocal effect
Examples of applying the replacing rules are consid-
ered next.
Depicted in Figure 11.2(a) is the original Romney
et al. (1992) conventional medical model shown with
compact symbolism for disturbances. The other three
models in the figure are equivalent versions generated
by the replacing rules. For example, within the just-
identified block of the two exogenous variables (i.e.,
there are no incoming effects) in the original model,
the covariance is replaced by a direct effect from illness
symptoms to neurological dysfunction in Figure 11.2(b)
(Rule 11.1). In the respecified model just described,
neurological dysfunction is no longer exogenous—it is
endogenous, or an outcome. Because the endogenous
variables of neurological dysfunction and diminished
SES in Figure 11.2(b) have the same cause, or illness
symptoms, the direct effect between them is reversed
in Figure 11.2(c) (Rule 11.2). That is, the direct effect
Neurological Dysfunction → Diminished SES
in Figure 11.2(b) is respecified as
Diminished SES → Neurological Dysfunction
in Figure 11.2(c). In the model just mentioned, the
pair of endogenous variables diminished SES and low
morale have the same cause, illness symptoms. Thus,
an equivalent version can be generated by reversing
the direct effect between them (Rule 11.2) That is, the
direct effect
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 Comparing Models 195

Diminished SES → Low Morale
in Figure 11.2(c) is replaced by
Low Morale → Diminished SES
in Figure 11.2(d). This respecification also changes the
status of diminished SES from endogenous in Figure
11.2(c) to exogenous in Figure 11.2(d).
All four models in Figure 11.2 have the same global
fit to the data; for example, chiML(3) = 3.245 for each
model. They all have the same local fit, too—specifi-
cally, their residuals are identical for each type, includ-
ing raw, standardized, normalized, and correlation
residuals. To verify these claims, please examine the
output file for analysis 2 in Table 11.2 in which the
equivalent models in the figure are all fitted to the same
data (Table 11.3). Finally, the models in the figure are
d-separation equivalent because they share the same
union basis set of implied conditional independencies,
or 3 in total for the 3 pairs of nonadjacent variables in
each model (you should verify this statement). Thus,
the models in Figure 11.2 are covariance equivalent,
which is the best case for the replacing rules.
Although equivalent models have the same global
and local fit, they differ in their sets of parameter esti-
mates and patterns of statistical significance among
those estimates—see the output file for analysis 2, Table
11.2. These results are expected because two equivalent
models have different configurations of paths and, from
a regression perspective, the roles of predictors or out-
comes change over equivalent models. It could happen

(a) Original (b) Equivalent 1

Diminished Diminished
SES SES

Illness Illness
Symptoms Symptoms

Low Low
Morale Morale

Neurological Neurological
Dysfunction Dysfunction

Poor Poor
Relationships Relationships

(c) Equivalent 2 (d) Equivalent 3

Diminished Diminished
SES SES

Illness Illness
Symptoms Symptoms

Low Low
Morale Morale

Neurological Neurological
Dysfunction Dysfunction

Poor Poor
Relationships Relationships

FIGURE 11.2. Four equivalent path models of adjustment after cardiac surgery shown with compact symbolism for distur-
bances. Paths rendered with dashed lines are reversed or changed relative to the original model.

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 196 Specification, Estimation, and Testing
for a pair of equivalent models that, say, the coefficient
for the direct effect X → Y is significant in model 1, but
the coefficient for the opposite direct effect, Y → X, is
not significant in model 2. Thoemmes (2015) noted that
there is no basis for preferring model 1 over model 2 in
this case because significance testing outcomes do not
indicate which of two equivalent models is correct. The
reasons are explained in Chapter 20 about mediation
analysis, where equivalent models are a major validity
threat, but significance testing cannot generally detect
the “true” model among equivalent versions.
Reapplying the replacing rules to the models in Fig-
ure 11.2 could generate even more equivalent models.
Relatively simple models may have few equivalent ver-
sions, but more complicated ones may have hundreds
or even thousands (MacCallum et al., 1993). In general,
more parsimonious models tend to have fewer equiva-
lent versions. You will learn in Chapter 14 that CFA
models can have infinitely equivalent versions; thus, it
is unrealistic that researchers should generate all pos-
sible equivalent models. As a compromise, researchers
should generate at least a few substantively meaningful
equivalent versions. Unfortunately, even this limited
step is usually neglected.
You should know that there are some problems with
the replacing rules: They are not guaranteed to be tran-
sitive (Hershberger & Marcoulides, 2013). This means
that reapplying the tracing rules to equivalent versions
generated by previous applications of the rules is not
guaranteed to spawn even more versions that are all
equivalent. The replacing rules do not cover models
with constrained parameters, such as equality con-
straints, and they do not evaluate whether a pair of
target models are equivalent only for certain values of
some of their parameters and nonequivalent for others
(Raykov & Penev, 1999). Another greater concern is
that the replacing rules can generate a structural model
that predicts a different set of conditional indepen-
dencies than the original model. That is, applying the
replacing rules can sometimes create or destroy implied
conditional independencies in the respecified model
compared with the original model (Pearl, 2009)—see
Topic Box 11.2 for more information and an example.
COPING WITH EQUIVALENT
OR NEARLY EQUIVALENT MODELS
Pearl (2009) reminded us that the existence of equiva-
lent models is inevitable if we agree that causal rela-
Pt2Kline5E.indd 196
tions cannot generally be inferred from data alone, that
is, without assumptions. Specifying simpler structural
models is one way to eliminate some equivalent ver-
sions. Listed next are suggestions for possibly elimi-
nating even more equivalent models (Hershberger &
Marcoulides, 2013; MacCallum et al., 1993; Williams,
2012):
1. Temporal precedence in experimental or longi-
tudinal designs precludes reversing direct effects
between causes manipulated or measured before
outcomes (no retrocausality, or backwards causa-
tion in time).
2. If any part of a model analyzed in a cross-sectional
design has been evaluated in prior experimental or
longitudinal designs, results from those studies may
help to rule out some causal orderings.
3. Certain variables, such as demographic character-
istics or stable personality characteristics, may be
unlikely or impossible to be endogenous. For exam-
ple, specifying a direct effect from an attitudinal
variable to chronological age in years is illogical.
4. Some causal orderings may be theoretically doubt-
ful, given the nature of the variables. For example,
parental IQ may be more likely to affect child IQ
than the reverse.
5. Variables specified as mediators must be potentially
changeable; otherwise, they are unlikely mediators.
For example, variables conceptualized as stable,
relatively unchanging traits could be specified as
causes, but not mediators (Topic Box 7.1).
6. Fixing some parameters to nonzero values compat-
ible with theory or results from prior studies would
rule out equivalent models involving those param-
eters. This is because such fixed values are not suit-
able for arbitrary reconfigurations of the paths or
variables for which they were specified (Mulaik,
2009b).
7. Adding variables that are selectively associated
with just a few of the other variables in the model
can help to reduce the number of equivalent ver-
sions. Suppose that a model has the path X → Y.
Adding a variable presumed to directly cause X but
not Y means that X has a unique parent compared
to Y, so Rule 11.2 would not apply, if both X and
Y were endogenous. This strategy must usually be
implemented before the data are collected.
8. Although equivalent models have identical residuals
3/22/2023 3:44:28 PM
 Comparing Models 197

TOPIC BOX 11.2

When the Replacing Rules Fail

Presented in Figure 11.3(a) is an original path model with the direct effect X → Y. The three paths in this
model between variables W and Z are listed next:

W→X→Z
W→Y←U→Z
W→X→Y←U→Z

where U represents an unmeasured common cause of Y and Z and thus replaces their disturbance covari-
ance in the figure and the specification that X is a direct cause of Y is underlined. The first path just listed
is the only open path between W and Z. The remaining paths are blocked by the collider Y, and X is not a
collider in either path, so both paths remain closed when controlling for X. Thus, the model in Figure 11.3(a)
predicts the conditional independence

W⊥Z|X

Because variables X and Y in Figure 11.3(a) have the same cause, W, we can apply Rule 11.2 and the
reverse the direct effect between them. The model so respecified is presented in Figure 11.3(b), and listed
next are all paths between W and Z in this generated model:

W→X→Z
W→Y←U→Z
W→X←Y←U→Z

where the reversed direct effect is underlined. Now controlling for X closes the first path just listed, but
doing so opens the third path where X is now a collider after reversing the direct effect between X and

(continued)

(a) Original (b) Modified

W┴Z|X W┴Z

W Y Z W Y Z

X X

FIGURE 11.3. An original path model (a) and a version generated by the replacing rules that is not d-separation
equivalent (b).

Pt2Kline5E.indd 197 3/22/2023 3:44:28 PM

 198 Specification, Estimation, and Testing

Y. The second path just listed is blocked by the collider Y, and controlling for X changes nothing here (the
path remains closed). Thus, variables W and Z cannot be d-­separated in Figure 11.3(b). Figures 11.3(a)
and 11.3(b) are not d-­separation equivalent, even though one model generates the other using the replac-
ing rules.
Pearl (2009, pp. 145–149) described graphical criteria and rules for generating d-­separation equiva-
lent models, but they vary depending on whether the structural model is recursive or nonrecursive and also
on the pattern of disturbance covariances, if any. Thus, they can be relatively complex to apply. Another
alternative is to use a computer tool such as dagitty in its web browser or R package versions (Textor et al.,
2016, 2021) to analyze both an original structural model and a second model generated by applying the
replacing rules to the original: If the two models have different sets of implied conditional independencies,
then they are not d-­separation equivalent (e.g., Figure 11.3).

at the variable level, residuals at the case level can
vary over such models. Raykov and Penev (2001)
suggested that models with the lower standard-
ized average individual case residuals would be
preferred over equivalent versions with higher aver-
ages. A complication is that structural models with
latent variables do not generate unique predictions
for individual cases due to factor score indetermi-
nacy, a concept explained Chapter 14. Applying the
Raykov–Penev method is more straightforward for
manifest-variable path models, where case residuals
are more directly analogous to regression residuals.
Apart from equivalent models, there may also be
nearly equivalent models that do not generate the
exact same predicted covariances or conditional inde-
pendencies, but they are similar enough in fit so that
they are basically within the same equivalence class of
models (Breckler, 1990). Nearly equivalent models may
arise as alternative respecifications at a particular point
in model building or trimming (e.g., Table 11.1) or with
models each based on different theories but with very
similar fits to the data. Thus, there is no specific rule for
generating nearly equivalent models because their con-
texts can vary. In some cases, nearly equivalent models
could be more numerous than truly equivalent models
and thus a more serious potential threat than equiva-
lent models. A method for estimating the relative fits of
nearly equivalent models over a range of data values is
described in the chapter appendix.
So far we have addressed comparing models based
on the same variables and fitted to the same data in
three main contexts: (1) parameter-nested models that
are hierarchically related and based on the same theory;
(2) nonnested models that are each based on different
theories; and (3) equivalent models generated by replac-
ing rules, where not all such models may be substan-
tively meaningful or even plausible. Some additional,
but less frequently encountered, contexts for comparing
models with different relations to one another are sum-
marized as an advanced topic in Appendix 11.A.
SUMMARY
Researchers often seek to select a structural equation
model from a set of alternative models all fitted to the
same data. The most frequent context occurs when
hierarchically related models are compared when the
restricted model is nested within the less restricted
model. The chi-square difference test in this case evalu-
ates the equal-fit hypothesis. It is critical to apply the
chi-square difference test and related diagnostic sta-
tistics, such as modification indexes, in ways that are
guided by theory. Relying too much on empirical cri-
teria, such as statistical significance, risks excessive
capitalization on chance. The chi-square difference test
cannot be used to compare alternative nonnested mod-
els, but predictive fit (information-theoretic) indexes
can be applied to evaluate such models. If a model is
retained, it is important to consider at least a few sub-
stantively meaningful equivalent models and to present
arguments about why the researcher’s model would be
preferred over those equivalent versions. There are rel-
atively new methods for estimating the relative global
fit of alternative models that are partially overlapping
(neither nested nor equivalent). These methods may be
helpful in understanding when two different models

Pt2Kline5E.indd 198 3/22/2023 3:44:28 PM


may have nearly equivalent or dissimilar fit over data or
parameter spaces specified by the researcher. The next
chapter is about analyzing structural equation models
over multiple samples, each selected from a different
population.
LEARN MORE
Dziak et al. (2020) consider relative advantages and draw-
backs of the AIC, BIC, and related predictive fit indexes
for comparing nonnested models; Hershberger and Mar-
coulides (2013) outline ways to deal with equivalent mod-
els; and Lai et al. (2017) describe graphical methods that
EXERCISES
1. Calculate the scaled chi-square difference statistic
given the results listed next for two nested models:
Model 1, df M1 = 17, chiML1 = 57.50, chiSB1 = 28.35
Model 2, df M2 = 12, chiML2 = 18.10, chiSB2 = 11.55
2. In Table 11.1, interpret the results in the row for the
respecification of overlapping disturbances for fit-
ness and stress.
3. Fit the path model of illness in Figure 8.1 to the data
in Table 4.3 but with the additional path Fitness →
Pt2Kline5E.indd 199
Comparing Models 199
estimate the relative fit of two models over various data or
parameter values.
Dziak, J. J., Coffman, D. L., Lanza, S. T., Li, R., & Jermiin,
L. S. (2020). Sensitivity and specificity of information cri-
teria. Briefings in Bioinformatics, 21(2), 553–565.
Hershberger, S. L., & Marcoulides, G. A. (2013). The prob-
lem of equivalent structural models. In G. R. Hancock
& R. O. Mueller (Eds.), Structural equation modeling: A
second course (2nd ed.) (pp. 3–39). IAP.
Lai, K., Green, S. B., & Levy, R. (2017). Graphical displays
for understanding SEM model similarity. Structural Equa-
tion Modeling, 24(6), 803–818.
Stress. Describe the global fit and local fit of this
model (see also Table 11.1).
4. In Figure 11.1(b), calculate df M.
5. Reproduce the values of the predictive fit indexes in
Table 11.4 for both models.
6. Describe global and local fit for the conventional
medical model in Figure 11.1(b) to the data in Table
11.3 based on output from analysis 1, Table 11.2.
3/22/2023 3:44:28 PM
 200 Specification, Estimation, and Testing
Appendix 11.A
Other Types of Model
Relations and Tests
A more complex type of a nested relation between
pairs of models is covariance matrix nesting, where
two models that can take completely different forms,
such as path model and a CFA model for the same
variables, but the set of possible covariance matrices
for the constrained model is a subset of those for the
unconstrained model. Moment matrix nesting has the
same basic definition for models with both covariance
and mean structures. If a pair of models is covariance-
matrix nested, then the chi-square difference test could
be conducted to directly compare their relative fits to
the data (Bentler & Satorra, 2010).
An example of covariance matrix nesting for differ-
ent model types based on the same variables described
by Bentler and Satorra (2010) is presented in Figure
11.4(a). The path model on the left where df M = 1 is
actually nested under the single-factor CFA model on
the right composed of the same variables and where
df M = 0. (Principles for counting free parameters in
CFA models are covered in Chapter 14.) Although the
two models in Figure 11.4(a) look completely different,
the set of all possible predicted covariance matrices
under the more restricted path model is a subset of all
(a) Covariance matrix nested models
X1 X2 X3
(b) Partially overlapping models
X1 X2 X3 X4
FIGURE 11.4. Two hierarchically related models based on covariance matrix nesting (a) and two nonnested but partially
overlapping models (b).
Pt2Kline5E.indd 200
the possible predicted matrices under the less restricted
CFA model. Because the two models in Figure 11.4(a)
are nested, the chi-square difference could be applied
to directly compare their relative fits to the same data.
Bentler and Satorra (2010) described a method for
nesting and equivalence testing (NET) based on
bootstrapping or Monte Carlo simulation methods that
evaluates whether two models are equivalent or nested
(parameter or covariance matrix-based). The method
could be especially useful when comparing models that
are very different (e.g., Figure 11.4(a)) or when models
are so large that is difficult to visually analyze them or
inspect their equations. Note that the NET method is
data-dependent in that results can change if a different
covariance matrix is specified at the beginning (Lai et
al., 2017), but the method can be repeated with different
matrices. Data dependence is not a unique limitation of
the NET procedure because the very concept of model
similarity has the same characteristic: Relative similar-
ity in fit between two models varies over the range of
data that could be collected and analyzed, so both model
and data features must be considered together (Lai et
al., 2016). Asparouhov and Muthén (2019) described
applications of the NET procedures to measurement
models and outline the implementation of the procedure
for both continuous and categorical outcomes in Mplus.
Direct comparison of very different types of struc-
tural equation models is relatively rare, but we will
consider in Chapter 14 how the test for a single-factor
CFA model is relevant for manifest-variable path mod-
els: The failure to reject such a single-factor model in
X1 X2 X3
1
X1 X2 X3 X4
3/22/2023 3:44:28 PM

this context means that the variables measure only one
domain (they do not show discriminant validity), so it
may make little sense to proceed with the path analysis.
For example, if a 1-factor CFA model were consistent
with the data in Table 11.3, then neither 5-variable path
model in Figure 11.1 would actually reflect five distinct
target concepts or domains.
Partially overlapping models share some, but not
all, probability distributions. Their common distribu-
tions can be obtained by constraining both models—not
just one of the two models as is true for pairs of nested
models (Levy & Hancock, 2007). Likewise, there are
no sets of constraints such that nonoverlapping models
would share any distributions. An example of partially
overlapping models is presented in Figure 11.4(b). Both
4-variable path models are equally complex (df M = 2)
and have a single disturbance covariance but for differ-
ent pairs of variables, respectively, X2 and X3 (model on
the left) versus X3 and X4 (model on the right). The two
path models are clearly not nested, but constraining the
covariance parameter in both models to zero would
generate common probability distributions.
For any structural equation model, its best fitting
probability distribution (BFPD) is the one that mini-
mizes the difference between the true data generating
process that creates values for observed variables. That
true process is defined by the model and a set of param-
eter values that correspond to possible distributions
where the model is correct (Levy & Hancock, 2007).
In ML estimation, the BFPD is estimated as the distri-
bution that maximizes the likelihood of the data. There
are three general cases for the best fitting probability
distributions of two partially overlapping models:
1. If the best fitting probability distributions of two
partially overlapping models are equal—that is,
they correspond to one of their shared distribu-
tions—then the two models are indistinguishable
with regard to the data generating process. This
means that they will have similar fit across a wide
range of data, that is, they are not discriminable
from one another (Lai et al., 2017).
2. The BFPD of the first model of the pair corresponds
to a shared distribution, but the BFPD of the second
model models belongs to a unique distribution that
is not shared with the first model. The models are
distinguishable in this case, and the model with the
unique BFPD—the one outside of the range of the
other model—is expected to fit better.
Pt2Kline5E.indd 201
Comparing Models 201
3. The best fitting probability distributions of both
models belong to unique distributions, and it is an
open question whether one model will have better
fit to the data generating process. That is, fit could
be different or similar for the two models.
Levy and Hancock (2007) described a series of steps
and significance tests to distinguish the three cases just
listed for partially overlapping models. They involve
fitting each of the two models to the data and then fit-
ting to the same data the constrained version of the
models that generates the same predicted covariances
or means, such as either model in Figure 11.4(b) but
with no disturbance covariance. Next, the chi-square
difference test is applied to compare the relative fits of
both original models to that of the constrained version
just described. There are three possible outcomes:
1. If the equal-fit hypothesis is retained for both tests
just described, the inference is that the models are
indistinguishable and do not differ in fit.
2. If the equal-fit hypothesis is retained for just one
of the two models, the inference is that the models
are distinguishable in that the model that passed the
chi-square difference test fits better and its BFPD is
unique.
3. If both models fail the chi-square difference test,
then it is unknown whether the models differ in
their fit to the data generating processing. The next
step would be to test the relative difference in fit
of the models to the data using Bayesian methods
for nonnested models—see Merkle et al. (2016) for
examples of how to apply such methods.
Levy and Hancock (2011) extended the model compari-
son framework just outlined to analyses of models over
multiple samples from known populations or over mix-
tures from an unknown number of populations.
Lai et al. (2017) described a quantitative and graphi-
cal approach to understanding model similarity over a
particular data space that complements the categorical
description of model relations as equivalent, nested,
partially overlapping, or nonoverlapping. Their method
builds on the insight by Preacher (2006) that fitting
propensity, or a model’s average ability to fit a range
of different data patterns, has relatively little relation
to the number of free model parameters. That is, two
models of similar complexity in this regard can have
very different potentials to closely explain data of
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 202 Specification, Estimation, and Testing
varying characteristics. The Lai et al. (2017) method
also relies on quantitative measures of model similar-
ity evaluated by Lai et al. (2016) that included ML fit
functions (FML) and statistical criteria based on cova-
riance residuals, or differences between observed and
predicted covariances.
Steps in the Lai et al. (2017) methods are summa-
rized next:
1. In Monte Carlo simulations, the two models to be
compared are each fitted to a large number (e.g.,
100,000) of generated correlation or covariance
matrices. The matrices can be generated over a
range of values of specified by the researcher, such
as r = .40–.60 for a population correlation. Only
admissible solutions are retained.
2. The relative fit of each model to a data matrix is
measured with a statistical criterion specified by the
researcher, such as FML, RMSEA, CFI, or SRMR.
Recall that the RMSEA and CFI are based in part
on FML through the presence of chiML in their for-
mulas (Equations 10.11, 10.15), but the SRMR is
related to the correlation residuals.
3. Next, differences in fit statistics between the two
models (e.g., DFML) can be plotted over a range of
values for data, parameters, or residuals, includ-
Pt2Kline5E.indd 202
ing combinations of the characteristics just listed.
These plots depict patterns of relative similarity or
dissimilarity in fit between two models over varia-
tions just mentioned.
There are critical limitations of the Lai et al. (2017)
method. It deals solely with global fit; that is, it does
not indicate whether local fit at the level of the residu-
als is satisfactory for the compared models. Global fit
statistics such as the FML, RMSEA, and CFI are for
normally distributed, continuous outcomes, so whether
their method yields meaningful results for nonnormal
outcomes, including categorical endogenous vari-
ables, is unknown. Some examples described by Lai
et al. (2017) rely on fixed thresholds for approximate
fit indexes that are dubious (e.g., RMSEA < .05 means
“good” fit). On the plus side, the method is potentially
useful for understanding when two models are nearly
equivalent in fit and when they diverge in relative fit
over data and parameter spaces of interest. It also pro-
vides a systematic way to better understand the roles of
specific model parameters when considering respecifi-
cations based on modification indexes or related statis-
tics. As I write, the Lai et al. (2017) method was not yet
implemented in a freely available computer tool or R
package, but I expect that situation to change.
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 12

Comparing Groups

The capability to analyze a structural equation model across multiple groups extends even further the range
of hypotheses that can be tested in SEM. The main question in the analysis is whether values for target
parameters, or those of substantive interest, are appreciably different over groups; that is, does group mem-
bership moderate the directions or magnitudes of effects represented in the model? Perhaps the simplest
way to address these questions is to conduct a series of single-group analyses. This means that the model is
estimated within each of two or more different samples. Next, compare the unstandardized estimates across
the samples. Recall that unstandardized instead of standardized estimates should generally be compared
when the groups differ in their variabilities. For the same reason, covariance matrices (or the raw scores) for
each group should be analyzed when the model has only a covariance structure, and covariance matrices
and means (or the raw scores) should be analyzed when the model has both a covariance structure and a
mean structure. If the unstandardized estimates for the same parameter are meaningfully different, then the
populations from which the groups were sampled may not be equal on that parameter.
More sophisticated comparisons are available by using an SEM computer program that performs a
multiple-group analysis where the same model is simultaneously fitted to the data from all groups. Through
specification of cross-group equality constraints, group differences on any parameter can be tested. Cross-
group equality constraints instruct the computer to derive equal unstandardized estimates of that parameter.
The fit of the constrained model can be compared with that of the unconstrained model with the chi-square
difference test. If the fit of the constrained model is much worse than that of the unconstrained model, we
can conclude that the parameters may not be equal in the populations from which the samples were drawn.
This comparison assumes that the unconstrained model fits the data well in all groups, including both global
and local fit (i.e., the residuals); otherwise, there is little point in specifying a constrained model that would
fit the data even worse. Also, remember that estimates constrained to be equal in the unstandardized solu-
tion are typically unequal in the standardized solution. In general, standardized estimates should be directly
compared only across different variables within each sample.

The specific technique described in this chapter is
multiple-group path analysis, which treats group
membership (gender, ethnicity, marital status, etc.) as
a categorical moderator variable. It is a special case of
moderated path analysis (Edwards & Lambert, 2007)
or conditional process analysis (Hayes & Rockwood,
2020), where moderators can be either categorical or
continuous variables. We will deal with the more gen-
eral conditional process analysis framework in Chapter
20 which covers enhanced mediation analysis, but I can
say now that it provides a very flexible approach to esti-
mating moderation and mediation in the same analysis.
In multiple-group path analysis, the researcher can
directly test whether presumed causal effects are con-

203

Pt2Kline5E.indd 203 3/22/2023 3:44:28 PM

 204 Specification, Estimation, and Testing
ditional. A conditional direct effect is indicated when
the unstandardized coefficient for, say, the direct effect
X → Y varies in magnitude or direction over groups,
such as basically zero for women versus an apprecia-
ble positive or negative coefficient for men. Likewise,
a conditional indirect effect refers to the observa-
tion that the unstandardized coefficient for an indirect
effect, such as
X→W→Y
varies appreciably over groups. A related term is
moderated mediation (Edwards & Lambert, 2007;
Preacher et al., 2007), which in this context implies
that group membership moderates an indirect effect. In
this presentation, though, I use the more neutral term
“conditional indirect effect” because the hypothesis of
mediation assumes a great deal more than just indirect
causation (Topic Boxes 6.1, 7.1, and 8.1).
There are many examples of multiple-group path
analysis in the research literature. For example, in
a national study of Latino and Asian adults living in
the United States, Molina et al. (2013) reported that
(1) indirect effects of experiences of discrimination on
self-rated health through psychological distress were
generally more consistent across Latino subgroups,
and (2) additional indirect effects through subjective
social status were apparent for Puerto Rican men, who
reported the highest levels of discrimination among all
participants. Wang et al. (2022) found that both mater-
nal and paternal “phubbing”—also called phone snub-
bing, or the act of using one’s cell phone during face-
to-face interactions—predicted levels of depression in
both male and female adolescents (yes, more phubbing,
more depression). They also reported that negative
effects of phubbing by either parent on communication
quality were greater for female adolescents, who may
have been more likely to interpret parental phubbing as
a sign of exclusion or rejection than male adolescents.
The basic logic of multiple-group path analysis,
including the specification of cross-group equality con-
straints to test hypotheses about differences over popu-
lations, extends to the analysis of other kinds of struc-
tural equation models over multiple samples. There is
also the advantage that manifest-variable path models
are generally simpler than latent variable models, so
path analysis is a good place to start. Reviewed next
are topics in multiple-group analyses for any kind of
structural equation model.
Pt2Kline5E.indd 204
ISSUES IN MULTIPLE‑GROUP SEM
Groups should occur naturally, such as when member-
ship is based on geographic region, ethnicity, marital
status, or diagnosis, among other examples of distinc-
tions observed in the real world and based on more-
or-less objective classification criteria. This definition
does not include pseudo-groups, which are formed
through arbitrary categorization (discretization) of con-
tinuous variables, such as “high” versus “low” groups
based on a mean split (Kline, 2020a). Reasons why this
practice is often a bad idea are briefly summarized next:
Numerical information about individual differences is
lost when a continuous variable is categorized. Spe-
cifically, all distinctions on the original variable among
cases assigned to the same category, such as “low,” are
ignored after categorization. It can be difficult to detect
true curvilinear or interactive effects after discarding
so much quantitative information. Categorization can
induce spurious effects due to the specific method of
partitioning cases. For instance, apparent main or inter-
active effects after a mean split may not be observed
following a median split for the same data (Altman &
Sauerbrei, 2006; MacCallum et al., 2002; Rucker et al.,
2015). It is generally better to analyze continuous vari-
ables in their original, quantitative form.
Some SEM computer tools, as an option, can print
special standardized solutions in multiple-group anal-
yses. For example, the LISREL program prints up to
four different standardized solutions in this context
(Jöreskog & Sörbom, 2018). The within-group stan-
dardized solution and the within-group completely
standardized solution are both derived by standard-
izing each separate within-group covariance matrix
except that only factors are standardized in the former
solution just mentioned versus all variables in the latter
solution. In the LISREL common metric standard-
ized solution, factors are rescaled such that the sum
of the average of their variances weighted by group
size is 1.0, but all variables are so rescaled in the com-
mon metric completely standardized solution. Com-
mon metric standardized results may be more directly
comparable over samples than within-group standard-
ized results, but the unstandardized estimates are still
preferred for this purpose. Check the documentation of
your SEM computer to see how it calculates the stan-
dardized solution in a multiple-group analysis.
It can happen in multiple-group analysis that some of
the standardized disturbance variances in a structural
3/22/2023 3:44:28 PM
 Comparing Groups 205

model or error variances in a measurement model are
> 1.0 in the common metric completely standardized
solution, but this outcome is not necessarily a prob-
lem (i.e., the solution may still be admissible). This is
because common metric error terms in each group are
essentially products of the corresponding within-group
standardized error terms and the common metric vari-
ance (Pilgrim et al., 2006). So even if all standardized
error variances are ≤ 1.0 in the within-group standard-
ized solution, some of these terms could exceed 1.0 in
the common metric standardized solution—see also
the classic short work on standardized estimates in
SEM by Jöreskog (1999).
DETAILED EXAMPLE FOR A PATH
MODEL OF ACHIEVEMENT
AND DELINQUENCY
Lynam et al. (1993) measured family socioeconomic
status (SES), verbal IQ, test effort (i.e., examinee moti-
vation during IQ testing), school achievement, and
delinquency within samples of Black (n = 214) and
White (n = 181) male adolescents ages 12–13 years.
They were grade 4 students enrolled in urban public
schools in the United States. They were also partici-
pants in a high-risk longitudinal study of early forms
of delinquency, ranging from vandalism or theft within
the home at less serious levels to shoplifting, vandal-
ism, theft of a car, arson, or gang fighting at more seri-
ous levels of misconduct. The data for these groups are
summarized in Table 12.1.
Depicted in Figure 12.1 with full McArdle–McDon-
ald RAM graphical symbolism is a recursive path model
with a mean structure (shown in dashed lines) based on
the variables in Table 12.1. The covariance part of the
figure is one of the path models tested by Lynam et al.
(1993, p. 195). They did not analyze means, but next
we do so in this example. Figure 12.1 represents the
hypotheses that SES, effort, and verbal IQ are corre-
lated causes that affect delinquency both directly and
indirectly through school achievement. For example,
adolescent boys with poor verbal ability may be more
likely to drop out of school, which could contribute to
delinquency because of reduced employment prospects
or more unsupervised time on the streets.
The design of Lynam et al.’s (1993) study was cross-
sectional with no temporal precedence in measurement,
so the only basis for directionality specification is argu-
ment. Fortunately, these authors gave a detailed account
of their hypotheses, especially about the assumption
that verbal IQ causes delinquency instead of the reverse
or that these two variables have a purely spurious asso-
ciation due to common causes. Briefly summarized,
Lynam et al. (1993) argued that their participants were
relatively young, which may rule out adverse effects of
delinquency that could lower verbal IQ such as drug
use, school dropout, or head injuries from fights, among

TABLE 12.1. Input Data (Correlations, Standard Deviations, Means)

for a Multiple-Group Analysis of a Recursive Path Model of
Achievement and Delinquency
Black
Variable 1 2 3 4 5 M SD
1. SES — .08    .28 .05 –.11 31.96 10.58
2. Test Effort   .25 —    .30 .21 –.17 –.01 1.35
3. Verbal IQ   .37 .40 — .50 –.26 93.76 13.62
4. Achievement   .27 .28    .61 — –.33 2.51   .79
5. Delinquency –.11 –.20   –.31 –.21 — 1.40 1.63

White
M 34.64 .05 104.18 2.88 1.22
SD 11.53 1.32 16.32 .96 1.45

Note. Data are from Lynam et al. (1993). Black (above diagonal), n = 214; White (below diagonal),
n = 181.

Pt2Kline5E.indd 205 3/22/2023 3:44:29 PM

 206 Specification, Estimation, and Testing
DA
1 tive factor against delinquency among young Black
SES Achieve
Effort 1
VIQ Delinq
1 is different over the groups.
DD
FIGURE 12.1. A recursive path model of achievement and
delinquency evaluated across samples of Black and White
male adolescents.
other possibilities. They also cited results from prior
longitudinal research that verbal reasoning is a rela-
tively stable trait that predates serious antisocial acts by
adolescent boys from lower SES parts of urban areas.
The rationale just summarized is subject to criticism.
For example, Block (1995) argued that Lynam et al.
(1993) overlooked the potential role of impulsivity as
a mediator for effects of verbal ability on delinquency.
That is, Block (1995) argued that it is not compromised
verbal ability per se that is causally related to delin-
quency; instead, reduced capacity to delay gratifica-
tion, think before acting, or remain focused on a goal
are more important factors in delinquency. Behavioral
impulsivity was measured by Lynam et al. (1993) based
on adolescent, teacher, and parent reports, but the score
reliability for their composite measure was low, only
.57. Block (1995) also suggested that the range of verbal
ability among delinquent youth is so wide that low ver-
bal IQ is not a necessary precondition. Thus, Lynam et
al. (1993) gave a detailed-yet-not-indisputable account
of their hypotheses. But to their credit, this depth of
explanation about directionality specifications is miss-
ing from too many published SEM studies of cross-
sectional data (Chapter 3).
Without constraints, the path model in Figure 12.1 is
just-identified and would perfectly fit the data in both
groups. Cross-group equality constraints were imposed
Pt2Kline5E.indd 206
on key parameters in this example to test the hypothesis
that remaining in school is a relatively stronger protec-
males compared with young White males, especially in
lower SES urban areas with relatively more single-par-
ent households where Black youth are disproportion-
ately represented (Lynam et al., 1993; Wilson, 1987).
The analysis strategy is outlined next:
1. For model 1, all 7 unstandardized direct effects are
constrained to equality over the two groups. It was
expected that model 1 would be inconsistent with
the data, if the effect of achievement on delinquency
2. For model 2, the equality constraint for the direct
effect of achievement on delinquency is released,
which was expected to appreciably improve fit over
that of model 1.
3. Assuming satisfactory global and local fit of model
2 in both groups, two additional models are tested.
For model 3, the intercept for regressing achieve-
ment on SES, test effort, and verbal IQ is constrained
to equality. For model 4, the intercept for regress-
ing delinquency on SES, test effort, verbal IQ, and
achievement is constrained to equality. Comparing
the relative fits of models 3 and 4 to model 2 tests the
equality of regression intercepts for the endogenous
variables over groups—see Figure 12.1.
For model 1, the total number of observations is
the sum across both groups. With v = 5 observed
variables, there are 5(8)/2, or 20 observations in each
group (5 variances, 10 unique covariances, 5 means;
Rule 9.3), which makes 20 × 2, or 40 altogether. Free
parameters include:
1. 3 variances and 3 covariances among measured
exogenous variables (SES, effort, and verbal IQ)
over both groups, or 6 × 2 = 12;
2. 2 disturbance variances for endogenous variables
(achievement and delinquency) over groups, or 2 ×
2 = 4;
3. 7 direct effects on achievement endogenous vari-
ables each constrained to pairwise equality over
groups; and
4. 3 means of measured exogenous variables and 2
intercepts for endogenous variables over groups, or
5 × 2 = 10,
3/22/2023 3:44:29 PM
 Comparing Groups 207

which altogether is 12 + 4 + 7 + 10 = 33. Thus, df M =
40 – 33 = 7, which also equals the number of equality
constraints for direct effects in model 1.
Model Comparisons
Listed in Table 12.2 for analysis 1 is the script file for
fitting models 1–4 to the data in Table 12.1 for default
ML estimation in lavaan. All script and output files in
the table can be downloaded from this book’s website,
and all analyses converged to admissible solutions. The
computer was unable to print standardized residuals
for all models and pairs of variables, but normalized
residuals are also included in the output. Reported in
TABLE 12.2. Script Files and Packages in R
for Maximum Likelihood Estimation of a
Recursive Path Model of Achievement and
Delinquency Analyzed Over Multiple Groups
Analysis Script file
1. Multiple-group path lynam-multiple-grp.r
analysis, direct effects or
intercepts constrained to
equality over groups
2. Generate conditional lynam-indirect.r
indirect effects in each
group
Note. The lavaan package was used for all analyses. Output files have
the same names except the extension is “.out.”
Table 12.3 are the values of selected global fit statistics
for all models. Model 1 with 7 equality-constrained
direct effects passes the chi-square test, or chiML (7) =
11.736, p = .110. The contributions to the overall model
chi-square from each group are roughly comparable, or
6.456 in the Black sample and 5.279 in the White sam-
ple (see the output for analysis 1). Thus, model–data dis-
crepancy as measured by chiML is not grossly dissimilar
over groups. The upper bound of the 90% confidence
based on the RMSEA for model 1 is .115, which is unfa-
vorable, but results for other approximate fit indexes do
not seem problematic (CFI = .975, SRMR = .036; see
Table 12.3). Next, we examine local fit.
Reported in the top part of Table 12.4 are correla-
tion residuals for model 1 in both groups, and values
of standardized residuals are reported in the lower
part of the table. These results suggest local fit prob-
lems even though model 1 passed the chi-square test.
For example, an absolute correlation residual, shown
in boldface in the table, exceeds .10 in the Black sam-
ple for the variables achievement and delinquency.
The value is –.102, so model 1 underpredicts the
sample correlation between these two variables by this
amount. No absolute correlation residuals exceed .10
in the White sample, but there are a total of 6 stan-
dardized residuals over both samples (3 in each group)
where p < .05. These results are generally associated
with the relatively larger absolute correlation residuals.
For example, the greatest absolute correlation resid-
ual in the White sample is .083 for achievement and
delinquency (i.e., overprediction), and the correspond-
ing standardized residual, 2.516, is significant at the

TABLE 12.3. Values of Selected Global Fit Statistics for Multiple-Group Recursive Path
Models of Achievement and Delinquency
Model RMSEA
Model Equality constraints chiML dfM p comparison chiD dfD p [90% CI] CFI SRMR
1 7 direct effects 11.736 7 .110 — — — — .059 [0, .115] .975 .036

2 6 direct effectsa 6.107 6 .411 1 vs. 2 5.629 1 .018 .010 [0, .093] .999 .029

3 6 direct effectsa 6.409 7 .493 2 vs. 3 .302 1 .583 0 [0, .083] 1.000 .030
Achieve intercept

4 6 direct effectsa 10.237 7 .176 2 vs. 4 4.130 1 .042 .048 [0, .107] .983 .033
Delinq intercept

Note. Model 3 is retained.

aAchieve → Delinq free.

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 208 Specification, Estimation, and Testing

TABLE 12.4. Correlation and Standardized Residuals

for a Multiple-Group Recursive Path Model of Achievement
and Delinquency with All Equality-Constrained Direct Effects
Variable 1 2 3 4 5
Correlation residuals
1. SES — 0 0 –.073 –.034
2. Test Effort 0 — 0 –.009 –.012
3. Verbal IQ 0 0 — –.042 –.017
4. Achievement .080 .011 .042 — –.102
5. Delinquency .027 .011 .009   .083 —

Standardized residuals
1. SES — 0 0 –2.917 –.984
2. Test Effort 0 — 0 –.682 –.472
3. Verbal IQ 0 0 — –2.009 –.542
4. Achievement 2.611 .550 1.976 — –2.541
5. Delinquency .954 .446 .551 2.516 —

Note. These results are for model 1 in Table 12.3. Black (above diagonal), White (below
diagonal). Values in boldface for correlations residuals exceed .10 in absolute value and for
standardized residuals exceed 1.96 in absolute value.

.05 level. Based on all results described to this point,
model 1 with all 7 equality-constrained direct effects
is rejected.
In model 2, the equality constraint for the direct
effect of achievement on delinquency is released—this
coefficient is now freely estimated in both groups—
while still imposing equality on the remaining direct
effects, or 6 in total. Model 2 passes the chi-square
test, or chiML (6) = 6.107, p = .411 (Table 12.3). Con-
tributions to the overall chi-square from both groups
are roughly comparable (Black, 2.989; White, 3.118).
The reduction in the model chi-square for model 2
compared with model 1 is chiD (1) = 5.629, which is
significant at the .05 level. Other results are favorable,
too: Values of approximate fit indexes for model 2 are
not generally problematic, and the largest correlation
residual is .073 in the Black sample and .080 in the
White sample (see the output file). There are no sig-
nificant standardized residuals in the White group, but
the computer was unable to generate all standardized
residuals in the Black group. One is significant for the
pair achievement and delinquency, but the correspond-
ing correlation residual is only .012. None of the nor-
malized residuals is significant in this group, but these
tests are more conservative.
Results described so far are consistent with the
hypothesis that the unstandardized direct effect of
achievement on delinquency varies with group mem-
bership, but we next consider two additional models
before we settle on a final choice for this example. These
analyses are more exploratory because Lynam et al.’s
(1993) path models had no mean structures. Model 3,
relative to model 2, features equality-constrained inter-
cepts for achievement. It was expected that constrain-
ing this parameter would marginally degrade global fit
compared with model 2, for which the same intercept is
freely estimated in both groups. This is because model
2 with equal direct effects for causes of achievement—
SES, test effort, and verbal IQ—over the two groups is
generally consistent with the data. Results for model 3
listed in Table 12.3 support this prediction. For example,
when comparing models 2 and 3, chiD (1) = .302, which
indicates practically no difference in the chi-square val-
ues over these models. They also have essentially the
same correlation, standardized, and normalized residu-
als. But one more feature of model 3 needs comment.
Because the intercept for achievement is equally
constrained in model 3, its whole mean structure is
no longer just-identified; specifically, it has df = 1, so
not all predicted means for the endogenous variables,

Pt2Kline5E.indd 208 3/22/2023 3:44:29 PM


achievement and delinquency, will exactly equal their
observed counterparts. This is because means on
endogenous variables are functions of both their inter-
cepts and means on the exogenous variables (Rule 9.5).
In contrast, mean residuals for the exogenous vari-
ables—SES, test effort, and verbal IQ—will all equal
zero because no constraints affected their predicted
means. Reported in the top part of Table 12.5 are the
observed and predicted means for the endogenous vari-
ables in the Black sample, and the corresponding results
in the White sample are listed in the bottom part of the
table. None of the means residuals is zero, but they are
relatively small. The standardized mean residuals
are significance tests in the form of normal deviates (z)
for the mean residuals, and these values are relatively
small, too. Thus, model 3 closely predicts covariances
and means in both groups, so it is retained
In model 4, the intercept for regressing delinquency
on SES, test effort, verbal IQ, and achievement is con-
strained to equality over groups plus all direct effects
except that of achievement on delinquency, which is
freely estimated in both samples. Because the direct
effect just mentioned contributes to the intercept for
delinquency, it was expected that constraining the
intercept just mentioned to equality would appreciably
worsen fit compared with model 2. This prediction is
consistent with the results; specifically, although model
4 passes the chi-square test—chiML(7) = 10.237, p =
.176—its fit is relatively worse than that of model 2—
chiD(1) = 4.130, p = .042 (Table 12.3). Also, residuals
for model 4 are similar to those for model 1; that is,
TABLE 12.5. Mean Residuals and Standardized Mean Residuals
for Endogenous Variables in the Final Multiple-Group Recursive
Path Model of Achievement and Delinquency
Observed
Variable mean
Achievement 2.510
Delinquency 1.400
Achievement 2.880
Delinquency 1.220
Note. These results are for model 3 in Table 12.3.
aNormalized mean residual.
Pt2Kline5E.indd 209
Comparing Groups 209
unsatisfactory—see the output for this analysis (Table
12.2). Thus, model 4 is rejected.
Parameter Estimates
and Conditional Effects
Listed in the top part of Table 12.6 for model 3 are
values for parameters freely estimated in both groups.
Results for the conditional direct effect of achievement
on delinquency are shown in boldface: In the Black
sample, the unstandardized coefficient for the direct
effect of achievement on delinquency is –.493, and the
corresponding estimate in the White sample is –.087.
Exercise 1 asks you to interpret the path coefficients
just mentioned. Thus, the unstandardized direct effect
of achievement on delinquency, controlling for SES,
effort, and verbal IQ, is about 5½ times greater among
Black versus White male adolescents. This difference
in effect size over groups was considered meaning-
ful by Lynam et al. (1993, p. 193). When scores on all
predictors (SES, effort, verbal IQ, and achievement)
equal zero, the difference in intercepts for delinquency
suggests a higher relative standing on this variable
among Black male youth (4.380) than among White
male youth (3.411), under the same conditions. (This
statement assumes that the raw scores are not centered,
or mean-deviated.) Exercise 2 concerns the results in
Table 12.6 for the disturbance variances.
Listed in the bottom part of Table 12.6 are results for
equality-constrained direct effects on achievement and
delinquency. For example, the unstandardized coeffi-
Predicted Mean Standardized
mean residual mean residual
Black
2.525 –.015 –.641
1.392 .008    .068a
White
2.857 .023 .510
1.222 –.002 –.146
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 210 Specification, Estimation, and Testing

cient for the direct effect of verbal IQ on achievement
while controlling for SES and effort is .032 for both
groups. Note also that the standard errors of the coef-
ficient just stated, .003, are also equal across the groups
even though two samples are not the same size. This
outcome for the standard errors of equality-constrained
parameters is expected. Standardized estimates for the
direct effect of verbal IQ on achievement vary over
samples, though: Black, .538; White, .564. The two
standardized path coefficients just listed are not the
same because equality constraints are imposed in the
unstandardized solution in this analysis, not in the stan-
dardized solution. The equality-constrained intercept
for achievement, –.426 for both groups, is also reported
at the bottom of Table 12.6.
Indirect effects of SES, test effort, and verbal IQ
on delinquency through the intervening variable of
achievement are computed in analysis 2 of Table 12.2.
The first stages for all three indirect effects are con-
strained to equality. This is because the unstandard-
ized direct effects of SES, test effort, and verbal IQ on
achievement are forced to be equal over groups (see
Table 12.6). But the second stage for all indirect effects,
or the unstandardized direct effect of achievement on
delinquency, is freely estimated in each group. Thus,
each indirect effect is conditional, too. Reported in
Table 12.7 are the coefficients (i.e., product estimators)
for indirect effects in each group. Exercise 3 asks you to
verify that none of the unstandardized indirect effects
are significant at the .05 level in the White sample, but

TABLE 12.6. Maximum Likelihood Parameter Estimates for a Multiple-Group

Recursive Path Model of Achievement and Delinquency
Black White
Parameter Unst. SE St. Unst. SE St.
Unconstrained estimates
Direct effects
Achieve → Delinq –.493 .138 –.245 –.087 .124 –.057

Intercepts
Delinq 4.380 .566 — 3.411 .586 —

Disturbance variances
Achieve .463 .045 .697 .580 .061 .668
Delinq 2.306 .223 .855 1.881 .198 .913

Equality-constrained estimates
Direct effects
SES → Achieve –.002 .003 –.031 –.002 .003 –.029
Effort → Achieve .036 .029 .059 .036 .029 .051
VIQ → Achieve .032 .003 .538 .032 .003 .564
SES → Delinq –.003 .007 –.022 –.003 .007 –.029
Effort → Delinq –.099 .059 –.081 –.099 .059 –.091
VIQ → Delinq –.017 .006 –.144 –.017 .006 –.198

Intercepts
Achieve –.426 .245 — –.426 .245 —

Note. These estimates are for model 3 (Table 12.3). Unst., unstandardized; St., standardized. Standardized estimates
for error variances are proportions of unexplained variance. Variances, covariances, and means for the exogenous
variables (SES, Effort, VIQ) are the sample values in each group (Table 12.1).

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 Comparing Groups 211

TABLE 12.7. Indirect Effects of SES, Test Effort, and Verbal IQ

on Delinquency through Achievement in a Multiple-Group
Recursive Path Model of Achievement and Delinquency
Black White
Causal variable Unst. SE St. Unst. SE St.
SES .001 .002 .007 < .001 < .001 .002
Effort –.018 .015 –.014   –.003    .005 –.003
Verbal –.016 .005 –.132   –.003    .004 –.030

Note. These estimates are for model 3 (see Table 12.3). Unst., unstandardized; St., stan-
dardized. Standard errors are Sobel standard errors.

(2) the unstandardized coefficient in the Black sample
for the indirect effect of verbal IQ on delinquency
through achievement, or –.016, is statistically signifi-
cant at the same level. Exercise 4 asks you to interpret
the result just mentioned in the Black sample.
TESTS FOR CONDITIONAL INDIRECT
EFFECTS OVER GROUPS
A somewhat unusual feature of the analysis just
described is that the unstandardized coefficients for the
first stages of indirect effects are constrained to pair-
wise equality over groups, but the second stages are
freely estimated in each sample. Perhaps a more typi-
cal scenario occurs when indirect effects are estimated
but with no constraints imposed on constituent direct
effects. A strategy in this case is to constrain just the
unstandardized product estimator for an indirect effect
to equality over groups (Ryu, 2015). Suppose that a1
and b1 are the unstandardized coefficients in population
1 for, respectively, the direct effects in the same model
X→W and W → Y
and that a2 and b2 are their counterparts in population
2. Constraining the product estimator for the indirect
effect of X on Y through W to equality over groups tests
the null hypothesis
H0: a1b1 = a2b2 (12.1)
without also explicitly constraining the direct effects.
Some SEM tools, including lavaan and Mplus
(Muthén & Muthén, 1998–2017; Rosseel et al., 2023),
support the imposition of constraints on researcher-
defined parameters such as for indirect or total effects.
One method to formally test the null hypothesis in
Equation 12.1 is to fit two nested models to the same
data: One model is constrained, where product esti-
mators for the same indirect effect are constrained to
equality over groups, but the other model is uncon-
strained. The test statistic is chiD(1) assuming normal-
ity or a scaled chi-square difference statistic adjusted
for nonnormality (Topic Box 11.1). This is the likeli-
hood ratio (LR) test method. A second method is the
Wald test: Only the unconstrained model is analyzed,
and the increase in the model chi-square due to impos-
ing the equality constraint is approximated by the W
statistic. The null hypothesis in Equation 12.1 describes
a single constraint applied over two groups for an indi-
rect pathway made up of three variables, but both meth-
ods can be extended to simultaneously test equality
hypotheses over ≥ 2 groups for ≥ 2 indirect effects that
each consist of ≥ 3 variables.
Two additional methods to test Equation 12.1 require
no constraints (Ryu, 2015): The third is nonparametric
bootstrapping, where large numbers of generated sam-
ples are randomly selected from the original groups,
where the sizes of generated samples are the same as
those in the original sample. A bootstrapped sampling
distribution for group differences in product estimators
for indirect effects is constructed by the computer, and
a bootstrapped significance test is applied, including
the derivation of bootstrapped confidence intervals for
parameter estimates in each group. The fourth method
is Monte Carlo simulation assuming that the joint dis-
tributions of estimates for unstandardized direct effects
is multivariate normal. Empirical sampling distribu-
tions for group differences in estimated indirect effects

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 212 Specification, Estimation, and Testing
are generated, and confidence intervals within these
distributions are derived by the computer.
Ryu (2015) conducted a computer simulation study
of the four basic methods just described to determine
their relative power and accuracy to detect population
differences in indirect effects. Two bootstrap confi-
dence interval methods were studied, percentile and
bias-adjusted, so the total number of conditions for
methods in Ryu (2015) is five. Other study conditions
included magnitudes of differences in indirect effects
(including zero), group size (n = 50, 100, 150), whether
group sizes are balanced or unbalanced (i.e., equal or
unequal), and whether a larger indirect effect is asso-
ciated with the larger or smaller group in unbalanced
conditions. The LR test method performed well over
most conditions regarding power and Type I error rate.
The Wald test method was generally less powerful than
the LR test when group sizes were equal and when a
smaller indirect effect was associated with the largest
group in unbalanced conditions. Both methods just
mentioned generally outperformed the two bootstrap
methods, and the Monte Carlo method had the lowest
power. An advantage of the LR test and Wald test meth-
ods is that no resampling or Monte Carlo simulation is
needed for either one (i.e., they are simpler to apply)
and their results are deterministic in that they each
yield a single estimate, unlike methods based on simu-
lated random sampling (bootstrapping, Monte Carlo).
A recent example of a multiple-group path analy-
sis where direct or indirect effects were compared
over independent samples is van Veelen et al. (2019),
who reported that the combination of working almost
exclusively with male colleagues and working in tech-
nical sectors where women are negatively stereotyped
predicted higher levels of perceived gender identity
threat and less career confidence and work engagement
among women with STEM (science, technology, engi-
neering, or mathematics) degrees than among men with
similar credentials.
In a multiple-group approach, group membership
is not represented in the model (e.g., Figure 12.1).
Instead, it is treated in the analysis as a categorical
moderator variable when estimates for parameters in
the same model, such as for indirect effects, are com-
pared over groups (e.g., Table 12.7). Ryu and Cheong
(2017) described an alternative for comparing indi-
rect effects over two groups called the single-group
approach. In this method, group membership is rep-
resented in the model as a binary exogenous vari-
able (i.e., a single coding variable) that covaries with
Pt2Kline5E.indd 212
a continuous causal variable X. A coding variable ×
X product term is created, and a presumed mediator
M is regressed on group membership, cause X, and
the product term (e.g., Figure 7.8(a)). The coefficient
for the product term estimates whether the relation
between cause X and mediator M changes over the
groups (i.e., there is interaction). If so, then the indirect
effect of cause X on outcome Y through mediator M is
conditional because its first stage, or X → M, depends
on group. Thus, a single coefficient (for the product
term) is used to test for group differences in the indi-
rect effect. There are other variations of a single-group
approach that are special cases of conditional process
analysis, and these are described in Chapter 20.
A drawback of the single-group approach is that
the sole coefficient for estimating differences in indi-
rect effects assumes equal variances over groups.
In contrast, there is no comparable requirement in a
multiple-group approach because variances can be
estimated separately in each group (e.g., Table 12.6).
In a computer simulations, Ryu and Cheong (2017)
compared the accuracy of single-group and multiple-
group approaches for estimating differences in indirect
effects over two populations. Study conditions included
ones where the homoscedasticity assumption was vio-
lated. In this case, single-group analysis can generate
incorrect results, especially in the LR test and Wald
test methods. Performance in single-group analysis
under heteroscedasticity was better in bootstrapped
confidence interval methods and also in the Monte
Carlo confidence interval method, but at cost of higher
Type I error rates. The best combination was the LR
test in multiple-group analysis, which generally yielded
optimal levels of power and Type I error rates. Given
these results, Ryu and Cheong (2017) recommended
that researchers first examine estimates for variance
parameters in a multiple-group analysis with no con-
straints to verify homoscedasticity before opting for a
single-group analysis.
SUMMARY
When simultaneously fitting a structural equation
model to the data from multiple groups, it is common
to impose cross-group equality constraints on certain
unstandardized parameter estimates. These parameters
could be for causal effects, including direct, indirect, or
total effects, or for variances, covariances, means, or
intercepts. The choice among them should be related to
3/22/2023 3:44:29 PM

specific hypotheses about group differences. If the fit
of the constrained model is much worse than that of the
unconstrained model—and the unconstrained model
fits the data reasonably well—we may conclude that
the populations from which the groups were selected
may differ on the equality-constrained parameter(s).
An alternative to multiple-group analysis is to represent
group membership in a single-group model that is fitted
to the data from all groups combined. Certain endog-
enous variables in the model are regressed on group
and product terms that involve group and other pre-
sumed moderator variables. Coefficients for the product
terms estimate interactive effects of group with other
causal variables, and their values can be converted to
estimates of conditional indirect effects. A drawback
is that single-group models generally assume homosce-
dasticity over groups, and estimates can be inaccurate
if such assumptions are untenable. In contrast, it is
EXERCISES
1. Interpret the results in Table 12.6 for the unstan-
dardized direct effects of achievement on delin-
quency in both groups.
2. Calculate R2 for the endogenous variables in Table
12.6 for both samples. Are these results directly
comparable over the groups? Explain your answer.
Pt2Kline5E.indd 213
Comparing Groups 213
straightforward to test homogeneity assumptions in a
multiple-group approach.
LEARN MORE
Results of computer simulations by Ryu (2015) and Ryu and
Cheong (2017) about methods to compare indirect effects
over groups were briefly summarized, but it is worthwhile to
read the whole original works.
Ryu, E. (2015). Multiple-group analysis approach to testing
group difference in indirect effects. Multivariate Behav-
ioral Research, 47(2), 484–493.
Ryu, E., & Cheong, J. (2017). Comparing indirect effects in
different groups in single-group and multi-group struc-
tural equation models. Frontiers in Psychology, 8, Article
747.
3. Test the unstandardized coefficients for indirect
effects in Table 12.7 for statistical significance in
both groups.
4. Interpret in Table 12.7 the unstandardized indirect
effect of verbal IQ on delinquency through achieve-
ment in the Black sample.
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 Part III

Multiple‑Indicator Approximation
of Concepts

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Pt3Kline5E.indd 216 3/22/2023 2:56:11 PM
 13

Multiple-Indicator Measurement

Models considered up to this point featured single-indicator measurement where each theoretical variable is
approximated by just one observed variable (i.e., manifest-variable path models). Introduced in this chapter
is the logic of multiple-indicator measurement, where two or more observed variables are used to estimate
the same concept. Multiple indicators may assess a wider range of attributes that correspond to the theoreti‑
cal definition of a concept than a single indicator, and precision (reliability) of empirical approximations for
concepts is generally higher with multiple indicators, if all indicators have adequate psychometric properties.
But estimating theoretical concepts with multiple indicators requires the researcher to face a wider range of
questions and decisions compared with analyzing models with single indicators. Broadly stated, these ques‑
tions involve hypothesized connections between the data from multiple indicators (i.e., their scores) and the
concepts those indicators should approximate. They are summarized next:

1. What are the directions of the relations between indicators and concepts? Specifically, are the
observed scores viewed as the outcomes of those concepts versus the causes of those concepts?
2. How is measurement error handled? That is, will it be taken into account at the level of the indicator,
at the level of the concept, or ignored (i.e., nothing is done)?
3. Given decisions on (1) and (2), how will numerical information from multiple indicators be summa‑
rized or assembled to form a proxy, or a statistical entity built up from data that approximates a
concept?

There are different kinds of measurement models, and they assume different patterns of relations
between concepts and indicators, represent measurement error in different ways, and are associated with
different kinds of proxies. To meaningfully test a theory when multiple indicators are available for some
concepts, the researcher should make intelligent decisions about measurement models on which to base
the analysis. The opposite involves making uninformed choices or, even worse, blindly relying on defaults
in a particular computer tool to implement these decisions for the researcher. Thus, the main goal of this
chapter is to make you more aware of the rationale, assumptions, and contexts for specifying measurement
models in SEM. I hope this presentation better prepares you for learning about specific SEM techniques for
multiple-indicator measurement described in upcoming chapters in Part III of this book. Next, we consider
two frameworks for linking data with concepts through the specification of measurement models.

I thank Edward Rigdon for his invaluable comments on an earlier version of this chapter. Any remaining limitations in this presentation
are clearly my own.

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 218 Multiple-Indicator Approximation of Concepts
CONCEPTS, INDICATORS,
AND PROXIES
Bagozzi and colleagues described holistic construal,
which is an eclectic, iterative approach to theory devel-
opment, testing, and refinement that is neither strictly
deductive nor confirmatory (Bagozzi, 2011; Bagozzi &
Phillips, 1982; Bagozzi & Yi, 2012). The model con-
nects theory and hypotheses at higher levels of abstrac-
tion with entities at lower levels of abstraction ending
with empirical observations (data), also called the
observational sector (Schaffner, 1969). At the high-
est level is a theoretical concept, or a verbal (text-
based) definition (Maraun & Halpin, 2008). It specifies
expected features or attributes of the target phenom-
enon, and this definition could be embedded within a
larger nomological network in which relations among
multiple concepts are outlined.
A derived concept in holistic construal falls at a
lower level of abstraction than a theoretical concept.
Although unobserved (i.e., latent), a derived concept
is directly linked with empirical concepts, or observ-
ables (i.e., data) (Bagozzi & Phillips, 1982). Henseler
(2021, p. 3) defines constructs in a similar way: They
are “statistical variables that are not by themselves
observable, but can be mathematically inferred from
observable variables.” Constructs also involve hypoth-
eses about how indicators should covary in studies of
individual differences or how they will be similarly
affected by experimental manipulations (Nunnally &
Bernstein, 1994).1
Rigdon’s (2012) concept proxy framework rep-
resents two basic elaborations beyond holistic con-
strual: First, there is greater emphasis on the differ-
ence between a theoretical concept and an empirical
approximation of that concept. The approximation is a
proxy, which essentially replaces the idea of interme-
diate latent variable in holistic construal, or a derived
concept, that lies between theoretical definitions and
data. This substitution emphasizes that proxies merely
approximate concepts, that is, they are empirical stand-
ins for concepts, but proxies and concepts are not
identical. At most, a proxy is a replacement variate
generated by combining or weighting scores from mul-
tiple indicators in optimal ways that essentially replace
the original indicators as the focus of the analysis and
interpretation of the results (Maraun & Halpin, 2008).
1 Michell
(2013) reminded us that theory can be inferred from
observation, that is, it is a myth that data must always follow
theory.
Pt3Kline5E.indd 218
Second, Rigdon’s (2012) emphasis on proxies also
reminds us to be more careful about language, espe-
cially about the term “latent variable model,” which is
widely used in the SEM literature (including also by
me earlier in this book). Specifically, our models fitted
to sample data do not actually have latent variables in
them, only proxies for target concepts. It is also impor-
tant to avoid a logical error about names assigned to
proxies in our models. The error is the naming fallacy
or nominalist fallacy (Cliff, 1983): Just because a proxy
is named does not mean that the corresponding concept
is understood or even correctly labeled. Proxies require
some type of designation, though, if for no other reason
than communication of the results. Although abstract
symbols such as h or x from LISREL notation are an
option, verbal labels are more user friendly and repre-
sent the effort to interpret statistical results for prox-
ies. But meaningful proxy names should be viewed as
conveniences or hypotheses and not as substitutes for
critical thinking.
Presented in Figure 13.1 is a graphical illustration
of the concept proxy framework for a single concept.
Symbols in the figure are arranged among a dimension
that connects data at the bottom to increasingly abstract
entities ending with the definition of a focal concept
at the top of the figure. That definition may refer to
other concepts that are part of the same theory, some
of which may be described as antecedent to the focal
concept and others assumed to be consequent concepts.
Related concepts are not shown in the figure, but each
Concept
definition
Concept
Proxy
Indicators
(Data)
FIGURE 13.1. Rigdon’s (2012) concept proxy framework.
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would have a similar graphical representation in the
concept proxy framework as depicted in the figure.
The second symbol from the top in Figure 13.1—the
oval rendered in double lines—represents the concept
as it exists in the real world.2 There are variations on
the status of this existence. One corresponds to a scien-
tific realist perspective that concepts exist independent
of observation and have causal agency on the manifest
variables that are supposed to measure them (Rigdon,
2016). For example, intelligence is expected to drive
behavior; specifically, persons with varying levels of
intelligence should behave in different ways in cer-
tain situations, including attaining different scores on
measures of reasoning, memory, fund of factual infor-
mation, or other cognitive abilities. In this way, intel-
ligence is a viewed as a causal entity.
Concepts can also exist purely in the minds of
researchers as organizing principles for understand-
ing a particular problem, or what Einstein (1916/1997)
described as a “necessity of thought” or an “a priori
given” among scientists. For example, Davidson and
White (2007) described recovery as the organizing
principle for an integrated model of treatment deliv-
ery for persons with mental health or addiction prob-
lems. Recovery occurs or does not occur as function
of measured variables that include treatment efficacy
or duration, patient background, or level of community
services posttreatment, among others, but recovery per
se is an outcome, not a cause. This perspective under-
lies the scientific empiricist view that (1) reality corre-
sponds to what is directly observable, and (2) concepts
2 E. Rigdon (personal communication, April 27, 2020).
(a) Reflective (b) Causal–Formative
L→M M→L
FIGURE 13.2. Measurement models for a set of three indicators: reflective measurement with effect indicators (a), causal–for‑
mative measurement with causal indicators (b), and composite (composite–formative) measurement with composite indicators
(c). L, latent; M, manifest; C, composite.
Pt3Kline5E.indd 219
Multiple-Indicator Measurement 219
are nothing more than labels for particular kinds of
regularities among measured variables (Rigdon, 2016).
That is, concepts have no causal agency from this per-
spective.
In Figure 13.1, the lines that connect indicators with
their proxy are nondirectional. They represent cor-
respondence rules, also called C-rules or epistemic
correlations (Schaffner, 1969), that associate concepts
with their indicators. But correspondence rules also
specify the presumed nature and direction of the causal
relations between a concept and its indicators. The two
aspects together, concept–indicator associations and
hypotheses about directionality, describe a formal mea-
surement model. There are three basic kinds: reflective,
causal–formative, and composite (Henseler, 2017). Of
the three, reflective measurement is probably the most
familiar to researchers in psychology and education,
especially those trained in classical measurement the-
ory. Types of measurement models are described next.
REFLECTIVE MEASUREMENT
AND EFFECT INDICATORS
A reflective model for a set of three indicators is
depicted in Figure 13.2(a). It represents the hypoth-
esis that each indicator has two unrelated causes, the
concept the indicator is supposed to measure and an
error component that represents unique variance that
is not explained by the concept. Unique variance has
two parts: random measurement error and specific
variance, which is systematic but not explained by the
concept. The rest of indicator variance, called com-
(c) Composite
M→C
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 220 Multiple-Indicator Approximation of Concepts
mon variance, is systematic and shared with the con-
cept.
Grace and Bollen (2008) used the term L → M block
(latent to manifest) to describe the “flow” of causation
from concept to indicators in Figure 13.2(a). Observed
variables in reflective measurement models are called
effect indicators or reflective indicators because
they are specified as outcomes of concepts (and also of
their own error terms). Other assumptions of reflective
measurement are listed next (Bollen & Bauldry, 2011;
Rhemtulla et al., 2020): Effect indicators for the same
concept
1. have a rationale or a conceptual unity that all cor-
respond to the same domain (i.e., there is a theory
that links the indicators as measures of a common
quantity);
2. their levels rise or fall in value together, given a cor-
responding change in the underlying concept;
3. are internally consistent as a set, which means that
their intercorrelations are positive and at least mod-
erately high in magnitude (e.g., > .50 for continuous
variables);
4. can be substituted for another without appreciably
affecting the interpretation of the concept;
5. are locally independent, or uncorrelated control-
ling for their common cause (the concept), if their
errors are independent; and
6. contribute only what they share (i.e., common vari-
ance) to approximation of the concept.
The representation of a concept as a latent variable
with effect indicators only is called the common fac-
tor model. The model’s name also describes the proxy
(i.e., a common factor) in factor analytic techniques that
approximate latent variables from whatever is com-
mon among their indicators while allocating anything
not shared among those indicators to the error terms
(Rhemtulla et al., 2020). A benefit of the common factor
model is that indicator measurement error variance is
removed from common factors. As a result, estimates of
relations among concepts are generally unbiased in the
common factor model, if the population measurement
model is reflective. Another benefit is that assumptions
of common factor models are generally testable in the
data. For example, the local independence assumption
is testable through the derivation of vanishing partial
correlations (i.e., conditional independencies) between
Pt3Kline5E.indd 220
indicators that depend on the same factor, among other
ways, to evaluate the adequacy of reflective measure-
ment models described in the next chapter.
A drawback is that assumptions of the common
factor model are at odds with the motivation to select
indicators each of which measures a distinct facet or
aspect of the target concept. Suppose that leadership
is defined as the combination of the abilities to teach,
listen, challenge, inspire, and solve problems while not
complaining (Tobak, 2015). Measures of each facet just
listed are selected. A common leadership factor would
represent only what is shared among these indicators,
not anything uniquely measured by any one of them.
Thus, if a concept is viewed as having distinct facets
such as leadership in this example, the common factor
model is not an optimal choice.
Here is a second example: Adolescents and their
parents and teachers each complete a questionnaire
about adolescent social skills. The goal is to capture
differences in perspectives over the three informants all
reporting on the same thing. If adolescent, parent, and
teacher reports are specified as effect indicators, then
any unique variance due to a particular type of infor-
mant would not contribute to a common social skills
factor. Reflective measurement is again not the best
choice, given the goal just stated. Fortunately, there are
alternatives to the specification of reflective measure-
ment as outlined next.
CAUSAL–FORMATIVE MEASUREMENT
AND CAUSAL INDICATORS
A causal–formative model is represented in Figure
13.2(b). It is described as an M → L block (manifest to
latent) (Grace & Bollen, 2008) because the latent vari-
able is represented as the outcome of its causal indica-
tors plus a disturbance term that represents unexplained
variation in the proxy for the concept. There are times
when it makes sense to view a latent variable as caused
by its indicators. For example, income, education, and
occupational prestige, among other variables, deter-
mine a person’s standing on a latent socioeconomic sta-
tus (SES) dimension, not the other way around. That is,
SES is the outcome of the variables just listed, not their
cause. For this reason, some authors, such as MacKen-
zie et al. (2011), described the construct represented in
Figure 13.2(b) as a composite latent construct, which
emphasizes that the construct in a causal–formative
model basically summarizes its indicators (plus unex-
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plained variation) instead of determining them as in a
reflective model.
Other features of causal–formative measurement
models are listed next (Henseler, 2017); see also Fig-
ures 13.2(a)–13.2(b):
1. Causal indicators for the same concept are exog-
enous variables that are free to vary and covary. In
contrast, effect indicators are endogenous, so their vari-
ances and covariances are not free parameters. Thus,
a reflective model explains the variance and covari-
ances of effect indicators, but a causal–formative model
explains neither variances nor covariances among a set
of causal indicators.
2. Measurement error in effect indicators is rep-
resented at the level of measured variables (i.e., their
error terms), but measurement error in causal indica-
tors is manifested at the construct level. This means
that as scores on causal indicators become less precise,
unexplained variation in estimates for the target latent
variable, or disturbance variances, increase. Dropping
a causal indicator may also increase measurement error
at the construct level.
3. There is no requirement for internal consistency
among causal indicators of the same construct. This
means that they can covary in any pattern whatsoever,
positive, negative, or even zero. What unifies a set of
causal indicators is the researcher’s hypothesis that
they affect the same domain or concept.
4. But omitting a causal indicator that covaries
with measured causal indicators may lead to bias. This
can happen because the omission of such an indicator
changes the empirical definition of the construct. So
unlike effect indicators, causal indicators are not gener-
ally interchangeable.
A stumbling block to estimating causal–formative
measurement models in traditional (i.e., covariance-
based) SEM is identification. For example, Figure
13.2(b) with causal indicators only is not identified.
Specifically, its parameters could be estimated only if
(1) Figure 13.2(b) were embedded within a larger model
where (2) the latent variable with causal indicators
only is specified as directly affecting at least two other
endogenous variables. In contrast, the reflective model
with effect indicators only in Figure 13.2(a) is identi-
fied, so it could potentially be analyzed as a “stand-
alone” model. Specific requirements are described in
Pt3Kline5E.indd 221
Multiple-Indicator Measurement 221
the next three chapters for identifying models in which
conceptual variables are approximated with sets of
multiple indicators. But I can say now that specification
of a measurement model has implications for identifica-
tion in SEM just as specification does for a structural
model (e.g., recursive or nonrecursive, Rule 7.4).
COMPOSITE MEASUREMENT
AND COMPOSITE INDICATORS
A composite model, also called a composite–forma-
tive model (Henseler, 2021), with composite indica-
tors is represented in Figure 13.2(c). It differs from a
causal–formative model in two ways: (1) The proxy for
the theoretical variable in a composite model is a com-
posite, or a linear combination of its indicators and (2)
because a composite is not latent, it has no disturbance.
In fact, constraining the disturbance variance to zero
in the causal–formative model in Figure 13.2(b) gen-
erates the composite model in Figure 13.2(c) (i.e., the
two models are hierarchically related). Grace and Bol-
len (2008) described a composite model as an M → C
block (manifest to composite). These authors also rep-
resent composites in diagrams as hexagons, which are
also used in Figure 13.2(c). A hexagon is not a standard
symbol in the literature, but it conveys the fact that a
composite is just an observed variable, albeit “assem-
bled” from ≥ 2 observed variables in the model (the
composite indicators).
Listed next are the features of composite models
(Henseler, 2017); see also Figures 13.2(a)–13.2(c):
1. The indicators make up the concept; that is, the
meaning of the concept is derived entirely from its
components, if it can be assumed a set of composite
indicators adequately represents the target domain.
2. Just as for causal indicators, composite indicators
are exogenous variables that are free to vary and
covary.
3. Relatively high correlations within a set of compos-
ite indicators may be expected but are not required.
4. Dropping or adding an indicator can change the
meaning of the composite, so composite indicators
are not generally interchangeable.
5. Measurement error in composite indicators is not
represented in the model, either at the construct
level or at the level of measured variables. This
means that composites constructed from error-
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 222 Multiple-Indicator Approximation of Concepts
prone observed variables contain measurement
error, too.
The last point (5) implies that if the true population
model is reflective but proxies for latent variables are
composites with measurement error instead of com-
mon factors, then correlations between composites will
inconsistently estimate correlations between factors.
This means that, in all likelihood, the estimates fail
to progressively converge toward the true values with
increases in sample size, which can increase both Type
I and Type II errors in model testing (Henseler, 2021).
The degree of bias in composite-based results seems
to decrease when population reflective models have at
least four indicators per factor all with relatively high
standardized factor loadings, such as > .70, or as cor-
relations among indicators increase (Hair et al, 2022;
Rhemtulla et al., 2020). There are also relatively new
methods for consistently estimating population reflec-
tive models with composites that are described in
Chapter 16.
Henseler and Schuberth (2020) described the role of
composites as proxies for emergent variables, which
refer to concepts that are forged, or come into being
through invention to solve problems. Emergent vari-
ables do not typically refer to natural phenomena—
they are instead abstractions of objects, either actual
or conceptual, with a purpose or intentional design.
That is, emergent variables are built up from artifacts,
or things that can be assembled into manufactured
objects or abstract processes, such as software, indexes
or guides, policies, or design principles. In this way, an
emergent variable is a composite of variables that act as
a whole, not as mere “heap of parts” (Henseler, 2021,
p. 36). This means that (1) a set of composite indica-
tors should be independent of all other variables in the
model, given their common proxy, and (2) the ratio
between indicators’ correlations with other variables in
the model should remain constant. These expectations
are testable implications in the data.
The ideas about emergent variables as proxies for
forged concepts in composite measurement models
just reviewed may be relatively novel for researchers
trained in classical measurement theory, but there are
specific rhymes, reasons, and rationales to approximat-
ing emergent variables instead of, or perhaps in addi-
tion to, latent variables. There also potential advan-
tages for classically trained researchers (like myself).
For example, in contrast to common factor models,
for which anything uniquely measured by individual
Pt3Kline5E.indd 222
effect indicators is discarded (counted as error), such
features are retained in the analysis of composite indi-
cators. Thus, the goal of assembling a set of indicators,
each of which represents a disparate facet or element
of a concept, is directly supported in composited-based
approaches to the analysis. Of course, composite mod-
els are not panaceas in that they present their own chal-
lenges. One is identification: The composite model in
Figure 13.2(c) is not identified unless it is included as
part of a larger model where its composite has direct
effects on other variables. (Recall that the same is true
for Figure 13.2(b).) The identification and analysis of
composite models is described in Chapter 16.
MIXED‑MODEL MEASUREMENT
Depicted in Figure 13.3 is mixed-model measure-
ment, also called a multiple-indicators and multi-
ple-causes (MIMIC) model (Jöreskog & Goldberger,
1975). Its factor has both effect indicators and causal
indicators, so the whole model is actually a combina-
tion of a reflective model and a causal–formative model
(see Figures 13.2(a)–13.2(b)). The basic hypothesis for
an MIMIC model is that the latent variable is a cause
of its effect indicators while simultaneously it is an out-
come of its causal indicators. For example, Hershberger
(1994) described how the measurement of depression
could be viewed from a mixed-model perspective:
Some indicators, such as “feeling sad,” “loss of appe-
tite,” and “insomnia,” can be understood as symptoms;
that is, they are outcomes of being depressed. But a dif-
Mixed model
Effect, causal indicators
FIGURE 13.3. Mixed-measurement model with both
causal indicators and effect indicators, also called a MIMIC
(multiple indicators and multiple causes) model.
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ferent indicator, “feeling lonely,” might cause depres-
sion rather than vice versa, such as when social isola-
tion or withdrawal precedes the onset of depression.
An MIMIC factor like the one in Figure 13.3 is always
endogenous, so it has a disturbance. Random measure-
ment error in its two effect indicators, also endogenous,
is manifested in their error terms. The bivariate correla-
tion between the effect indicators should be positive and
at least moderately high in value. The partial correlation
between the two effect indicators should vanish when
controlling for their common cause, the MIMIC factor,
and only their common variance contributes to approxi-
mation of the factor. The same two indicators are also
viewed as interchangeable with other effect indicators for
the same factor, just as in reflective measurement models.
In contrast, measurement error in the two causal indica-
tors in Figure 13.3 is manifested in the factor disturbance,
and both their common and unique variances contribute
to approximation of the factor. As in causal–formative
models, cause indicators in an MIMIC model are not
viewed as interchangeable, and they can have any pattern
of bivariate correlations whatsoever.
An MIMIC model can be intuitively described as
regressing the common variance of the effect indica-
tors (i.e., the parts they contribute to the proxy) on the
causal indicators, and the factor disturbance can be
seen as shared variance over the effect indicators that
is not explained by the causal indicators (Wilcox et al.,
2008). The key to specifying an MIMIC model is that
all its indicators, both effect and causal, are understood
as, respectively, measuring the same thing or causing
the same thing. Such a rationale provides the justifica-
tion for viewing Figure 13.3 as a complete measurement
model for a single latent construct for which all its indi-
cators, causal or effect, belong to the same domain—
see MacKenzie et al. (2011) and Wilcox et al. (2008) for
more information about the logic of MIMIC models.
See also Bollen and Bauldry (2011), who differentiated
covariates from causal indicators and composite indica-
tors. Briefly summarized, covariates are often included
in the model to control for omitted variable bias (Chap-
ter 6), but their effects are viewed as distal compared
with those of cause or composite indicators on the same
construct. This is because covariates do not generally
belong to same domain as construct indicators.
An advantage of an MIMIC model like the one in
Figure 13.3 is that it is identified as a stand-alone model.
Thus, both the reflective model in Figure 13.2(a) and
the MIMIC model in Figure 13.3 require no additional
variables for identification. In contrast, the two forma-
Pt3Kline5E.indd 223
Multiple-Indicator Measurement 223
tive measurement models in Figures 13.2(b)–13.2(c) are
not identified without adding variables (or embedding
them in larger models, which does the same thing).
Also, the MMIC model in Figure 13.3 represents one
method for identifying the causal–formative model in
Figure 13.2(b) with a composite latent construct: If two
effect indicators were added to the causal–formative
model, it would resemble the MIMIC model in Figure
13.3, and thus Figure 13.2(b) would be identified with
this change.
CONSIDERATIONS IN SELECTING
A MEASUREMENT MODEL
The considerations in specifying reflective or formative
measurement (causal–formative, composite) for sets of
multiple indicators are discussed next. Rhemtulla et al.
(2020) reviewed SEM studies published in six major
psychology journals around August 2016. They found
that common factor models were specified in most
analyses without explicit justification or even when the
assumptions of reflective measurement were implausi-
ble. Jarvis et al. (2003) reviewed 178 articles published
in four marketing research journals over the years
1982–2000, and they found that 28% of measurement
models were incorrectly specified as common factor
models, given descriptions of concepts in article text.
Part of the problem may be the misunderstanding that
a common factor represents a combination of its effect
indicators, when just the opposite is true (i.e., common,
not unique, variance is analyzed). Another possibility
is that psychology researchers trained in classical mea-
surement theory were (1) relatively less familiar with
formative measurement but, to their credit, (2) prob-
ably understood that a common factor model adjusts
for measurement error in the indicators. But Rhemtulla
et al. (2020) noted that the simple presence of measure-
ment error is insufficient to justify the default specifica-
tion of reflective measurement as explained next.
Through both rational examples and reanalyses of
extant data, Jarvis et al. (2003) and Rhemtulla et al.
(2020) described how specification of reflective mea-
surement, when the true model is formative measure-
ment, can result in severely biased estimates even when
the model closely fits the data. To summarize:
1. Estimates of absolute bivariate correlations
between variables in the structural part of a larger
model are generally too high. This happens because
3/22/2023 2:56:12 PM
 224 Multiple-Indicator Approximation of Concepts
common factor models assume that unique indicator
variance is not part of the corresponding concept, so
excluding that unique variance has the effect of falsely
inflating estimates of shared variance among other
variables in the model. Such positive bias can be propa-
gated through the model in complex patterns that result
in both over- and underestimation of direct effects.
2. The degree of bias increases as the proportion
of unique indicator variance increases, which has
the effect of lowering correlations among indicators.
But bias decreases as correlations among indicators
increase (i.e., there is less unique variance) so that the
choice between a reflective model and a composite
model becomes less important.
3. Both the degree and direction of bias depend on
which other variables are also in the model. For exam-
ple, parameter estimates for common factors with pre-
dictors and outcomes in the rest of the model were very
different than when only outcomes for the same factors
are included in the model.
4. Biased parameters were not always detected by
global model fit statistics. In extreme cases, fit can be
perfect yet bias can be severe. In general, degree of bias
and degree of misfit were unrelated. Thus, statistical
analysis is generally unable to detect the “correct”
measurement model, reflective versus formative.
Sarstedt et al. (2016) found in computer simulation
studies that when a composite model is true in the pop-
ulation, estimates that assumed reflective measurement
were markedly biased in all simulation conditions.
Results were more nuanced when a common factor
model is true: For models with just two indicators or
when standardized factor loading were relatively low,
estimates that assumed a composite model were appre-
ciably biased. But in larger samples (e.g., N ≥ 500) for
models with more indicators (e.g., ≥ 4), mean absolute
errors were generally comparable across common fac-
tor models versus composite models. In small samples
of N = 100, though, estimates from both types of mea-
surement models were equally poor, again when a com-
mon factor model is true. On average, the amount of
bias was about 11 times greater when fitting a common
factor model to data generated from a composite model
compared with fitting a composite model to data gener-
ated from a common factor model.
Chang et al. (2016) conducted simulation studies
where (1) both reflective models and formative models
Pt3Kline5E.indd 224
for the same indicators have perfect fit in the popula-
tion and (2) results were compared between them,
which does not give a privileged position to either type
of model. Their simulation scenarios represented the
existence of multiple viable specifications where treat-
ing measures as reflective is just as likely to be suc-
cessful as treating measures as formative. This balance
includes the possibility that researchers might appro-
priately model a set of indicators as either reflective
or formative. For example, indicators that satisfy the
more restrictive assumptions of reflective measurement
can also be compatible with the less stringent assump-
tions of formative measurement. The results indicated
that reflective models generated somewhat less biased
estimates with greater statistical power than formative
models, especially in smaller sample sizes (N = 250).
Chang et al. (2016) also reported that standardized esti-
mates were generally more accurate than unstandard-
ized estimates for both types of models. Overall, when
indicators are strongly correlated w‑ith each other and
model fit is reasonably good, the dif‑ference between
reflective models and composite models shrinks so the
choice of model becomes much less critical.
In some research areas, such as managerial account-
ing, archival data play important roles (Nitzl & Chin,
2017). For two reasons, though, the analysis of such data
might be challenging from a reflective measurement
perspective: First, the development of common factor-
based measurement models can require multiple rounds
as questionnaires or measures are revised and updated,
but a similar opportunity to refine or adjust indicators
may not exist for archival data (Rigdon, 2013). Second,
a variable defined in theory as a key effect indicator for
a particular theoretical concept may not exist in archi-
val data. There could be post hoc alternatives such as
financial statements or other institutional documents
about business practices or policies, but the statisti-
cal properties of such data could be inadequate for the
common factor model. The use of composite methods
that analyze formative measurement models is a more
flexible option in this context.
CAUTIONS ON
FORMATIVE MEASUREMENT
Specification of formative measurement is not a magi-
cal alternative to reflective measurement. Indeed, the
merits of formative measurement have been intensely
debated in the literature. Possible advantages already
3/22/2023 2:56:12 PM

mentioned include the fact that some concepts are
really forged, or they are the outcomes of their indica-
tors, not the reverse. Another is that somewhat smaller
samples may be needed for adequate statistical power
when analyzing composite models even when the true
model is reflective (Reinartz et al., 2009). But there are
possible drawbacks, too. Summarized next are some
major criticisms of formative measurement—see the
works cited next for more detailed presentations:
1. Because causal indicators and composite indica-
tors are exogenous, their variances and covariances are
not explained by a measurement model. This charac-
teristic makes it more difficult to assess the construct
validity of such indicators (Edwards, 2011), but Bollen
(2011), Hair et al. (2022, chap. 5), and Markus (2018)
offered suggestions.
2. The absence of the requirement for internal con-
sistency in formative measurement implies the risk that
multiple dimensions are aggregated into a single com-
posite, which can be difficult, if not impossible, to inter-
pret (Wilcox et al., 2008). This is because a proxy that
links heterogeneous causes (its indicators) to distinct
outcomes can become a “conceptual polyglot with no
clear interpretation of its own” (Edwards, 2011, p. 379).
That causal indicators should have a strong rationale as
belonging to the same domain might allay some con-
cern about this issue (Bollen & Diamantopoulos, 2017).
3. The lack of the expectation for internal consis-
tency can also lead to misunderstanding. Suppose that
a researcher observes low correlations among a set of
observed variables and concludes that they must be
formative indicators (causal or composite). This deci-
sion is not justified because low intercorrelations in this
case could merely signal poorly constructed measures
(Edwards, 2011).
4. Measurement error in composites can result in
biased estimates when the true population model is
reflective, but there are special methods for analyzing
composites described in Chapter 16 that can adjust esti-
mates of structural correlations or other parameters for
measurement error.
5. Until recently, there were few inferential tests
of global fit for composite models, which made it dif-
ficult to simultaneously test overidentifying constraints
for the whole model (Antonakis et al., 2010; Rönkkö
& Evermann, 2013). But this situation is changing. For
example, Henseler et al. (2014) introduced the SRMR
Pt3Kline5E.indd 225
Multiple-Indicator Measurement 225
as part of a goodness-of-fit test in the method of con-
firmatory composite analysis (CCA), a composite ana-
log to the technique of CFA for reflective measurement
models, and Bentler and Huang (2014) described chi-
square goodness-of-fit tests for composite methods.
Other options for global fit testing of composite models
are described in Chapter 16.
ALTERNATIVE MEASUREMENT MODELS
AND APPROACHES
Specification of measurement as reflective, forma-
tive, or mixed with multiple indicators as proxies for
hypothetical constructs are the not the only options in
SEM. Described next are additional types of indicators
and models, some of which do not assume or deal with
latent variables or composite latent constructs at all.
This overview is necessarily brief, but see the works
cited next for more information.
Reactive Measurement
and Reactive Indicators
In reactive measurement, the act of measurement
itself changes the characteristic being assessed. The
Hawthorne effect, where people modify their behavior
in response to being observed, is an example of reactive
measurement. Another is pretest sensitization, where
administration of a pretest alerts participants in an
experiment to the target variable such that their post-
test scores are affected. There is evidence over a wide
range of behavioral, emotional, and cognitive variables
that people asked to complete psychological measures
are altered by the experience, and effect sizes can range
from trivial to more substantial in ways that are not
always well understood (French & Sutton, 2010).
Hayduk et al. (2007) described reactive indicators,
which are assumed to simultaneously cause and affect
latent variables. Thus, a reactive indicator is both reflec-
tive and formative. In model diagrams, the symbol for
a direct feedback loop () connects a reactive indica-
tor with its proxy, and both variables would have error
terms because each variable in a causal loop is endog-
enous. Conceptually, an external input on a latent vari-
able with a reactive indicator cycles repeatedly through
the feedback loop just described. With each cycle, the
magnitude of the effect arriving back at the latent vari-
able from a reactive indicator diminishes. Beyond a
few cycles, such as 4–5 for smaller reciprocal effects
3/22/2023 2:56:12 PM
 226 Multiple-Indicator Approximation of Concepts
or more cycles for larger effects, an asymptotic limit is
reached, and this limiting effect would be transmitted
to outcomes (if any) of the latent variable associated
with a reactive indicator.
Hayduk et al. (2007) fitted models with a single reac-
tive indicator to data from a study where participants
had been deceived into believing a task was either eas-
ier or harder than it really was. The task involved hold-
ing an isometric sitting position above a stool without
touching it. For participants prompted to believe falsely
that the task was very difficult, self-reported endurance
increased true (latent) endurance. Perhaps something
about the experience of unexpected success, such as
a momentarily boost in self-confidence, improved
endurance. The opposite effect was found for partici-
pants falsely told the task was very easy: Self-reported
endurance decreased true endurance after discovering
that the task was harder than participants anticipated.
Perhaps negative self-evaluations stemming from the
perceived failure to easily perform the task hindered
endurance.
Because reactive measurement models are nonrecur-
sive, they are more challenging to identify than com-
mon factor models with effect indicators only. Require-
ments for identifying nonrecursive models with causal
loops are outlined in Chapter 19, but it can be said now
that one strategy involves specification of causally-prior
variables as instruments with direct effects on just one
of two variables in a direct feedback loop. Another is to
impose constraints on certain parameters for a causal
loop. The reactive measurement models described by
Hayduk et al. (2007) were identified using both meth-
ods just mentioned.
C‑OAR‑SE Method
The acronym for Rossiter’s (2011) C-OAR-SE method
represents its six basic steps, which are Construct
definition, Object representation, Attribute classifica-
tion, Rater-entity identification, Scale (item type and
answer format) selection, and Enumeration (scoring).
It abandons reflective measurement and related sta-
tistical techniques, coefficients, or methods, includ-
ing factor analysis (both EFA and CFA), Cronbach’s
alpha, and multitrait–multimethod (MTMT) analysis.
Instead, methods for content validation, which concern
whether item content comes close to semantic identity
with the target domain, are emphasized. Recall that
content validity is established through rational analy-
sis of item content, given a priori definitions or argu-
Pt3Kline5E.indd 226
ments about relevant component behaviors, skills, or
knowledge (Psychometrics Primer). Content validity
in C-OAR-SE also includes answer–scale validity,
or whether the response format is free from semantic
confusion when participants give answers. Predictive
validity, convergent validity, and discriminant validity
are all de-emphasized in favor of developing content-
valid measures.
Other features of C-OAR-SE are summarized next
(Rossiter, 2011):
1. Single-item measures are highlighted over multiple-
item measures in the evaluation of beliefs or per-
ceptions, which are considered as basic or concrete
concepts with a single meaning. Abstract concepts,
which have more than one meaning, are generally
viewed as aggregations of concrete beliefs or per-
ceptions that follow formative measurement.
2. In questionnaire development, adding or drop-
ping items based on increasing coefficient alpha is
rejected, especially if emphasizing internal consis-
tency jeopardizes content validity.
3. Score stability is assessed through short-term test–
retest analysis, and score precision is based on con-
fidence intervals that reflect the sample size. Also,
the evaluation of score reliability follows the estab-
lishment of content validity in C-OAR-SE, not the
reverse.
The focus on content validity in C-OAR-SE is a
strength: If a measure’s items are not representative of
the target domain, no other psychometrics can salvage
it (Rossiter, 2011). But there are potential shortcom-
ings with other features of the method. For example,
use of single-item measures may be a reasonable choice
when the target domain is very concrete, there is near-
unanimous consensus among participants about what
is being measures, sample sizes are small (e.g., N < 50),
multiple items are very homogenous (e.g., inter-item
correlations > .80) and semantically redundant, and
weaker effects are expected (e.g., correlations with cri-
terion < .30); otherwise, multiple-item measures tend
to perform better (Diamantopoulos et al., 2012). Mea-
sures “approved” by experts as being content valid are
not automatically gold standards without further evi-
dence; that is, psychometrics still matter in test evalua-
tion (Salzberger et al., 2016). There are research prob-
lems for which the selection of a measurement model
other than C-OAR-SE is justified (Rigdon et al., 2011).
3/22/2023 2:56:12 PM

Indeed, a point of this discussion is that researchers
should not make default, one-size-fits-all choices about
measurement models.
Network Models
(Causally‑Linked Observed Variables)
In a network model, there are no proxies for latent vari-
ables, latent composites, or emergent variables; indeed,
there are no proxies whatsoever that combine multiple
indicators into a single approximation of a concept.
Instead, observed variables are viewed as autonomous
causal agents that affect each other in a network that
comprises a system of interacting variables. Unlike
reflective measurement, where concepts cause manifest
variables, or formative measurement, where concepts
are constructed from observables, studying a concept
in a network perspective means evaluating the function
of its indicators in a dynamical system (Schmittmann
et al., 2013). Networks are understood as receiving
inputs from external variables, such as stressful life
events, that can shift a system from equilibrium to a
perturbed state, such as from a healthy emotional state
to a depressed state.
A network perspective on psychopathology is quite
different compared with more conventional measure-
ment models. For example, depression in reflective
measurement is considered a unidimensional latent
variable that causes its symptoms such as lack of sleep,
fatigue, poor concentration, or sadness, among others.
Apart from their common cause, these symptoms have
no causal relations between them (e.g., Figure 13.2(a)).
In formative measurement, depression is constructed
from its symptoms, which vary and covary, but again
there is no causal effect between any pair of indica-
tors (e.g., Figures 13.2(b)–13.2(c)). In a network model,
depression is represented as a system of causal effects
among the symptoms themselves (Schmittmann et al.,
2013). For example, a stressful life event could cause
lack of sleep, which in turns leads to fatigue and then
next to poor concentration or negative mood states.
Thus, the experience of depression arises from exter-
nal shocks to a network of causally-linked symptoms in
this perspective (Borsboom, 2017).
Diagrams of network models resemble those for
manifest-variable path models. Patterns of direct or
indirect effects between nodes, or variables in a net-
work, can be either recursive or nonrecursive (respec-
tively, without or with causal loops). Note that network
diagrams are sometimes presented with nondirectional
Pt3Kline5E.indd 227
Multiple-Indicator Measurement 227
lines that connect nodes, and such lines represent vari-
able associations instead of directional causal effects
(e.g., Borsboom, 2017, p. 8). There are special statistical
methods and software tools for analyzing network mod-
els. For example, centrality coefficients estimate the
relative importance of individual nodes based on their
influence on other nodes. These coefficients can reflect
either local influence over just a part of the network or
global influence over the whole network. Borsboom
et al. (2021) summarized recent criticisms of central-
ity coefficients as estimates for causal effects, such as
when interactions occur at different timescales or when
peripheral network nodes are important for determin-
ing system behavior. Thus, the interpretation of cen-
trality coefficients as measures of causal dynamics may
be questionable, and more work is needed in this area.
Clustering methods identify subsets of nodes with
stronger internal associations with one another and
weaker associations with other, more external nodes. In
social network analysis, people with higher centrality
values are seen as relatively more influential, and clus-
ters correspond to subgroups of people with close-knit
relationships—see Clifton and Webster (2017).
SUMMARY
Researchers familiar with traditional SEM techniques
generally specify reflective measurement for multiple
indicators of the same concept. But that choice should
not be routine, or blindly selected without considering
whether the assumptions of reflective measurement are
plausible. For example, only variation shared among
multiple indicators contributes to their proxy, a com-
mon factor. This poses a problem when each indica-
tor is intended to measure a distinct aspect or facet of
a concept: Any variance that is unique (not shared) is
shuffled off to indicator error terms in a reflective mea-
surement model. Formative measurement is an alter-
native where potentially all indicator variance (except
random measurement error) contributes to approxima-
tion of hypothetical concepts. But formative measure-
ment models are not cure-alls without potential pitfalls
of their own. One is that it is more challenging to estab-
lish indicator validity in formative measurement mod-
els than in reflective measurement models. Another is
that the consequences of omitting a formative indica-
tor are generally more serious than the same specifi-
cation error for reflective indicators. Specification of a
measurement model should be guided by substantive
3/22/2023 2:56:12 PM
 228 Multiple-Indicator Approximation of Concepts
considerations, not by fitting alternative models to the
data to find the one with the best fit. One reason is that
a reflective model versus a composite model could
explain the same data nearly as well (i.e., they could be
nearly equivalent models). Analysis of reflective mea-
surement models in the technique of CFA is the subject
of the next chapter.
LEARN MORE
Bollen and Diamantopoulos (2017) address criticisms of for‑
mative measurement that fail to distinguish between causal
indicators and composite indicators, Rhemtulla et al. (2020)
Pt3Kline5E.indd 228
describe misuses of the common factor model, and Rigdon
(2012) outlines the concept proxy framework.
Bollen, K. A., & Diamantopoulos, A. (2017). In defense of
causal–formative indicators: A minority report. Psycho-
logical Methods, 22(3), 581–596.
Rhemtulla, M., van Bork, R., & Borsboom, D. (2020). Worse
than measurement error: Consequences of inappropri‑
ate latent variable measurement models. Psychological
Methods, 25(1), 30–45.
Rigdon, E. E. (2012). Rethinking partial least squares path
modeling: In praise of simple methods. Long Range Plan-
ning, 45(5–6), 341–358.
3/22/2023 2:56:12 PM
 14

Confirmatory Factor Analysis

This chapter covers the analysis of measurement models with common factors and continuous indicators
using the SEM technique of confirmatory factor analysis (CFA). In contrast to exploratory factor analysis
(EFA), restricted measurement models are analyzed in CFA. This means that the researcher specifies
(1) the exact number of factors (e.g., 3); (2) the pattern of factor loadings, or the specific correspondence
between factors and indicators; and (3) the presence of correlated errors, if any. The second feature just
mentioned means that an indicator loads only on the factor(s) it is supposed to measure (as specified by the
researcher), but all cross-loadings of that indicator on other factors are fixed to zero. Although it is pos‑
sible (but not required) to specify an exact number of factors in EFA, the technique analyzes unrestricted
measurement models, where each indicator loads on all factors, and the researcher cannot disable this
feature of the method (i.e., all cross-loadings are freely estimated). Another difference is that EFA models
with multiple factors are identified only after specifying a method of factor rotation, such as oblique (fac‑
tors are allowed to covary) versus orthogonal (factors are uncorrelated). Because standard CFA requires an
identified model, there is no rotation phase, and factors are typically allowed to covary. Within requirements
for identification, correlated errors can be estimated in CFA, but doing so in EFA is not so straightforward.
Thus, the technique of CFA better supports the analysis of error covariance structures than EFA. Additional
considerations in the choice between EFA or CFA are outlined next.

EFA VERSUS CFA Both techniques partition observed indicator vari-

Both CFA and EFA are based on the common factor
model, which assumes reflective measurement from the
perspective of classical test theory.1 The two methods
share mathematical bases such that the restricted mod-
els analyzed in CFA are generated by constraining to
zero cross-loadings in the corresponding EFA model
for the same indicators and number of factors (Jöreskog,
1969). These constraints identify the restricted mea-
surement models that are analyzed in CFA.
1 An exception is the EFA technique of principal component
analysis (PCA), which analyzes composites instead of common
factors.
ance into common variance and unique variance.
Common variance is shared among the indicators and
is a basis for observed covariances between them that
departs appreciably from zero. Factors that approxi-
mate latent variables are “constructed” from common
variance, and these proxies are called common factors.
The number of factors of substantive interest is usually
less than the number of indicators. It is impossible to
estimate more common factors than indicators, but for
parsimony’s sake, there is no point in retaining a model
with just as many explanatory entities (factors) as there
are entities to be explained (indicators; Mulaik, 2009a).
Unique variance consists of specific variance and ran-
dom measurement error. Specific variance is system-

229

Pt3Kline5E.indd 229 3/22/2023 2:56:12 PM

 230 Multiple‑Indicator Approximation of Concepts
atic variation that is not explained by any factor in the
model. It may be due to characteristics of individual
indicators, such as the particular stimuli that make up a
task. Another source is method variance, or the use of
a particular measurement method (e.g., self-report) or
informant (e.g., parents) to obtain the scores.
A fundamental issue in both EFA and CFA is that
latent variables can be approximated from observed
variables, but not exactly. This is because a total of v
observed variables (the indicators) cannot be uniquely
transformed to an even larger number of variables, or
v + m + u in total, where m is the number of common
factors and u is the number of unique variances for the
indicators (of which there are v such terms). This gen-
eral problem is called factor indeterminacy, which
means that common factors are not uniquely deter-
mined by their respective sets of indicators. For exam-
ple, there are infinitely many ways to generate factor
scores for individual cases, an issue called factor score
indeterminacy, and not all of these sets of factor scores
will rank the cases the same way (Grice, 2001). Indeed,
correlations between sets of factor scores equally com-
patible with the same data can be negative (Guttman,
1955). The problem of rotational indeterminacy in
EFA refers to the existence of infinite sets of factor
loadings and factor correlations all of which fit the data
equally well in models with multiple factors (Steiger &
Schönemann, 1978). Also, indicator scores are rarely
perfectly precise (i.e., rXX < 1.0). With infinitely many
indicators in an infinitely large sample, there is no inde-
terminacy in factor analysis, but this goal is impracti-
cal; thus, latent variables are inherently estimated with
uncertainty—see Rigdon et al. (2019) for more infor-
mation.
Because EFA is less demanding than CFA, it may be
preferred in areas of more recent research where theory
about measurement is weak in terms of the number of
theoretical concepts that should be approximated or the
correspondence between common factors and indica-
tors. Early stages in constructing psychological tests or
questionnaires, especially when there is relatively little
guidance from theory, is a context for which EFA is well
suited. For example, if there could be unexpected, but
substantially meaningful, factors that strongly relate to
subsets of indicators, then EFA would be preferred over
CFA, which is less flexible here (Flora & Flake, 2017).
In contrast to the data-driven character of EFA,
the CFA technique is used to evaluate how well a
predefined factor solution fits the data in a particular
sample. An example is later stages of test construc-
Pt3Kline5E.indd 230
tion that follow more preliminary analyses with EFA
in which the basic dimensionality of the indicators has
been established (Brown, 2015). That is, results from
earlier applications of EFA can inform the specifica-
tion of CFA models in later test validation studies with
data collected in new samples. The technique of CFA
can also be applied to evaluate the effect of revising an
established test by adding or removing indicators, such
as whether the original factor structure in the modified
test is preserved in the revision (Flora & Flake, 2017).
It was mentioned that hypotheses about correlated
measurement error can be readily tested in CFA.
Another advantage over EFA is that there is no need
to save estimated factor scores in the raw data file in
CFA if common factors are later analyzed as predictors
or outcomes of other variables. This is because a CFA
model can be respecified as a structural regression (SR)
model, where some factors are specified as exogenous,
or causes, but others are endogenous, or outcomes. In
this way, an endogenous factor can be regressed on
other factors or on observed variables, such as covari-
ates. Chapter 15 covers SR models. In general, fac-
tor scores for cases are not generally needed in SEM
analyses.
A much more controversial role for CFA is its appli-
cation immediately after retaining a factor model in
EFA with the goal of somehow “verifying” or “con-
firming” the EFA results. In this case, the CFA model
has the same number of factors as the EFA model, but
some or all cross-loadings are constrained to zero in
the CFA model. No new data are collected, so both
the EFA and CFA models are analyzed in the same
sample. There are two problems here: One is that
the two techniques, EFA and CFA, could capitalize
on the same chance variation in a particular sample,
especially if the same estimator (e.g., maximum likeli-
hood, ML) is used in both analyses. Whether any CFA
model retained in this situation would replicate in a
new sample is unknown.
A second problem is that specification of a CFA
model based on EFA outcomes and analyzed with the
same data could lead to rejection of the CFA model.
This is because indicators in EFA often have relatively
high secondary loadings on factors other than the one
for which they have their primary loading. These sec-
ondary loadings may account for relatively high pro-
portions of variance, so constraining them to zero in
CFA may be too conservative. Consequently, the more
restrictive CFA model may be inconsistent with the
data (van Prooijen & van der Kloot, 2001). Misspecifi-
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cation of zero cross-loadings can lead to overestimation
of factor correlations (Asparouhov & Muthén, 2009).
Replicating factor analysis results, whether EFA or
CFA, in new samples is a better solution—see Osborne
and Fitzpatrick (2012) for guidance. To be clear, apply-
ing CFA right after EFA in the same sample in no way
verifies, confirms, or replicates the EFA results (Flora
& Flake, 2017).
The labels “exploratory” versus “confirmatory” (i.e.,
EFA vs. CFA) should not be reified. It is true that EFA
requires no a priori hypotheses about factor–indica-
tor correspondence or even the number of factors. But
there are also more confirmatory modes in EFA, such
as instructing the computer to extract a specific num-
ber of factors based on theory. The technique of CFA
is not strictly confirmatory. It happens in many, if not
most, analyses that the initial restricted factor model
fails to fit the data. In this case, the researcher typically
modifies the hypotheses on which the initial model was
based and specifies a new model, and the respecified
model is then tested with the same data. This process
should be guided by theory, but relatively few applica-
tions of CFA are strictly confirmatory.
Two alternative factor analysis methods blend fea-
tures of EFA and CFA and thus are intermediate options.
Both allow for some of the flexibility in EFA while add-
ing capabilities for global fit testing or specification of
error covariances. In exploratory structural equation
modeling (ESEM) (Asparouhov & Muthén, 2009), the
researcher specifies the exact number of factors just
as in CFA, but the measurement model is unrestricted
in that all possible cross-loadings are free parameters.
The model is identified through specification of a rota-
tion option also as in EFA. Standard errors are available
for freely estimated parameters as are statistics about
both global fit (e.g., model chi-square) and local fit (e.g.,
standardized residuals). The technique was originally
exclusive to Mplus, but now there are R packages for
ESEM such as psych (Revelle, 2022)—see Marsh et al.
(2014) and Morin (2023) for more information.
Unrestricted measurement models are also analyzed
in the EFA in CFA framework (E/CFA) (Jöreskog,
1969) except that a reference variable indicator is
selected for each factor and all cross-loadings of that
indicator are fixed to zero; otherwise, cross-loadings
for all other indicators are freely estimated as are all
factor covariances. Relatively large residuals between
pairs of indicators could indicate the need to freely esti-
mate error covariances—see Brown (2015, chap. 5) for
examples.
Pt3Kline5E.indd 231
Confirmatory Factor Analysis 231
SUGGESTIONS
FOR SELECTING INDICATORS
Indicator selection is critical because the quality of
results in factor analysis (CFA or EFA) depends on the
quality of the scores analyzed. The recommendations
by Fabrigar and Wegener (2012) and Little et al. (1999)
are summarized next:
1. Define theoretical concepts in sufficient detail so
that the essential nature of each target domain can be
clearly stated. If the goal is to delineate dimensions of
anxiety, for example, then consult relevant theoretical
and empirical works about the nature and number of
factors, such as state anxiety, trait anxiety, social anxi-
ety, and so on.
2. Next, identify candidate indicators that, as a set,
adequately sample the various domains. Ideally, not all
indicators for the same domain will rely on the same
method of measurement, such as assessment through
self-report questionnaires only. This is because com-
mon method variance can affect observed scores
above and beyond any influence of substantive latent
variables. Special CFA models for estimating method
effects are described later in this chapter.
3. Suppose there is strong guidance from theory or
results from empirical studies about selecting indica-
tors a priori. In this case, homogeneous indictors are
preferred. This is because estimates based on indica-
tors that are highly correlated (internally consistent)
may be less biased and more efficient in analyses that
are more confirmatory than exploratory.2
4. But analyzing sets of less homogenous indicators
that cover a wider range of the target domain may be a
safer bet when there is relatively little guidance from
either theory or research about indicator selection. A
risk is that sharply defined approximations based on
highly correlated indicators can be off-target, or fail to
reflect essential aspects of a concept. Use of more con-
firmatory methods can be a benefit in this context, too.
5. Analyzing a set of indicators with less-than-stel-
lar psychometrics (i.e., lower score reliabilities or inter-
nal consistencies) can yield estimates that are approxi-
mately accurate if they (a) sample a sufficiently wide
part of the concept, (b) yield scores that are sufficiently
2 Indicatorintercorrelations should not be so high (e.g., r > .95)
that extreme collinearity is a problem.
3/22/2023 2:56:12 PM
 232 Multiple‑Indicator Approximation of Concepts
variable (e.g., capture wider rather than narrow ranges
of individual differences), and (c) are analyzed by more
confirmatory than exploratory methods.
6. Technical problems in the analysis, such as Hey-
wood cases or convergence failure in iterative estima-
tion, are more likely to occur if some factors have too
few indicators, especially in small samples for factors
with just two indicators. A safer minimum is about 3–5
indicators for each anticipated factor. For example, if a
total of four leadership dimensions are hypothesized,
then the minimum number of candidate indicators
would be about 12–20. Possible exceptions to this ≥ 3
indicators/factor pragmatism are explained next.
Hayduk and Littvay (2012) described situations
where having more indictors per factor is not neces-
sarily better than having fewer, including the use of
single indicators. For example, if just 1 of 3 candidate
indicators for the same factor has good psychometric
characteristics, it may be better to omit the 2 weaker
indicators, which may dilute or contaminate estimates
for the best single indicator. If multiple indicators are
highly redundant, there is little extra information to
be gained beyond analyzing a single indicator of the
same construct. Default specification of a minimum
number of multiple indicators, such as 3–5 per factor,
as a “golden rule” limits the number of estimated fac-
tors. In contrast, relying on fewer indicators per factor,
including single indicators, permits the specification
of additional latent variables, given the same number
of indicators. These added concepts could allow stron-
ger statistical control for confounding or estimation of
indirect effects—see Hayduk and Littvay (2012) for
examples. The point is that there is no magic num-
ber of indicators per factor. Instead, the researcher’s
hypotheses should guide the selection of indicators,
not an arbitrary rule for a minimum number (e.g., ≥ 3
indicators/factor).
BASIC CFA MODELS
Characteristics of basic CFA models with multiple
factors are summarized next:
1. Each indicator is continuous with two causes—
a common factor that approximates the latent vari-
able the indicator is supposed to measure and all
sources of unique variance—random measurement
Pt3Kline5E.indd 232
error and specific variance not explained by the fac-
tor—represented by the error term.
2. The error terms are independent of each other and
of the factors; that is, there are no unmeasured con-
founders for any pair of indicators, and all omitted
causes are unrelated to the factors.
3. All relations are linear and the factors covary (i.e.,
there are no causal effects between any pair of fac-
tors).
The first two features just listed specify unidimen-
sional measurement, or the hypothesis that each indi-
cator measures a single dimension and shares nothing
with other indicators after controlling for the common
factors. Later in the chapter we will deal with CFA
models for multidimensional measurement in which
some indicators load on more than one factor or pairs of
error terms are specified as correlated. There are spe-
cial factor analytic methods for estimating curvilinear
relations between factors and continuous indicators or
between factors themselves—see Amemiya and Yalcin
(2001). Relations between categorical indicators and
factors are inherently nonlinear, and the technique of
categorical CFA is described in Chapter 18.
Presented in Figure 14.1 is a basic CFA model
with two factors and six indicators represented in full
McArdle–MacDonald RAM graphical symbolism. All
cross-loadings are fixed to zero. For example, there is
no direct causal effect from factor B to indicator X1,
which is specified as measuring the other factor (i.e.,
A → X1). But this specification does not imply that X1
and factor B are unrelated. To the contrary, the open
path in the model, or
X1 ← A B
predicts that indicator X1 and factor B should covary
because B is correlated with A, a cause of X1 (the other
cause is E1, its error term), but this association is not
causal. Likewise, indicators X1 and X4 in the figure are
expected to covary because their respective causes, fac-
tors A and B, are correlated, or
X1 ← A B → X4
and this is true even though X1 and X4 are presumed to
measure different things.
The numerals (1) in the Figure 14.1 are scaling con-
stants that specify metrics for unmeasured variables,
3/22/2023 2:56:13 PM

which in CFA models include common factors and
indicator error terms. For example, the specification in
the figure that
E1 → X1 = 1.0
is a unit loading identification (ULI) constraint that
scales E1 in the metric of the unique (unexplained) vari-
ance of its indicator, X1. The same basic method was
described in Chapter 7 for scaling disturbances in path
models.
Each factor in Figure 14.1 is scaled through the
reference variable method—also called the marker
variable method or the referent loading identifica-
tion approach (Newsom, 2015)—where a ULI con-
straint is imposed on the loading of one indictor per
factor. For example, the specification
A → X1 = 1.0
in the figure scales the variance of factor A in the met-
ric of the common (explained) variance of indicator
X1, the reference variable for factor A. By the same
logic, the computer estimates the variance of factor
B in the metric of the common variance in X4, the
marker variable for this factor. Most computer tools
for CFA that automatically scale common factors use
the reference variable method. For example, a com-
mon default for syntax is that the first indicator listed
for a factor is automatically selected as the reference
variable—check the documentation for your computer
tool about factor scaling.
E1 E2 E3
1 1 1 1
X1 X2 X3
1 1
A B
FIGURE 14.1. Basic confirmatory factor analysis model with 2 factors and 6 indicators presented in full McArdle–MacDon‑
ald RAM graphical symbolism.
Pt3Kline5E.indd 233
Confirmatory Factor Analysis 233
If multiple indicators for the same factor have
equally precise scores and if none is deemed as criti-
cally representative of the underlying concept (Hay-
duk & Littvay, 2012), then it is generally arbitrary
in single-sample analyses which indicator is selected
as the reference variable. This is because the choice
does not typically affect (1) global model fit, (2) the
standardized solution, or (3) estimates of indicator
error variances in the unstandardized solution. Refer-
ence variable loadings fixed to 1.0 remain so in the
unstandardized solution and have no standard errors
because they are constants, not variables. This means
that there is no significance test—a normal deviate (z),
or the ratio of a statistic over its standard error—for
fixed reference variable loadings, which is a possible
drawback of the method if a significance test for all
unstandardized loadings is desired. Other options for
scaling factors that do not require the selection of ref-
erence variables are described in the next section.
All factors in basic CFA models are exogenous vari-
ables that are free to vary and covary. It is possible to
include covariates in measurement models, such as age
or other characteristics of research participants, that
control for potential confounds or bias. Covariates are
usually specified as causes of common factors, which
also respecifies such factors as endogenous variables
with disturbance terms (i.e., endogenous factors are
neither free to vary nor to covary). A CFA model with
covariates is actually an SR model with both a mea-
surement component (the factor model) and a structural
component (measured causes of factors, or the covari-
ates).
E4 E5 E6
1 1
X4 X5 X6
3/22/2023 2:56:13 PM
 234 Multiple‑Indicator Approximation of Concepts
Model Parameters
Free parameters of CFA models with continuous indi-
cators when means are not analyzed include the vari-
ances and covariances of exogenous variables and
direct effects on endogenous variables (Rule 7.1). For
the basic model in Figure 14.1, free parameters include
1. 8 variances (of 2 factors and 6 indicator error
terms);
2. a single covariance for the 2 factors; and
3. 4 direct effects of factors on indicators (i.e., load-
ings) that are not fixed to equal scaling constants
(e.g., the loadings for X2–X3 and X5–X6).
The grand total of free parameters is thus 13. With v =
6 observed variables, the total number of observations
when means are not analyzed is 6(7)/2, or 21 (Rule 7.2),
so df M = 21 – 13 = 8 for Figure 14.1.
Identification Requirements
All CFA models must satisfy the same necessary-but-
insufficient identification requirements as for other
parametric structural equation models, or (1) df M ≥ 0
and (2) each unmeasured variable must be scaled (Rule
7.3). We just proved that the basic model in Figure 14.1
meets both of the requirements just stated. Additional
sufficient requirements for basic CFA models that con-
cern minimum numbers of indicators are summarized
next:
RULE 14.1 If a basic CFA model
1. with a single factor has at least 3 indicators, or
2. has 2 or more factors where each factor has 2
or more indicators, then the model is identified
without additional constraints when means are not
analyzed.
That’s it. The first part of Rule 14.1 for single-factor
models is the three-indicator rule. Exercise 1 asks you
to verify that df M = 0 for a basic model CFA with 1 fac-
tor and 3 indicators. In practice, such a model would
be uninteresting because it would perfectly fit the data.
Thus, df M > 0 only for basic single-factor models with
≥ 4 indicators. Exercise 2 involves proving that a basic
single-factor model with just 2 indicators is not iden-
tified without imposing constraints, such as specify-
Pt3Kline5E.indd 234
ing that the 2 unstandardized loadings are equal.3 The
second part of Rule 14.1 for basic models with mul-
tiple factors is the two-indicator rule. As mentioned,
though, analyses of models with factors that have just
two indicators in small samples are susceptible to tech-
nical problems in the analysis.
OTHER METHODS
FOR SCALING FACTORS
A drawback of the reference variable method is that the
estimate of factor variance depends on the particular
indicator selected as the marker variable. That estimate
will change if the loading for a different indicator for
the same factor is constrained to unity, especially if
raw score metrics vary over indicators. It is also true
that ratios of factor variance estimates over their stan-
dard errors (i.e., z) depend on the reference variable.
This means that outcomes of significance testing (i.e.,
p values) for factor variances can be affected by replac-
ing one indicator by another as the reference variable.
The same is also true for factor covariances: Their esti-
mates, standard errors, and z statistics all depend on the
metrics for the particular indicators selected for scaling
the two factors (Gonzalez & Griffin, 2001).
Two other options for scaling factors in CFA that
do not require the selection of reference variables are
described next. The choice among the three methods
has no effect on global model fit, the standardized solu-
tion, and unstandardized estimates for error terms, but
unstandardized estimates for other model parameters
depend on the method. The two alternative methods
are compared against the reference variable method for
the basic 3-factor, 6-indicator model depicted in Figure
14.2(a), but now using more compact graphical symbol-
ism. Recall that df M = 8 for Figure 14.2(a), which is the
same model as depicted in Figure 14.1, which features
full RAM graphical symbolism.
Represented in Figure 14.2(b) is the variance stan-
dardization method or factor variance identification
approach (Newsom, 2015), where scaling constants
are applied to the factor variances. That is, the method
standardizes factors by fixing their variances to 1.0,
3 Kenny (1979) noted that although a 2-factor model with equal-
ity-constrained loadings is identified with df M = 0, such a model
does not perfectly fit the data, if the correlation between the indi-
cators is negative.
3/22/2023 2:56:13 PM
 Confirmatory Factor Analysis 235

(a) Reference variable (b) Variance standardization

ULI constraints UVI constraints

X1 X2 X3 X4 X5 X6 X1 X2 X3 X4 X5 X6

1 1

A B 1 A B 1

(c) Effects coding

ECI constraints

X1 X2 X3 X4 X5 X6

b e
a c d f

A B

FIGURE 14.2. Scaling factors in the reference variable method with unit loading identification (ULI) constraints (a), variable
standardization method with unit variance identification (UVI) constraints (b), and effects coding method with effects coding
identification (ECI) constraints (a + b + c)/3 = (d + e + f )/3 = 1.0 (c). Models presented in compact graphical symbolism, and
all indicator error terms are scaled through ULI constraints.

which is called a unit variance identification (UVI)
constraint. Because the factors are standardized, their
variances are not free parameters, but factor covari-
ances are freely estimated as Pearson correlations. Nei-
ther the indicators nor their error variances are stan-
dardized in this method, and loadings for all indicators
are free parameters. This means that all loadings have
standard errors in the unstandardized solution, so each
can be tested for statistical significance (if desired).
Exercise 3 asks you to verify that df M = 8 for Figure
14.2(b); that is, scaling factors through ULI constraints
versus UVI constraints affects neither the number of
free parameters nor the model degrees of freedom.
The choice between scaling factors through ULI
constraints versus UVI constraints is usually based on
the merits of analyzing factors in, respectively, unstan-
dardized versus standardized form. When a CFA
model is analyzed in a single sample and there are no
repeated measures variables, either method is probably
fine because overall model fit is usually not affected.4
Fixing the factor variances to 1.0 to standardize them
has the advantage of simplicity and does not require
the selection of reference variables. A shortcoming of
the factor variance method is that it is usually appli-
cable only to exogenous factors. Although most SEM
software allows the imposition of constraints on any
4 Steiger(2002) described an exception called constraint inter-
action that can occur when some common factors have just two
indicators and a cross-factor equality constraint is imposed on
the loadings for indicators of different factors. In some cases, the
value of chiD (1) for the test of the equality constraint depends
on how the factors are scaled. The same author also described
checks for constraint interaction and ways to handle the issue.

Pt3Kline5E.indd 235 3/22/2023 2:56:13 PM

 236 Multiple‑Indicator Approximation of Concepts
free parameter, variances of endogenous factors are
not free parameters, and only some programs, such as
LISREL and SEPATH, allow the predicted variances
of endogenous factors to be constrained to 1.0. This is
not an issue for basic CFA models, wherein all factors
are exogenous, but it can be for SR models where some
factors are endogenous.
There are times when standardizing factors is not
appropriate—for example, (1) the analysis of a struc-
tural equation model across independent samples that
differ in their variabilities and (2) longitudinal mea-
surement of variables that manifest changing variances
over time. In both cases, important information may be
lost when factors are standardized. How to appropri-
ately scale factors in multiple-group CFA is addressed
in Chapter 22.
Little et al. (2006) described the effects coding
method for scaling factors when (1) the indicators for
the same factor all have the same raw score metric
and (2) most of those indicators are specified to mea-
sure just one factor. Their method does not require the
selection of reference variables nor does it standardize
factors. Instead, it relies on the capability of modern
SEM computer tools to simultaneously impose linear
constraints on two or more parameter estimates, in this
case the unstandardized loadings for indicators of a
common factor.
The method works by specifying an effects coding
identification (ECI) constraint, which means that the
average loading for indicators of the same factor equals
1.0 in the unstandardized solution. This specification
instructs the computer to derive optimal loadings for a
set of indicators that average to 1.0. So scaled, the fac-
tor variance is estimated as the average common vari-
ance across all the indicators in their original metric,
weighted by the extent each indicator contributes to
factor measurement. In this way, all indicators contrib-
ute to the scale of their common factor. For example,
the ECI constraint for indicators X1–X3 of factor A in
Figure 14.2(c) is
a+b+c
= 1.0 (14.1)
3 not truths), but the original terms by Kaufman and
which is algebraically equivalent to
3–a–b–c=0 (14.2)
The researcher specifies the linear constraint defined in
Equation 14.2 in the syntax of an SEM computer tool.
Exercise 4 asks you to derive the corresponding ECI
Pt3Kline5E.indd 236
constraint that scales factor B in Figure 14.2(c), assum-
ing that scores on X4 –X6 are all based on the same
metric. There is an option in lavaan to automatically
generate ECI constraints when models with common
factors are analyzed (Rosseel et al., 2023).
The effects coding method does not standardize the
factors, and all indicators for the same factor contribute
to scaling that factor. The feature just mentioned is a
potential benefit if the researcher seeks a stable esti-
mate of factor variance that does not rely on a single
indicator (i.e., a reference variable). This may be espe-
cially useful in studies where factor variances provide
substantive information. One example is in longitudi-
nal studies of change over time when the focus is on
latent growth factors (Chapter 21 in this book), and
another is when samples from different populations are
compared on factors that underlie observed outcomes
(Chapter 22), among other situations described by Sch-
weizer et al. (2019) when interpretation of factor vari-
ances is meaningful.
DETAILED EXAMPLE FOR A BASIC CFA
MODEL OF COGNITIVE ABILITIES
The first edition of the Kaufman Assessment Battery
for Children (KABC-I) (Kaufman & Kaufman, 1983)
is an individually administered cognitive ability test
for children 2½–12½ years old. The test’s authors
claimed that the eight subtests represented in Figure
14.3 measure two factors. The three tasks in the fig-
ure believed to reflect sequential processing all require
the correct recall of auditory stimuli (Number Recall,
Word Order) or visual stimuli (Hand Movements) in a
particular order. The other five tasks—Gestalt Closure
through Photo Series in the figure—are presumed to
measure more holistic, less order-dependent reasoning,
or simultaneous processing. Keith (1985) suggested
alternative factor names for the KABC-I, including
“short-term memory” instead of “sequential process-
ing” and “visual-spatial reasoning” instead of “simul-
taneous processing” (i.e., factor names are hypotheses,
Kaufman (1983) are retained in this example. Exercise
5 asks you to demonstrate that df M = 19 for Figure 14.3.
Listed in Table 14.1 are the annotated script files
used to conduct the analyses for this example in
lavaan (Rosseel et al., 2023) and semTools (Jorgensen
et al., 2022). All input and output files can be down-
loaded from this book’s website. Summarized in Table
3/22/2023 2:56:13 PM
 Confirmatory Factor Analysis 237

EHM EWO ENR EGC ETr ESM EMA EPS

1 1 1 1 1 1 1 1

Hand Word Number Gestalt Spatial Matrix Photo

Triangles
Movements Order Recall Closure Memory Analogies Series

1 1

Sequential Simultaneous

FIGURE 14.3. Basic confirmatory factor analysis model of the first edition of the Kaufman Assessment Battery for Children
presented in full McArdle–MacDonald RAM graphical symbolism.

14.2 are the input data, which are from the KABC-I’s
normative sample for 10-year-old children (N = 200).
Variances in lavaan analyses are automatically cal-
culated as S2 in the denominator, not as s2 with N – 1
in the denominator. (The standard deviations in Table
14.2 are the square roots of s2.) Remember that this
default in lavaan can be disabled—see the script file
for analysis 1, Table 9.1.
Single‑Factor Model
If the target model has two or more factors, the first
model analyzed in CFA is often a single-factor model.
If a single-factor model cannot be rejected, there is
little point in evaluating models with more factors.
Listed in Table 14.1 for analysis 1 is the lavaan input
file for fitting a single-factor model with eight indica-
tors (all KABC-I subtests) to the data in Table 14.2.
The unstandardized loading for the Hand Movements
task was automatically fixed to 1.0 to scale the single
factor. You should verify that df M = 20 for this single-
factor model. Estimation in lavaan with default ML
converged to an admissible solution. Values of selected
global fit statistics for the single-factor model are
reported next:
chiML(20) = 105.427, p < .001
RMSEA = .146, 90% CI [.119, .174]
CFI = .818, SRMR = .084

TABLE 14.1. Analyses, Script Files, and Packages in R

for Confirmatory Factor Analysis Examples
Analysis Script files R packages
1. Single-factor model for the KABC-I kabc-1-factor.r lavaan

2. Two-factor model for the KABC-I, power kabc-2-factor.r lavaan

analysis for the exact-fit test, and reliability semTools
coefficients for factor measurement

3. Example of a Heywood case for a two- sabatelli-heywood.r lavaan

factor model analyzed in a small sample

Note. Output files have the same names except the extension is “.out.” KABC-I, Kaufman Assessment
Battery for Children, first edition.

Pt3Kline5E.indd 237 3/22/2023 2:56:13 PM

 238 Multiple‑Indicator Approximation of Concepts

TABLE 14.2. Input Data (Correlations, Standard Deviations) for Analysis

of a Two-Factor Model of the KABC-I
Indicator 1 2 3 4 5 6 7 8
Sequential scale
1. Hand Movements —
2. Number Recall .39 —
3. Word Order .35 .67 —

Simultaneous scale
4. Gestalt Closure .21 .11 .16 —
5. Triangles .32 .27 .29 .38 —
6. Spatial Memory .40 .29 .28 .30 .47 —
7. Matrix Analogies .39 .32 .30 .31 .42 .41 —
8. Photo Series .39 .29 .37 .42 .58 .51 .42 —

SD 3.40 2.40 2.90 2.70 2.70 4.20 2.80 3.00

Note. KABC-I, Kaufman Assessment Battery for Children, first edition. Input data are from Kaufman and
Kaufman (1983), N = 200.

The single-factor model fails the chi-square test at a
conventional level of statistical significance, and the
lower bound of the RMSEA’s 90% confidence interval,
or .119, exceeds .10 which is a poor result. Results for
the CFI and SRMR are also unfavorable. Exercise 6
asks you to inspect the residuals for this analysis, but I
can tell you that local fit is poor, too. Thus, the single-
factor model for the KABC-I is rejected.
A single-factor CFA model is nested under any other
CFA model with two or more factors and the same pat-
tern of error covariances (if any) for the same indica-
tors. This is because a model with one factor is just a
restricted version of any model with multiple factors
where, conceptually, all absolute pairwise factor cor-
relations are constrained to unity.5 So constrained, the
factors are identical, which is the same as collapsing
multiple factors down to just one. This also means
that the chi-square difference test can be conducted to
directly compare the relative fit of single- versus mul-
tiple-factor CFA models. Kenny (1979) noted that the
test for a single-factor is also relevant for manifest-vari-
able path models. This is because the failure to reject
a single-factor in this context means that the variables
measure only one domain (they do not have discrimi-
nant validity).
Two‑Factor Model
In analysis 2 (see Table 14.1), the two-factor model in
Figure 14.3 was fitted to the data in Table 14.2.6 The
estimator is default ML, and the analysis in lavaan
converged normally to an admissible solution. The
power of the chi-square test in this analysis where
df M = 19 estimated with the MacCallum–RMSEA
method for the actual sample size, N = 200, is low,
only .39.7 Thus, if the model does not have perfect fit
in the population, there is only about a 40% chance of
detecting this result over random samples. A minimum
sample size for power of the exact-fit test to be at least
.90 is N = 542, or over twice as large as the actual sam-
ple (N = 200). Despite low power, the two-factor model
fails the chi-square test, or
chiML (19) = 38.325, p = .005

5 Constraints are generally imposed in the unstandardized solu- 6 Kline(2013b) and Flora and Flake (2017) compared EFA results
tion, not the standardized one. This means that single-factor
for an unrestricted version of Figure 14.3 fitted to the same data
models must be explicitly specified and fitted to the data instead
with those for the two-factor CFA model for the KABC-I.
of fixing factor correlations to 1.0 in models with two or more
factors. 7 Parameters: e0 = 0, e1 = .05, df M = 19, N = 200, a = .05.

Pt3Kline5E.indd 238 3/22/2023 2:56:13 PM


Thus, we tentatively reject the two-factor model, and
we will examine other details about both global and
local fit after demonstrating the chi-square difference
test for this example.
Given the chiML values for the one- and two-factor
models just reported, the chi-square difference statistic
is calculated as follows:
df D = 20 – 19 = 1
chiD (1) = 105.427 – 38.325 = 67.102, p < .001
which says that the fit of the model with two factors is
statistically better than that of the model with a single
factor. The implication of this result is not yet clear
because the two-factor model is tentatively rejected.
In general, the outcome of the chi-square difference
test is most meaningful when the more complex of the
two models, or the two-factor model in this case, has
acceptable fit. As we will see, there are appreciable
problems with the fit of the two-factor model, too.
Selected values of approximate fit indexes for the
two-factor CFA model of the KABC-I are listed next:
RMSEA = .071, 90% CI [.038, .104]
CFI = .959, SRMR = .072
Although values of the CFI and SRMR are not obvi-
ously problematic, the upper bound of the RMSEA’s
confidence interval, .104, is unfavorable.8 Thus, results
over the global fit statistics considered to this point are
mixed: The exact fit test is failed and values of some,
but not all, approximate fit indexes indicate potential
problems in global fit. The residuals for this model are
examined after we next consider parameter estimates
in this pedagogical example for the two-factor model.
Presented in Table 14.3 are parameter estimates for
the two-factor model with standard errors for both solu-
tions. Note in the table that the unstandardized loadings
for reference variables (Hand Movements, Gestalt Clo-
sure) equal 1.0 and have no standard errors. The unstan-
dardized loading for the Number Recall task is 1.147,
so scores on this task are expected to increase by this
amount for every 1-point increase in the sequential fac-
8 Dynamic
thresholds at the .05 level computed in the Monte
Carlo simulation method by Niemand and Mai (2018) for this
analysis are RMSEA < .058, SRMR < .056, and CFI > .941.
Observed results for the RMSEA (.071) and SRMR (.072) are
problematic based on these dynamic thresholds, but not for the
CFI (.959) in this method.
Pt3Kline5E.indd 239
Confirmatory Factor Analysis 239
tor. The standard error is .181, so z = 1.147/.181 = 6.34,
which is significant at the .01 level. All other unstan-
dardized loadings in the table are interpreted in the
same way. Standardized loadings in basic CFA models
are estimated Pearson correlations between indicators
and their common factor. For example, although the
Hand Movements task is a reference variable, it has a
standardized loading that is not 1.0; instead, it is .497
(see the table). Thus, the sequential factor explains
.4972, or about R2 = .247 (25%) of this indicator’s vari-
ance. All the other standardized loadings in Table 14.3
are interpreted in comparable ways.
Ideally, a factor would explain at least 50% of the
variance in a continuous indicator (Bagozzi & Yi,
2012). Such a result for all indicators of the same
factor would support the hypothesis of convergent
validity. A somewhat less demanding standard is that
average variance extracted (AVE), which is just the
average of the squared standardized loadings for indi-
cators that depend on the same factor, should exceed
.50. If AVE > .50, then, on average, more variance
is explained by the common factor than remains in
indicator error terms (Hair et al., 2022). By the first
standard just described, the results in Table 14.3 are
problematic: The two-factor model fails to explain the
majority of the variance (R2 > .50) for a total of four
out of eight indicators, or half their number. Results
are somewhat more favorable using the second stan-
dard, at least for the sequential factor, which explains
an average of about 52% of the variance among its
three indicators (AVE = .517). In contrast, the simul-
taneous factor explains, on average, only about 43% of
the variance among its five indicators (AVE = .434).
More formal measures of precision for factor measure-
ment are described in Topic Box 14.1.
In the real world, though, lower values of R2 are
generally acceptable in factor analysis. For exam-
ple, Comrey and Lee (1992) suggested the graded
descriptors listed next: R2 > .50 is excellent, and R2
values approximately equal to .40, .30, .20, and .10
are, respectively, very good, good, fair, and poor. By
these less strict guidelines, results for indicators of the
two-factor CFA model of the KABC-I are “excellent”
(R2 > .50) for three out of eight indicators, none are
“poor” (R2 around .10), and the rest (for five indica-
tors) are somewhere in between—see Table 14.3. But
note that these guidelines should not be blindly applied
over all applications of CFA or over all kinds of indica-
tors. For example, indicators that are continuous, such
as total scores in the present example, tend to obtain
3/22/2023 2:56:13 PM
 240 Multiple‑Indicator Approximation of Concepts

TABLE 14.3. Maximum Likelihood Estimates for a Two-Factor

Model of the KABC-I
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Factor loadings
Sequential
Hand Movements 1.000 — .497 .062
Number Recall 1.147 .181 .807 .046
Word Order 1.388 .219 .808 .046

Simultaneous
Gestalt Closure 1.000 — .503 .061
Triangles 1.445 .227 .726 .044
Spatial Memory 2.029 .335 .656 .050
Matrix Analogies 1.212 .212 .588 .055
Photo Series 1.727 .265 .782 .040

Error (unique) variances

Hand Movements 8.664 .938 .753 .061
Number Recall 1.998 .414 .349 .075
Word Order 2.902 .604 .347 .075
Gestalt Closure 5.419 .585 .747 .061
Triangles 3.426 .458 .472 .064
Spatial Memory 9.997 1.202 .570 .065
Matrix Analogies 5.105 .578 .654 .065
Photo Series 3.482 .537 .389 .063

Factor variances and covariance

Sequential 2.838 .838 1.000 —
Simultaneous 1.834 .530 1.000 —
Sequential Simultaneous 1.271 .324 .557 .067

Note. KABC-I, Kaufman Assessment Battery for Children, first edition. Standardized esti-
mates for error variances are proportions of unexplained variance. All variables are standard-
ized in the standardized solution.

higher factor loadings than indicators that are ordinal,
such as individual items with Likert-type response
scales. Item-level (i.e., categorical) CFA is described in
Chapter 18.
Given the results in Table 14.3 for the standardized
loadings, Exercise 7 asks you to calculate the predicted
correlations between each factor and the indicators of
the other factor, such as the model-implied correlation
between the simultaneous factor and the Hand Move-
ments indicator of the sequential factor. Note that these
results are not cross-loadings because each indicator
is specified to measure a single factor in basic CFA
models. Graham et al. (2003) used the term structure
coefficient to describe estimated Pearson correlations
between measured variables and common factors or
composites. So defined, structure coefficients for basic

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 Confirmatory Factor Analysis 241

TOPIC BOX 14.1

Reliability of Factor Measurement

Recall that the alpha coefficient, also known as tau-­equivalent reliability, assumes that a set of items
(i.e., multiple indicators) are unidimensional and measure their common factor in the same way (i.e., their
factor loadings are equal), but their error variances are allowed to vary. Also, computation of alpha
does not require a factor analysis—­see the Psychometrics Primer. Coefficient omega is a model-based
alternative that (1) requires the analysis of a CFA model and (2) assumes only that a set of indicators is
congeneric, or caused by a common factor to varying degrees (i.e., loadings vary over indicators) and
with error variances that may be unequal. The version of omega for the unstandardized solution in unidi‑
mensional models with continuous indicators and independent errors is listed next (Raykov, 2004):

( Σ λˆ ) φˆ
2
i
ω= (14.3)
( Σ λˆ ) φˆ + Σ qˆ
2
i ii

where Σ λ̂i is the sum of the loadings among indicators for the same factor, φ̂ is the estimated factor vari‑
ance, and Σ q̂ii is the sum of the error variances over all indicators. A different formula is needed for when
indicators share at least one error covariance:

( Σ λˆ )
2
ˆ
φ
i
ω= (14.4)
( Σ λˆ )
2
ˆ + Σq
φ ˆ + 2Σ q
ˆ
i ii ij

where 2Σ q̂ij is the sum of the error covariances. Flora (2020) describes other forms of omega, including
ones for categorical indicators or multidimensional measurement models.
In the analysis of the two-­factor model of the KABC-I in Figure 14.3, I used the semTools package
to compute omega and related coefficients for factor reliability. These results are listed in the output file
for analysis 2 in Table 14.1, but the calculation of omega for the three indicators of the sequential fac‑
tor is demonstrated next. There are no error covariances in the model, so we need Equation 14.3 and
the unstandardized parameter estimates for these indicators and their common factor in Table 14.3. You
should verify these calculations:

Σ λ̂i = 1.000 + 1.147 + 1.388 = 3.535

φ̂ = 2.838
Σ q̂ii = 8.644 + 1.998 + 2.902 = 13.564
3.5352(2.838)
= ω = .723
3.5352(2.838) + 13.564

which is not a terrible result, but still the evidence for convergent validity among the three indicators of this
factor is mixed at best (see Table 14.3). It is not surprising that the value for the alpha coefficient, which
assumes tau-­equivalence instead of congenerity, is lower for the same three indicators, or .701—see the
output file for this analysis.

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 242 Multiple‑Indicator Approximation of Concepts
CFA models include the (1) standardized loadings for
indicators of the same factor and (2) model-implied
correlations between indicators and all other factors
in the model (i.e., the ones they are not specified to
directly measure).
You should know that standardized loadings for
indicators that depend on multiple correlated factors
are not generally interpreted as Pearson correlations.
This is because they take the form of standardized
regression coefficients (beta weights), which control for
nonzero factor correlations and are scaled in a standard
deviation metric, not in a correlation metric. Suppose
that indicator X1 depends on both factors A and B and
that the factor correlation is not zero. Its two standard-
ized loadings on factors A and B are, respectively, .75
and .80. The first coefficient says that the score on X1 is
expected to increase by .75 standard deviations, given
a change in factor A of 1 standard deviation while con-
trolling for factor B. Its other standardized loading, .80,
has a similar interpretation except that now factor A is
controlled. The squares of standardized loadings that
are not correlation coefficients in form generally have
no meaningful interpretation—specifically, such val-
ues are not proportions of indicator variance explained
by the corresponding factor—see Graham et al. (2003)
for more examples.
Listed in the middle part of Table 14.3 are estimated
error (unique) variances for the indicators. For exam-
ple, the unstandardized error variance for the Triangles
task is 3.426. The sample variance for this indicator is
s2 = 2.702 = 7.290 (Table 14.2), and the rescaled vari-
ance for N = 200 is
S2 = (199/200) 7.290, or 7.254
Thus, the ratio 3.426/7.254, or .472, is the proportion
of variance in the Triangles task not explained by the
simultaneous factor (i.e., 1 – R2). The same proportion,
.472, is the estimated proportion of error variance in
the standardized solution—see the table. It also equals
the complement of the squared standardized loading
for the Triangles task, or R2 = .7262, or .527 at three-
decimal accuracy (i.e., .472 + .527 = 1.0).
Estimates of the factor variances and covariance are
reported in the bottom part of Table 14.3. For example,
the unstandardized estimate for the variance of the
sequential factor is 2.838. Exercise 8 asks you to verify
that this factor variance corresponds to the common
(explained) variance of its reference variable, Hand
Movements. Likewise, the unstandardized variance for
Pt3Kline5E.indd 242
the simultaneous factor corresponds to the common
variance of its reference variable, Gestalt Closure. The
estimate of the covariance between the sequential and
simultaneous factors is 1.271 (see the table). The corre-
sponding result in the standardized solution is the esti-
mated factor correlation, which is .557. As expected,
the two cognitive ability factors are positively related
and, more specifically, share .5572, or about .310 (31%)
of their variance with each other. The value for the fac-
tor correlation is only moderate in size, which suggests
reasonable discriminant validity (i.e., the sequential
and simultaneous factors are not identical), but see
Rönkkö and Cho (2022) for alternative definitions of
discriminant validity for factor models.
Local fit of the two-factor CFA model is considered
next. Correlation residuals and standardized residuals
are reported in Table 14.4. Absolute correlation residu-
als ≥ .10 and absolute standardized residuals that are
significant at the .05 level (> 1.96) are shown in bold-
face. Many of the results just mentioned concern Hand
Movements, an indicator of the sequential factor, and
most of the indicators of the other factor, simultane-
ous. All of these results are positive, which says that
the model underestimates the corresponding sample
associations (correlations or covariances). Overall,
these residuals are problematic and suggest poor local
fit. Given all the results considered so far, the two-fac-
tor model in Figure 14.3 is rejected. Next, we consider
options for respecifying this model.
RESPECIFICATION OF CFA MODELS
Respecification of CFA models is more challenging
than for manifest-variable path models. This is because
there are more possibilities for revising a CFA model,
including (1) factor–indicator correspondence, (2)
whether measurement is unidimensional or multidi-
mensional, or (3) the number of factors in the model.
What is no different in CFA, though, is that just as
specification of the initial model should be guided by
substantive considerations so, too, should its respecifi-
cation. Recall MacCallum’s (1995) admonition about
the shift from more confirmatory analysis of the ini-
tial model to a more exploratory mode as respecified
models are fitted to the same data: If any respecified
model is retained, it should not be viewed as confirmed
without fitting it to new data.
The role for residuals, modification indexes, or other
diagnostic information in CFA respecification is also
3/22/2023 2:56:14 PM
 Confirmatory Factor Analysis 243

TABLE 14.4. Correlation Residuals and Standardized Residuals for a Two-Factor

Model of the KABC-I
Indicator 1 2 3 4 5 6 7 8
Sequential scale
1. Hand Movements — –.591 –3.790 1.126 2.046 3.464 3.505 2.991
2. Number Recall –.011 — 1.539 –2.329 –1.558 –.112 1.129 –2.002
3. Word Order –.052 .018 — –1.315 –1.001 –.355 .727   .524

Simultaneous scale
4. Gestalt Closure .071 –.116 –.066 —   .429 –.784 .323   .910
5. Triangles .119 –.057 –.037   .015 — –.267 –.245   .677
6. Spatial Memory .219 –.005 –.015 –.030 –.007 — .664 –.144
7. Matrix Analogies .227 .056   .035   .014 –.007 .024 — –1.978
8. Photo Series .174 –.061   .018   .027   .012 –.003 –.040 —

Note. Correlation residuals are listed below the diagonal, and standardized residuals are reported above the diagonal. KABC-
I, Kaufman Assessment Battery for Children, first edition.

the same: Their values should prompt the researcher
to free a fixed or constrained parameter in the initial
CFA model only when (1) there is a substantive basis for
doing so and (2) the value of the corresponding expected
parameter change (EPC) has a meaningful interpreta-
tion (Brown, 2015). Respecifications made solely to
improve model fit—that is, where there are no theoreti-
cal, empirical, or practical bases for the change—can
capitalize so much on sampling error that any revised
model may not replicate. With these cautions in mind,
let’s review basic respecification options in CFA.
Sometimes an indicator fails to have a substantial
loading on the factor it is supposed to measure. One
option is to specify that the indicator depends on a dif-
ferent factor. Inspection of the residuals can help to
identify the other factor to which the indicator’s corre-
spondence may be switched. Suppose that the residuals
between an indicator of factor A and those for indicators
of factor B are positive and relatively large. This pattern
suggests that the indicator may measure factor B bet-
ter than it does factor A. An indicator can also have a
relatively high loading for its own factor in the initial
model but also have high residuals between it and the
indicators of another factor. This pattern suggests that
the indicator may measure both factors, which is one
form of multidimensional measurement.
Sometimes indicators are known a priori to mea-
sure more than one domain. Suppose that the items
of an engineering aptitude test are either text-based
or require the interpretation of data graphics. The
test yields a single total score, which may reflect both
verbal reasoning and visual–spatial ability. If just the
total score is available (i.e., responses to individual
items are not saved in the data file), the correspond-
ing indicator might be specified as measuring two fac-
tors. But if item responses are also available, another
option is to derive separate total scores, one for the
verbal items and another for the visual–spatial items,
and specify that each subtotal depends on a different
factor. Although specification of unidimensional mea-
surement provides stronger tests of hypotheses about
convergent validity and discriminant validity (Ziegler
& Hagemann, 2015), there can be a priori or practical
reasons to specify that an indicator assesses multiple
factors.
Freeing parameters for one or more error covari-
ances—also called a correlated uniqueness in factor
analysis—is the second way to specify multidimen-
sional measurement. Here, a pair of indicators is speci-
fied as sharing systematic variance that is not due to
any factor in the model. Summarized next are substan-
tive reasons for including an error covariance in an ini-
tial CFA model (Brown, 2015; Cole et al., 2007): The
corresponding pair of indicators
1. share comparable stimuli, content, or item wording
or come from the same task (e.g., Figure 3.1);
2. are based on the same source of information, such
as parent informants, or based on the same mea-
surement method, such as self-report;

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 244 Multiple‑Indicator Approximation of Concepts
3. are susceptible to the same response sets, or system-
atic differences in how participants answer ques-
tions regardless of their content (e.g., social desir-
ability response set); or
4. are repeated measures variables with dependent
(autocorrelated) error variances.
The failure to specify theoretically justifiable error
covariances may not in some cases harm fit, but their
omission can lead to undetected misspecifications that
distort the interpretation of common factors as prox-
ies for latent variables—see Cole et al. (2007) for
examples. A downside is that post hoc specification of
multidimensional measurement poses a risk: Each error
covariance or factor loading added to a model “costs”
only a single degree of freedom, which increases model
complexity and probably improves its fit, too. But with-
out cross-validating models that are so modified, it is
unknown whether any results based on them generalize
beyond the original sample, if a respecified model is
retained.
The specification of multidimensional measurement
also has consequences for model identification: Neither
correlated errors nor indicator loadings on additional
factors can be added to basic CFA models in any arbi-
trary pattern; that is, special identification rules are
needed. For example, O’Brien (1994) described a set
of rules for CFA models where every indicator loads
on a single factor but some error covariances are freely
estimated. These rules are applied “backwards” start-
ing from patterns of independent (uncorrelated) pairs
of error terms to prove the identification of loadings,
then of factor covariances in models with two or more
factors, and finally of measurement error covariances.
The O’Brien (1994) rules work well for relatively sim-
ple factor models, but they can be awkward to apply to
more complex models. A different set of identification
rules by Kenny et al. (1998) that may be easier to apply
to a wider range of models is described in Appendix
14.A.
More drastic respecification changes the number of
factors in the initial CFA model. For example, poor
discriminant validity is evidenced by estimated abso-
lute factor correlations that are practically 1.0. This
means that the two factors are basically identical and,
thus, could be merged into a single factor with all the
indicators from the two factors in the original model.
That is, there are too many factors in the initial model.
Pt3Kline5E.indd 244
Poor convergent validity where loadings for indicators
of the same factor are not uniformly positive and rela-
tively high in the standardized solution suggests that
the model has too few factors. Anyhow, respecifying
the number of factors in the initial model indicates
that (1) the original hypotheses were very wrong and
(2) subsequent analyses are far more exploratory than
confirmatory.
It is generally dubious practice in factor analysis,
EFA or CFA, to automatically prune indicators from
the model that fail to have statistically significant fac-
tor loadings. This is especially true in small samples
when the power of significance tests to detect popula-
tion loadings that are not zero is low. A better criterion
is to establish a priori a minimum standardized fac-
tor loading for a substantively meaningful association
between indicator and factor. This threshold could vary
over different research areas or level of measurement for
the indicators (e.g., higher target values for continuous
than for categorical indicators). But avoid respecifying
a measurement model—or any kind of structural equa-
tion model—based solely on results of statistical sig-
nificance tests, which can greatly capitalize on chance.
Next, we consider respecification of the two-factor
model for the KABC-I in Figure 14.3. Earlier we exam-
ined the residuals in Table 14.4 for this model. Most
of the larger and positive residuals are between Hand
Movements and other tasks specified to measure the
other factor. Because the magnitude of the standardized
loading for Hand Movements is at least moderate (.497;
Table 14.3), it is possible that this task may measure
both factors, among other possibilities, for respecifica-
tion. Listed in Table 14.5 are the six largest modifica-
tion indexes and corresponding unstandardized and
standardized EPC values for parameters fixed to zero
in the original model (see the output file for analysis 2,
Table 14.1). Note in the table that the MI statistics for
the parameters
Simultaneous → HM and ENR EWO
are identical, 20.097. This means that allowing Hand
Movements (HM) to also depend on the simultaneous
factor or adding a covariance between the error terms
of the Number Recall (NR) and Word Order (WO)
tasks would reduce chiML by about 20 points. Let’s con-
sider each of these results in more detail.
In Table 14.5, it is estimated that the standardized
loading of Hand Movements on the simultaneous factor
3/22/2023 2:56:14 PM
 Confirmatory Factor Analysis 245

TABLE 14.5. Respecifications for the Six Largest

Modification Indexes for a Two-Factor Model of the KABC-I
Expected parameter change
Effect MI p Unstandardized Standardized
Simultaneous → HM 20.097 < .001 1.054 .421

ENR EWO 20.097 < .001 4.741 1.969

EHM EWO 7.013 .008 –1.746 –.348

Simultaneous → NR 7.013 .008 –.501 –.289

EHM ESM 4.847 .028 1.609 .173

EHM EMA 3.799 .051   .995 .150

Note. The estimate in boldface is invalid (out of range). KABC-I, Kaufman Assessment
Battery for Children, first edition; MI, modification index; HM, Hand Movements; NR,
Number Recall; WO, Word Order; SM, Spatial Memory; MA, Matrix Analogies; PS,
Photo Series.

would increase from zero in the original basic model
(i.e., Figure 14.3) to .421 in a respecified model where
Hand Movements loads on both factors (i.e., the stan-
dardized EPC). This value is nearly as large as the
actual standardized loading of this task on the sequen-
tial factor in the original model, or .497 (Table 14.3).
Note in Table 14.5 that the standardized EPC for allow-
ing the errors of the Number Recall and Word Order
tasks to covary, or 1.969, is invalid because it is out-of-
range in a correlation metric. Remember that both MI
and EPC values are merely estimates, and sometimes
these estimates are simply wrong: The actual result is
.531 in the standardized solution for the CFA model
where the error correlation between the two tasks just
mentioned is freely estimated.9
Among other changes suggested by the results in
Table 14.5, the next two have exactly the same MI
value (7.013): Allow the errors of the Hand Movements
and Word Order to covary or to respecify that Number
Recall loads on both the sequential and simultaneous
factors. The last two results in Table 14.5 correspond
9 Justas for correlated disturbances, a positive error correlation
in a measurement model indicates that increases in one or more
unmeasured common causes increases scores on both indicators.
A negative correlation says that scores on one indicator increase
while scores on the other indicator decrease, given an increase in
an unmeasured common cause.
to freeing the parameters for two different error covari-
ances, but the estimated reductions in the chiML and the
magnitudes of the standardized EPC values are rela-
tively smaller for these respecifications. Given all these
estimates and based on my knowledge of the KABC-I
(Kline et al., 1996) and results of other factor-analytic
studies (Keith, 1985), specifying that Hand Move-
ments measures both factors is plausible. Although the
task requires exact reproduction of a sequence of hand
movements performed by the examiner, there is an
obvious visual–spatial component to the task that could
also reflect simultaneous processing. For practice, you
could fit the respecified model just described to the
data in Table 14.2 and check the results. (Hint: Major fit
problems in the original model are mainly cleared up in
the respecified model just described.)
ESTIMATION PROBLEMS
The issues, complications, and possible remedies in the
analysis phase of CFA are considered next.
Empirical Underidentification
Recall that empirical underidentification occurs when
the data provide too little information to estimate all
free parameters in a structural equation model (Chapter

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 246 Multiple‑Indicator Approximation of Concepts

9). This can happen if sample estimates for certain key
parameters are very close to either zero or one, among
other possibilities. Consequently, the analysis may fail
due to nonconvergence or inadmissible solutions even
when the model is theoretically identified. Three exam-
ples of empirical underidentification in CFA are listed
next:
1. A basic single-factor CFA model requires three
indicators to be just-identified (Rule 14.1). But if
one of the factor loadings has a value that is close
to zero, the analysis may fail because the model has
basically just two indicators, which is insufficient
for identification with no additional constraints.
2. Suppose that the estimated factor covariance is
close to zero for a basic two-factor model where
each factor has two indicators, the minimum
required for identification (Rule 14.1). The virtual
absence of the covariance parameter transforms the
original model into two separate single-factor, two-
indicator models, each of which is underidentified.
3. In Figure 14.8(f), indicator X3 depends on two fac-
tors, but if the estimated factor correlation is close
to 1.0, the loading or error variance for this indi-
cator may be empirically underidentified—see
Appendix 14.A.
Other possible causes of empirical underidentification
include (1) violation of normality or linearity when
using normal theory methods such as default ML;
(2) extreme multicollinearity among observed vari-
ables; and (3) specification errors (Rindskopf, 1984).
Convergence Failure
or Inadmissible Solutions
Failure of iterative estimation in CFA can be caused
by poor starting values; see Topic Box 14.2 for sug-
gestions. Nonconvergence or inadmissible solutions
are more likely when there are only two indicators per
factor or the sample size is less than 100–150 cases
(Marsh & Hau, 1999). Tips for analyzing CFA models
and other kinds of structural equation models in small
samples are offered in Chapter 17.
Inadmissible solutions include Heywood cases such
as negative variance estimates for indicator error terms
or estimated absolute correlations or squared correla-
tions (e.g., R2) that exceed 1.0. Solution inadmissibil-
ity can also occur at the parameter matrix level. The
computer estimates in CFA a factor covariance matrix
and an error covariance matrix. If any element of either
matrix is out of bounds, the whole matrix is nonpositive
definite, and this can happen even though no individual

TOPIC BOX 14.2

Starting Values for Measurement Models

These recommendations assume that all variables, including the factors, are unstandardized. In the refer‑
ence variable method of scaling factors, initial estimates of factor variances should probably not exceed
90% of the observed (sample) variance for the corresponding reference variable. In the effects coding
method, all indicators of the same factor share the same raw score metric, so the starting value for the
factor variance should be less than 90% of the average observed variance over all indicators. The starting
values for covariances follow the initial estimates of their variances; that is, they are the product of each
factor’s standard deviation (the square root of the initial estimates of their variances) and the expected
correlation between them.
If indicators of the same factor have variances similar to that of the reference variable, then start‑
ing values of their factor loadings could be 1.0. If the reference variable is, say, one-tenth as variable as
another indicator, the initial estimate of the other indicator’s loading could be 10.0. Conservative starting
values for indicator error variances could be 90% of the observed variance associated with the associated
indicator, which assumes that only 10% of the variance will be explained. Bentler (2006) suggested it is
probably better to overestimate the variances of factors and error variances than to underestimate them in
terms of starting values.

Pt3Kline5E.indd 246 3/22/2023 2:56:14 PM


element is a Heywood case. The causes of nonposi-
tive definite parameter matrices include the following
(Wothke, 1993):
1. The data provide too little information, that is,
empirical underidentification that involves factor
variances, covariances, or loadings.
2. The model is overparameterized (too many free
parameters).
3. The sample has outliers or severely nonnormal dis-
tributions.
4. The measurement model is misspecified.
Would you like to see an example of a Heywood case
in a real analysis? Sabatelli and Bartle-Haring (2003)
administered to each spouse in a total of 103 married
couples three indicators of family-of-origin experi-
ences (FOE) and two indicators of marital adjust-
ment. The FOE indicators are retrospective measures
of the perceived quality of each spouse’s relationship
with his or her own mother or father and of the rela-
tionship between their parents while growing up. The
adjustment ratings concern problems and intimacy in
the marital relationship. Higher scores on all measures
suggest more respect, empathy, and tolerance for indi-
viduality (FOE) and higher levels of intimacy and fewer
complaints about problems in the marital relationship.
Reported in Table 14.6 are the summary statistics
for the sample of wives only. For analysis 3 in Table
TABLE 14.6. Input Data (Correlations, Standard Deviations)
for Analysis of a Two-Factor Model with Heywood Cases
Indicator 1 2
Marital adjustment
1. Problems —
2. Intimacy    .740
Family-of-origin experiences
3. Father    .265
4. Mother    .305
5. Father-Mother    .315
M 161.779
SD 32.936
Note. These data are from S. Bartle-Haring (personal communication, June 3, 2003), N = 103.
Means are reported but not analyzed.
Pt3Kline5E.indd 247
Confirmatory Factor Analysis 247
14.1, a two-factor model where the FOE factor has three
indicators and the marital adjustment factor has two
indicators is fitted to the data in Table 14.6. Although
the basic CFA model just described is identified (Rule
14.1), the estimate in lavaan for the error variance of
the intimacy indicator is –39.892. The standardized
loading for the same indicator, 1.006, is also invalid:
This statistic for a continuous indicator that depends on
a single factor is interpreted as a Pearson correlation,
which cannot exceed 1.0 in absolute value. The lavaan
output contains the warning that some estimated vari-
ances are negative; otherwise, there is a complete solu-
tion with standard errors and residuals, and the model
passes the chi-square test—chiML (4) = 4.688, p =
.321—but the Heywood cases render the whole solution
inadmissible.
Kolenikov and Bollen (2012) noted that although
negative variances for observed variables with actual
scores are impossible, error terms in CFA models are
not observed; instead, they are estimated. In global
estimation, it can happen that negative variance esti-
mates for unmeasured variables occur within a larger
solution that satisfies the fit function for a particular
estimation method. Assuming that the model is identi-
fied, the possibilities that the Heywood case is due to
misspecification or empirical underidentification were
mentioned earlier in this section. A third possibility is
that the negative variance estimate is within the bounds
of sampling error for a population error variance that
is positive but close to zero. This conclusion would be
3 4 5
—
   .422 —
   .401    .791 —
   .351    .662   .587 —
138.382 86.229 86.392 85.046
22.749 13.390 13.679 14.382
3/22/2023 2:56:14 PM
 248 Multiple‑Indicator Approximation of Concepts
consistent with the observation that a confidence inter-
val around the offending variance estimate includes
zero, which is true in the example analysis of the data
in Table 14.6 for a two-factor CFA model: In the output
for analysis 3 in Table 14.1, the estimated error variance
for the intimacy indicator is –39.892, its standard error
is 109.200, and the 95% confidence interval is
[–253.921, 174.137]
which includes zero as an estimate for the population
error variance. A caveat here is that the standard error
or confidence interval for the Heywood case could
themselves be wrong, but Kolenikov and Bollen (2012)
described alternative methods for estimating standard
errors in this context. Larger negative error variances
that exceed the limits of sampling error could indicate
misspecification, but there is no quick fix, such as con-
straining variance estimates to be at least zero, that
fundamentally solves the problem for a given estimator.
Use of alternative methods to analyze these data with
no Heywood case are described in Chapter 17.
Empirical Checks for Identification
It is theoretically possible for the computer to generate
a converged, admissible solution for a model that is not
really identified, yet print no warning or error message.
This is most likely to happen in CFA when analyzing
very complex models with multiple error covariances or
indicators that load on more than one factor for which
the application of heuristics cannot prove identification.
Described next are empirical tests for solution unique-
ness that can be applied when analyzing any type of
structural equation model. These tests concern neces-
sary but insufficient requirements; that is, if any test is
failed, the solution is not unique, but passing does not
prove identification:
1. A second analysis of the same model is done, but
different starting values than in the first analysis
should be used (e.g., computer defaults vs. user-
specified starting values). If estimation in the sec-
ond analysis converges to a different solution work-
ing from different initial estimates, the model is not
identified.
2. This check applies to overidentified models only
(i.e., df M > 0): Use the predicted covariance matrix
from the first analysis as the input data for a second
Pt3Kline5E.indd 248
analysis of the same model. If the second analysis
does not generate the same parameter estimates as
the first, the model is not identified.
3. If the model is identified, the Fisher informa-
tion matrix of covariances among the parameter
estimates has an inverse. Correlations among the
parameter estimates are derived from this matrix. A
problem is indicated if any of these absolute corre-
lations is close to 1.0, which suggests extreme linear
dependency. Bollen and Bauldry (2011) described
additional empirical checks for identification.
Local Estimation with Instruments
Most CFA models for continuous indicators described
in the literature are analyzed with simultaneous meth-
ods such as default ML for summary data or raw data
while assuming multivariate normality or robust ML
for raw data only but with no requirement for multi-
normality. Recall that although global estimation is
more efficient in large samples for correctly specified
models, local estimation may better isolate error due
to misspecified parts of the model than global estima-
tion (Chapter 8). Global methods also require identified
models, and iterative estimation in such methods does
not always converge to admissible solutions.
Although local estimation (i.e., single-equation,
limited information) is usually reserved for manifest-
variable path models, Bollen (2019) and Bollen, Fisher,
Giordano, et al. (2022) described an option for models
with common factors called model-implied instru-
mental variables using two-stage least squares
(MIIV-2SLS). As the name suggests, the method locates
instruments for every model parameter and then sepa-
rately estimates each parameter in a 2SLS regression
analysis. These instruments are already part of the CFA
model; that is, they are not external variables that are
added to the model to function as instruments. Unlike
default ML, the 2SLS estimator is neither iterative nor
does it assume multivariate normality. If the whole
model is underidentified, the 2SLS method can still be
applied to individual parameters that are identified.
The MIIV-2SLS method is available in the R pack-
age MIIVsem (Fisher et al., 2021). It works by replacing
all common factors in the model with their respective
reference variables but with no error terms. After all
such latent-to-observed (L2O) transformations are
complete, the resulting model is based on observed
variables only but with a more complex error covari-
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ance structure for each equation. Next, instruments are
located in the respecified model, and these instruments
are applied to generate 2SLS estimates for param-
eters in the original model, including those for com-
mon factors or error terms (Bollen, 1996). If more than
the minimum number of instruments is available for a
particular parameter not associated with a reference
variable, the Sargan overidentification test, which
determines if all instruments are uncorrelated with
the equation error, is conducted (Sargan, 1958). If the
Sargan test for an equation is significant, then a speci-
fication error is suggested because the model-implied
independence of instruments and error terms is not sup-
ported in the data. But the Sargan test is not foolproof:
Jin (2022) described situations where the test can fail
to detect nonzero omitted parameters, and preventing
such misdirections is statistically challenging. Such
limitations emphasize the importance of model speci-
fication over analysis. In Chapter 17, the MIIV-2SLS
method is applied to estimate an admissible solution to
the two-factor CFA model fitted to the data in Table
14.6 that generated a Heywood case in default ML
estimation (analysis 3, Table 14.1). Chen et al. (2023)
described additional estimation options for structural
equation models with common factors.
EQUIVALENT CFA MODELS
There are two sets of principles for generating equiva-
lent CFA models—one for models with multiple fac-
tors and another for single-factor models. Consider
the two-factor model of self-perceived ability and
academic plans by Kenny (1979) presented in Figure
14.4(a). I used the method of constrained estimation in
the SEPATH procedure of STATISTICA (TIBCO Sta-
tistica, 2022) to fit this model to the correlation matrix
reported in a sample of 556 grade 8 students presented
in Table 14.7. Values of selected global fit statistics are
listed next:
chiML(8) = 9.256, p = .321
RMSEA = .012, 90% CI [.017, .054]
CFI = .999, SRMR = .012
The other three models in Figure 14.4 are equivalent
versions of the original model that yield the same val-
ues of global fit statistics, predicted correlations, and
residuals. Figure 14.4(b) features replacement of the
Pt3Kline5E.indd 249
Confirmatory Factor Analysis 249
factor correlation with the specification that two indi-
cators, educational aspiration and college plans, depend
on both factors. In Figure 14.4(c), the plans factor in the
original model was swapped for a correlation between
the two indicators of this factor and the specification
that all six indicators are affected by a single common
factor. Figure 14.4(d) is a hierarchical CFA model in
which the covariance between the ability factor and
the plans factor in the original model is replaced by a
second-order general factor (A), which has no observed
variables as indicators and is presumed to directly affect
the first-order factors (ability, plans). This specification
provides an account of why the two first-order factors
(which are endogenous in this model and have distur-
bance terms) covary. Because the general factor has
only two indicators (i.e., the ability and plans factors), it
is necessary to constrain both its unstandardized direct
effects on the first-order factors to 1.0, if the variance
of the general factor A is freely estimated. Hierarchical
CFA models are described later in this chapter.
The situation involving equivalent versions of CFA
models with multiple factors is even more complex than
suggested by the last example. It is possible to apply the
replacing rules (Rules 11.1–11.2) to substitute factor cor-
relations with direct effects, which makes some factors
endogenous. The resulting model is an SR model, but it
will fit the data equally well. For example, substitution
of the factor correlation in Figure 14.4(a) with a direct
effect between the two factors generates an equivalent
SR model. Raykov and Marcoulides (2001) showed that
there are an infinite number of versions of basic CFA
models. For each equivalent model, the factor correla-
tions are eliminated (i.e., the factors are assumed to be
orthogonal) and replaced by one or more factors with
fixed loadings (1.0) for all indicators. These added fac-
tors replace the factors in the original model as common
sources of variation among the indicators in the equiva-
lent versions that all explain the same data just as well.
Equivalent versions of basic single-factor CFA
models can be derived using Hershberger and Mar-
coulides’s (2013) reversed indicator rule, where one
indicator is specified as causal and the rest remain as
effect indicators. Consider the CFA model of reading
in Figure 14.5(a). The effect indicators represent pho-
nological processing, word and letter recognition, and
word attack skills (the ability to recognize and analyze
a printed word to connect it to the spoken word). The
equivalent version in Figure 14.5(b) specifies phono-
logical ability as a cause of the reading factor, which is
now endogenous. This respecified version is an MIMIC
3/22/2023 2:56:14 PM
 (a) Original (b) Equivalent 1

A PTE PPE PFE EA CP A PTE PPE PFE EA CP

1 1 1 1 1

Ability Plans Ability Plans

(c) Equivalent 2 (d) Equivalent 3

A PTE PPE PFE EA CP A PTE PPE PFE EA CP

1 1 1

A Ability Plans
1 1

FIGURE 14.4. Four equivalent CFA models of self-perceived ability and educational plans shown in compact graphical
symbolism for indicator error terms (a–d) and disturbances of endogenous factors (d). For all models, chiML(8) = 9.256,
p = .321 when fitted to the data in Table 14.7 using a method for constrained estimation. AS, ability self-concept; PTE, per‑
ceived teacher evaluation; PPE, perceived parental evaluation; PFE, perceived friends’ evaluation; EA, educational aspiration;
CP, c­ ollege plans. Scaling constants (1) for error or disturbance terms are assumed.

TABLE 14.7. Input Data (Correlations) for Analysis of a Two-Factor

Model of Perceived Ability and Educational Plans
Variable 1 2 3 4 5 6
1. Ability Self-Concept —
2. Perceived Parental Evaluation .73 —
3. Perceived Teacher Evaluation .70 .68 —
4. Perceived Friends’ Evaluation .58 .61 .57 —
5. Education Aspiration .46 .43 .40 .37 —
6. College Plans .56 .52 .48 .41 .71 —

Note. Input data are from Kenny (1979); N = 556.

250

Pt3Kline5E.indd 250 3/22/2023 2:56:15 PM


(a) Original (CFA)
Phonological Word Letter Word
Ability Recognition Recognition Attack
1 1
Reading
FIGURE 14.5. Application of the reversed indicator rule to generate an equivalent single-factor model of reading. CFA,
confirmatory factor analysis; MIMIC, multiple indicators–multiple causes. All models shown in compact graphical symbolism
where scaling constants (1) for error or disturbance terms are assumed.
model with both cause and effect indicators, and its fit to
the data would be identical to that of the original single-
factor CFA model. A total of three additional equivalent
models could be generated, but the one with phonologi-
cal ability as a causal indicator is plausible (Hulme &
Snowling, 2016).
SPECIAL TESTS
WITH EQUALITY CONSTRAINTS
Congeneric indicators in basic CFA models depend
on a common factor and their error variances are inde-
pendent. Also, their factor loadings (except for scal-
ing constants) and error variances are all free param-
eters. For example, the two sets of indicators for the
sequential and simultaneous factors in Figure 14.3 are
congeneric if no constraints are imposed on their load-
ings and error terms. Although congeneric indicators
are assumed to measure the same dimension, both the
magnitudes of their association with their common
factor, or factor loadings, and their error variances are
allowed to differ.
A CFA model with tau-equivalent indicators is
nested under the version with congeneric indicators.
It features equality-constrained loadings for each set
of indicators that depend on the same factor, but their
error variances are free parameters. This means that (1)
a one-unit change in their common factor predicts the
same amount change in each indicator, but (2) their error
variances may be unequal (Brown, 2015). The alpha
coefficient for internal consistency assumes tau-equiv-
Pt3Kline5E.indd 251
Confirmatory Factor Analysis 251
(b) Equivalent (MIMIC)
Word Letter Word
Recognition Recognition Attack
Phonological
Reading
Ability
alent indicators (Topic Box 14.1). Recall that equality
constraints are generally imposed in the unstandard-
ized solution. This means that although indicators
specified as tau-equivalent have equal unstandardized
factor loadings, their standardized loadings may differ.
An even more restricted model assumes parallel
indicators, which have both equal loadings on their
common factor and equal error variances. Parallel
tests measure a common factor in the same way (equal
loadings) and with the same degree of precision (equal
unique variances). Such measures are psychometrically
interchangeable in use. An example is when two or
more parallel forms are developed to avoid participants
retaking the same test in follow-up assessments: The
same thing is measured with equal precision over paral-
lel versions, and practice with the same items or stimuli
due to administering the same test twice are avoided. In
a model for parallel indicators, the loadings for indica-
tors of the same factor will be equal in the unstandard-
ized solution as will be the error variances for the same
indicators. This is because there are now constraints
related to both causes of all indicators in basic CFA
models: their common factors and their error terms. A
model with parallel indicators is nested under the tau-
equivalent version for the same indicators.
Testing whether sets of indicators are congeneric,
tau-equivalent, or parallel begins by fitting a basic
CFA model to the data with no equality constraints
imposed on loadings or error variances. If the model
for congeneric indicators just described is retained, the
more restrictive tau-equivalence model with equality-
constrained loadings for indicators of the same factor is
3/22/2023 2:56:15 PM
 252 Multiple‑Indicator Approximation of Concepts
fitted to the same data. Because models for congenerity
and tau-equivalence are hierarchically related, their
relative fit can be compared with the chi-square differ-
ence test. If the model for tau-equivalence (equal factor
loadings) is retained, then the analysis proceeds in the
same way except that the next model tested assumes
parallel indicators with equal factor loadings and equal
error variances. The model for parallel indicators is
nested under the model for tau-equivalent indicators.
Note that all of the tests just described assume indepen-
dent errors, and the data must be fitted to a covariance
matrix, not a correlation matrix—see Brown (2015,
chap. 7) for examples.
Vanishing tetrads are a kind of overidentifying
restriction for factors with at least four continuous
indicators and no error correlations. In his pioneering
work on factor analysis, Spearman (1904) showed that
differences in products of covariances or correlations
between certain pairs of indicators must be zero, if all
indicators depend on the same factor (i.e., reflective
measurement). For continuous indicators X1–X4 of the
same factor, there are three vanishing tetrads in a cor-
relation metric:
r12 r34 – r13 r24 = 0 (14.5)
r13 r24 – r14 r23 = 0
r14 r23 – r12 r34 = 0
where r12 represents the population correlation between
indicators X1 and X2, and so on. If any two restrictions
hold in in Equation 14.5, the third must also be true,
so there are actually just two independent overidentify-
ing restrictions. For each factor with k ≥ 4 indicators,
there are a total of k (k – 3)/2 orthogonal overidenti-
fying restrictions. Kenny and Milan (2012) described
additional types of between- or within-factor vanishing
tetrads for CFA models.
Glymour et al. (1987) described exploratory tetrad
analysis (ETA), a computer-based search algorithm
that attempts to locate unidimensional reflective mea-
surement models based on observed vanishing tetrads
among at least four variables that together comprise
a congeneric indicator set. This search algorithm is
implemented in the freely available program TETRAD
(Spirtes et al., 2022) that is compiled as a Java applica-
tion. Bollen and Ting (1993) described confirmatory
tetrad analysis (CTA) which, unlike ETA, requires a
priori measurement models. Both local and global fit
can be evaluated by examining vanishing tetrads for
Pt3Kline5E.indd 252
continuous variables with either normal or nonnormal
distributions. Because vanishing tetrads are estimated
from observed variables, the technique of CTA may be
useful for analyzing measurement models that are not
identified in CFA.
Bollen and Ting (2000) described the vanishing
tetrad test (VTT) as an empirical check of effect
indicators versus causal indicators based on vanish-
ing tetrads: If absolute sample estimates for Equation
14.5 exceed zero beyond the limits of sampling error,
then the null hypothesis of reflective measurement
with effect indicators is rejected. In contrast, a forma-
tive measurement model with causal indicators implies
no vanishing tetrads, and models with both effect and
causal indicators or correlated errors imply still differ-
ent patterns of vanishing tetrads. The same authors also
cautioned against exploratory application of the VTT,
especially when the number of observed variables is
large: Not only could the sheer numbers of such tests be
large, but some of the significant results could very well
be Type I errors (true reflective models are rejected). I
agree, and you should not be surprised to hear me say
(again) that no researcher should blindly rely on sig-
nificance testing to specify a CFA model (or any other
kind of statistical model). Wang and Finn (2016) dem-
onstrated application of the VTT to evaluate indicators
of consumer-based brand loyalty as either reflective or
formative. Although reflective measurement character-
ized this concept at the brand level, formative measure-
ment was more consistent with the data at the consumer
level.
MODELS FOR MULTITRAIT–
MULTIMETHOD DATA
The technique of CFA can be used to analyze data from
a multitrait–multimethod (MTMM) study, the logic
of which was first articulated by Campbell and Fiske
(1959). In such a study, at least two different traits are
each measured using at least two different methods.
Traits are hypothetical concepts about stable charac-
teristics, such as cognitive abilities, and methods refer
to multiple-test forms (e.g., computer-administered vs.
paper and pencil), ways of collecting data (e.g., self-
report vs. observational), or informants (e.g., parents
vs. teachers), among other possibilities. The goals in an
MTMM study are to (1) evaluate the convergent valid-
ity and discriminant validity of tests that vary in their
measurement method and (2) derive separate estimates
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for the effects of traits versus methods on observed
scores. See the Psychometrics Primer on this book’s
website for a summary of the MTMM approach to
estimating convergent validity and discriminant valid-
ity while controlling for common method bias, which
provides a rival explanation of observed correlations
between measures (Podsakoff et al., 2003).
The earliest procedure for analyzing data from an
MTMM study involved inspection of correlation matri-
ces for all variables. For example, convergent validity
would be indicated by the observation of appreciably
high correlations among variables that supposedly
measure the same trait but with different methods. If
correlations among variables that should measure dif-
ferent traits but use the same method are relatively
high, then common method effects are suggested. This
implies that correlations between different variables
based on the same method may be relatively high even
if they measure unrelated traits.
The failure to control for common methods effects in
CFA (and EFA, too) can inflate the values of estimated
factor correlations. This is because any extra systematic
variation due to methods instead of traits is allotted to
the factors. Consequently, values of factor loadings for
indicators based on the same method can be inflated.
Correlations between indicators of different factors
can also be inflated, if those indicators share a com-
mon method. Thus, common method bias can lead to
the false conclusion that (1) evidence for discriminant
validity is poor for indicators that depend on different
factors or (2) evidence for convergent validity is strong
for indictors that depend on the same factor (Brown,
2015). There are a variety of special CFA models for
MTMM data that control for common method bias,
some of which are described next—see Widaman
(1985) or Podsakoff et al. (2003) for taxonomies of
models for MTMM data.
Early applications of CFA to MTMM data in the
1970s generally corresponded to the correlated traits–
correlated methods (CTCM) model like the one in
Figure 14.6(a). Such models have separate trait and
method factors that are assumed to covary, but method
factors are assumed to be independent of trait factors.
In the figure, variables X1–X3 are based on one method,
X4 –X6 rely on a different method, and X7–X9 correspond
to a third method. The model also specifies that the set
of indicators (X1, X4, X7) measures one trait but each of
the two other sets, (X2, X5, X8) and (X3, X6, X9), measures
a different trait. Given these specifications, high load-
ings for trait factors would suggest convergent validity,
Pt3Kline5E.indd 253
Confirmatory Factor Analysis 253
high loadings for method factors would indicate com-
mon method effects, and moderate correlations (not too
high) between the trait factors would indicate discrimi-
nant validity.
A drawback of the CTCM model is that it assumes
effects of the same method are uniform over all mea-
sures based on that method; that is, it does not allow for
trait-specific method effects, such as when traits dif-
fer in their proneness to response sets such as acquies-
cence, or the tendency to agree with test items regard-
less of their content (Eid et al., 2003). For example, self-
reports about positive traits, such as resilience, might
be more susceptible to acquiescence response sets than
about negative traits, such as narcissism. Another prob-
lem is that analyses of CTCM models can be plagued
by convergence problems or inadmissible solutions. For
example, Marsh and Bailey (1991) found in computer
simulations that aberrant estimates were derived about
75% of the time for CTCM models. Kenny and Kashy
(1992) noted part of the problem: CTCM models are
not identified if the loadings on trait or method factors
are equal. If the loadings are different but similar in
value, then CTCM models may be empirically unde-
ridentified.
Some simpler alternatives to CTCM models that may
avoid estimation problems have been proposed, includ-
ing those with multiple but uncorrelated method fac-
tors, models with fewer method factors than the total of
methods used to collect the MTMM data, and the model
presented in Figure 14.6(b), which is a correlated-
uniqueness (CU) model (Marsh & Grayson, 1995).
For the same indicators, traits are represented in CU
models exactly as they are in CTCM models—compare
Figures 14.6(a) and 14.6(b). But method effects in CU
models are assumed to be a property of each indicator,
and relatively high error covariances between indica-
tors based on the same method are taken as evidence
for common method effects. An advantage is that con-
verged, admissible solutions are more likely in analyses
of CU models than for CTCM models. A drawback is
that because method effects are shunted off to the error
terms in CU models, their estimates are a mishmash
of systematic indicator variance, random influence,
and common method effects that can be greatly biased
(Lance et al., 2002). Another issue is that method
effects modeled as error variance are assumed to be
zero on average, but method effects could lower or raise
scores for most cases (i.e., the mean is not zero) (Pohl &
Steyer, 2010). There are still more types of CFA models
for MTMM data—see Topic 14.3 Box for examples—
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 254 Multiple‑Indicator Approximation of Concepts

(a) Correlated traits–correlated methods

Method 1 Method 2 Method 3

1 1 1

X1 X2 X3 X4 X5 X6 X7 X8 X9

1 1
1

Trait 1 Trait 2 Trait 3

(b) Correlated–uniqueness

X1 X2 X3 X4 X5 X6 X7 X8 X9

1 1 1

Trait 1 Trait 2 Trait 3

FIGURE 14.6. A correlated traits–correlated methods model (a) and a correlated uniqueness model (b) for multitrait–multi‑
method data shown with compact symbolism for indicator error terms.

Pt3Kline5E.indd 254 3/22/2023 2:56:15 PM

 Confirmatory Factor Analysis 255

and that is one of the challenges for researchers in this
area: matching theory with the appropriate statistical
model. Rönkkö and Cho (2022) offered suggestions for
how to operationalize and assess discriminant validity
in situations where variables are measured with a sin-
gle method instead of multiple methods as in MTMM
­studies.
SECOND‑ORDER AND BIFACTOR
MODELS WITH GENERAL FACTORS
All CFA models described to this point featured first-
order factors with indicators that are observed vari-
ables. These first-order factors are typically specified
to covary (e.g., Traits 1 and 2 in Figure 14.6), but that

TOPIC BOX 14.3

Other Types of CFA Models for MTMM Data

Eid et al. (2008) described MTMM models for interchangeable versus structurally different methods.
Interchangeable methods (raters) are structurally equivalent. Examples include customers randomly
selected to evaluate a product or students selected in the same way to rate an instructor. The raters here
are interchangeable because they all have access to the same product or teacher, and which customers
or students are randomly selected should not matter. Structurally different methods (raters) are
not randomly selected from a larger set of equivalent raters. Examples include coworkers versus managers
who rate the job performance of the same employees: These different raters are not randomly chosen and
do not share same perspective, so they are structurally different.
Models for interchangeable methods described by Eid et al. (2008) are based on principles of multi‑
level analysis, where raters such as students are nested within higher-­level units such as teachers. In contrast,
the same authors recommended correlated traits–­ correlated methods minus one (CTC(M–1))
models that directly compare structurally different methods. In CTC(M–1) models, one method is selected
as the reference method for which no explicit method factor is specified but trait-­specific factors are
specified for all other methods. Thus, a score on a method factor estimates the deviation of a true value
for a trait score by a specific method versus the prediction based on the reference method. For example,
if parents, teachers, and adolescents all report on the adjustment of the adolescents, then the amount of
over- or underestimation by parents and teachers can be compared with self-­reports from the adolescents.
A limitation is that the fit and estimates of factor variances in analyses of CTC(M–1) models may not be
invariant over choice of the reference method. Pohl and Steyer (2010) describe alternative models that
directly compare different methods without the limitation just mentioned; their models also allow average
method effects to depart from zero.
Eid et al. (2008) described additional MTMM models for situations where both interchangeable
and structurally different measurement methods are employed. Bauer et al. (2013) described trifactor
models for integrating data obtained from multiple informants or raters perhaps for a single domain
(e.g., monotrait–­multimethod data). The data are analyzed at the item level, and a trifactor model includes
a common factor that represents the consensus view of the raters, separate factors that represent unique
views or biases of raters, and specific factors for each item. There are even more variations of CFA models
for MTMM data, but researchers should select among them based on substantive, not data-­driven, reasons.
One reason is that MTMM models with no constraints can be so highly parameterized that they would fit
a wide variety of sample data, so analysis by itself may be insufficient to detect misspecification. Williams
and McGonagle (2016) described research designs and analysis strategies for estimating common method
variance for self-­report measures, and Geiser et al. (2015) described possible consequences of specifying
the wrong model for MTMM data. See Eid et al. (2023) for more information and examples.

Pt3Kline5E.indd 255 3/22/2023 2:56:15 PM

 256 Multiple‑Indicator Approximation of Concepts
association is unanalyzed in the sense that no causal
hypothesis that explains these associations is repre-
sented in the model. In a second-order CFA model—
also called a hierarchical CFA model—the indicators
of a second-order factor are first-order factors, and
the second-order factor is a general factor that explains
covariances among its indicators, the first-order fac-
tors. That is, a second-order CFA model is a causal
model in which the researcher makes specific claims
about directions or patterns of covariation among first-
order factors (Brown, 2015).
Presented in Figure 14.7(a) is a second-order model
that represents the hypothesis that a general factor, g,
(a) Second-order (hierarchical)
X1 X2 X3 X4 X5
1 1
A B
(b) Bifactor (canonical)
g
X1 X2 X3 X4 X5
1 1
A B
FIGURE 14.7. A second-order hierarchical model (a) and a bifactor model (b) shown with compact symbolism for indicator
error terms and factor disturbances.
Pt3Kline5E.indd 256
causes each of the three first-order factors, A–C. The
first-order factors have observed variables as indica-
tors, but no observed variables are directly caused by
g. Instead, the indicators of the general factor are the
three first-order factors. This specification (1) reflects
the hypothesis that g explains any covariances among
the first-order factors. It also (2) defines the first-order
factors as endogenous variables with disturbances,
which reflect variation not explained by g. Loadings
on g and disturbances for the first-order factors are
estimated controlling for measurement error, which is
accounted for by the error terms for observed variables,
or the indicators of first-order factors.
X6 X7 X8 X9
1
C
X6 X7 X8 X9
1
C
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To identify a second-order CFA model with a single
general factor, there must be at least three first-order
factors or their disturbances may not be identified
without imposing additional constraints. That is, Rule
14.1 for first-order factors applies to the general factor
in Figure 14.7(a), which has three indicators (factors
A–C). The general factor in the figure is scaled by fix-
ing the loading of first-order factor A to 1.0 (i.e., A is
the reference variable for g). Another option is to fix
the variance of g to 1.0 (standardize it), which leaves all
direct effects of g on first-order factors as free param-
eters. Either way of scaling g in a single-sample analy-
sis is probably fine, but it is usually inappropriate to
standardize factors in multiple-group analyses. There
are examples of second-order CFA models in assess-
ment research where a single general factor is concep-
tualized as a superordinate cognitive ability factor that
affects more specific skills such as verbal reasoning
or visual–spatial analysis (Williams et al., 2010). It
is also possible to analyze second-order models with
two or more general factors that covary (e.g., Brown,
2015, pp. 288–297), but each second-order factor must
have at least two first-order factors as indicators (i.e.,
Rule 14.1 still applies). There are also examples of CFA
models with third-order factors (Lee & Stankov, 2013),
but such analyses are relatively rare in the literature.
Bifactor models—also called nested-factor mod-
els or general-specific models—may be especially
well suited for situations where a set of indicators is
(1) believed to be mainly unidimensional, but (2) there
are also secondary, domain-specific factors of substan-
tive interest that should also be represented in the anal-
ysis (Brown, 2015; Chen et al., 2006). A bifactor model
has a general factor that represents the primary domain
of interest. But unlike a general factor in a second-order
model, the general factor in a bifactor model is speci-
fied as (1) a direct common cause for all indicators, but
(2) it has no causal effects on domain-specific factors.
Thus, the general factor in a bifactor model does not
explain the association of the domain-specific factors.
An example of a bifactor model is presented in Fig-
ure 14.7(b), where all observed variables load on a gen-
eral factor (g) and nonoverlapping subsets of indicators
load on three domain-specific factors, A–C. The form
of the model in the figure is canonical in that it assumes
orthogonal relations among the domain-specific fac-
tors and the general factor (Chen et al., 2006). This
specification partitions indicator variance into three
nonoverlapping sources, the domain-specific factors,
the general factor, and unique indicator variance (i.e.,
Pt3Kline5E.indd 257
Confirmatory Factor Analysis 257
their error terms). An extension of Figure 14.7(b) allows
the domain-specific factors to covary with each other
but not with the general factor. This specification rep-
resents the contribution of domain-specific factors as
above and beyond that of the general factor, just as in
the canonical model. It may also be possible to specify
that the domain-specific and general factors covary, but
now indicator variation is not uniquely attributable to
domain-specific factors versus the general factor.
Unlike second-order models, all factors in bifactor
models are exogenous, and variation among domain-
specific factors is not explained by the general factor.
A related difference is that domain-specific factors in
bifactor models do not mediate effects of the general
factor on observed variables. First-order factors in
second-order models are intervening variables that lie
along indirect causal pathways from the general factor
to the indicators, and their status as mediators implies
that first-order factors are always endogenous (see Fig-
ure 14.7(a)). Because the general factor in a second-
order model has no indicators, it may be more difficult
to interpret than the general factor in a bifactor model,
where all observed variables are its indicators (Gig-
nac, 2008). Another advantage of canonical bifactor
models is that the predictive validity of domain-spe-
cific factors, which are independent of the general fac-
tor, can be directly estimated by “embedding” a bifac-
tor model in a larger SR model where outcomes are
predicted by domain-specific versus general factors
(Chen et al., 2006). It is trickier to do so for second-
order models where the general and first-order fac-
tors overlap. This is because the general factor must
be held constant when estimating external validity of
the first-order factors in a hierarchical model (Chen et
al., 2006; Gignac, 2008). For more information about
the specification and analysis of bifactor models, see
Reise et al. (2023).
It is also true that second-order models for the same
data can be expressed as more constrained versions of
bifactor models; that is, the models are nested (hierar-
chically related), so they can be directly compared with
the standard chi-square difference test. The method
relies on the Schmid–Leiman (SL) transformation
(Schmid & Leiman, 1957). In EFA, it transforms an
oblique factor solution with correlated factors to a hier-
archical model where the first-order factors are residu-
alized, or rendered orthogonal to second-order (gen-
eral) factors through proportionality constraints. Thus,
SL transformation makes explicit a hierarchical struc-
ture implied by correlated factors. It has the advantage
3/22/2023 2:56:15 PM
 258 Multiple‑Indicator Approximation of Concepts
that explained variation among the indicators is more
readily partitioned between first-order and general
factors. Yung et al. (1999, p. 116) demonstrated how
bifactor models for the same data can be constrained
through a generalized form of SL transformation with
no proportionality constraints to generate second-order
models; that is, second-order models are nested within
bifactor models. Thus, the two models can be compared
with the standard chi-square difference test. Chen et
al. (2006) offered detailed advice along these lines
and demonstrated the implications of fitting bifactor
models versus second-order models to data from rat-
ing scales about general quality of life (QOL) versus
degree of satisfaction in more specific areas, such as
mental health and physical health, among other areas.
Bifactor models have become “popular” in that there
are now many examples in the literature. The choice
between a second-order model and a bifactor model
should be guided by a priori considerations, or theo-
ries of measurement in a particular research area. This
means that researchers should avoid “shopping” for a
measurement model that fits the data in a particular
sample. Instead, the researcher should consult relevant
theory and empirical studies about the dimensionality
of target concepts and a particular set of indicators—
see Dunn and McCray (2020) for more information
and examples. Flora (2020) described a special form
of the omega reliability coefficient for bifactor models,
and Reise et al. (2010) outlined options for analyzing
exploratory bifactor models where indicators have
cross-loadings on multiple domain-specific factors or
where those factors are assumed to covary.
A more controversial type of bifactor model for
indicators that all rely on the same method features
the specification of a general factor that purportedly
represents common method variance as a latent vari-
able (Podsakoff et al., 2003, p. 891; Widaman, 1985,
Model 3B). A problem with this type of model is that
the researcher is unable to identify or describe the spe-
cific cause or type of method variance. Antonakis et al.
(2010) put it like this: Without also analyzing indicators
or markers of specific kinds of common method bias,
a single general method factor may have no meaning-
ful interpretation. An example of a marker for a social
desirability method factor is the Marlowe–Crowne
Social Desirability Scale (Crowne & Marlowe, 1960).
In this case, the method factor represents a social desir-
ability response set, or the tendency for respondents to
present themselves in a favorable light based on per-
ceived social norms, regardless of the truthfulness of
Pt3Kline5E.indd 258
those responses. Multiple markers should also reflect
various facets of common method bias—see Podsa-
koff et al. (2003, pp. 881–833) for descriptions of pos-
sible sources of method-related bias—and in CFA they
would be specified as indicators of a method factor.
See Richardson et al. (2009) for more information and
examples.
SUMMARY
The CFA technique analyzes reflective measurement
models where common factors are proxies for theo-
retical variables. These models are restricted in that
the researcher must specify in advance the number of
factors, the correspondence between factors and indica-
tors, and error covariance patterns, if any. Basic CFA
models feature continuous indicators each of which
depends on just a single factor with independent errors.
This combination specifies unidimensional measure-
ment, and the evaluation of basic CFA models with
multiple factors tests the hypotheses of convergent
validity and discriminant validity. It is also possible to
test CFA models with error covariances or indicators
that load on more than one factor, but it is more chal-
lenging to determine whether such models are identi-
fied compared with basic models. Technical problems
in the analysis such as nonconvergence of iterative
estimation or inadmissible solutions are more likely
in smaller samples, especially when some factors have
just two indicators. Respecification can be challeng-
ing because there might be many possible changes that
could be made to a given CFA model. Another problem
is that of equivalent CFA models. The best way to deal
with both of these challenges is to rely more on sub-
stantive knowledge than on statistical considerations
in the analysis. The next chapter concerns SR models
where directional causal effects are specified between
certain pairs of common factors.
LEARN MORE
Brown (2015) is a comprehensive resource for CFA with many
research examples. The shorter introduction by Roos and
Bauldry (2022) is not as in-depth but covers a wide range of
topics in clear, easy-to-understand language. Results of com‑
puter simulations by Ondé and Alvarado (2020) provide a
cautionary tale against relying on arbitrary rules or thresh‑
olds about sample size, the number of indicators per factor,
3/22/2023 2:56:15 PM

values of standardized factor loadings, or fixed thresholds
for global fit statistics that supposedly indicate “good” model
fit in CFA. Rönkkö and Cho (2022) outline alternative defini‑
tions and methods for evaluating discriminant validity in the
case of when multiple methods are not available or when
variables are all measured at a single occasion.
Brown, T. A. (2015). Confirmatory factor analysis for
applied research (2nd ed.). Guilford Press.
EXERCISES
1. Show that df M = 0 for a basic single-factor CFA
model with 3 indicators using the reference variable
method to scale the factor.
2. For a basic single-factor model with 2 indicators,
prove that df M = –1. Assume the reference variable
method.
3. Prove that df M = 8 for Figure 14.2(b) in the variance
standardization method.
4. Derive the ECI constraint that scales factor B in
Figure 14.2(c).
5. Show that df M = 19 for Figure 14.3.
Pt3Kline5E.indd 259
Confirmatory Factor Analysis 259
Ondé, D., & Alvarado, J. M. (2020). Reconsidering the
conditions for conducting confirmatory factor analysis.
Spanish Journal of Psychology, 23, Article E55.
Rönkkö, M., & Cho, E. (2022). An updated guideline for
assessing discriminant validity. Organizational Research
Methods, 25(1) 6–47.
Roos, J. M., & Bauldry, S. (2022). Confirmatory factor
analysis. Sage.
6. Describe the residuals in the lavaan analysis for
fitting a single-factor model to the data for the
KABC-I (see analysis 1, Table 14.1).
7. Calculate structure coefficients (i.e., predicted cor-
relations) between each factor and the indicators of
the other factor, given the results in Table 14.3.
8. Show that the estimated variance for the sequen-
tial factor of 2.838 in Table 14.3 corresponds to
the unique (unexplained) variance for its reference
variable, Hand Movements (see analysis 2, Table
14.1).
3/22/2023 2:56:18 PM
 260 Multiple‑Indicator Approximation of Concepts
Appendix 14.A
Identification Rules
for Correlated Errors
or Multiple Loadings
The identification rules described next correspond to
Conditions B, D, and E in Kenny et al. (1998, pp. 253–
254). The same authors also described additional iden-
tification heuristics for exceptions to these rules not
covered here. Rule 14.2 spells out conditions that must
be satisfied by each factor (Rule 14.2a), pair of factors
(Rule 14.2b), and indictor (Rule 14.2c) to identify error
correlations in CFA models. Rule 14.2a is a requirement
for a minimum number of indicators with no error cor-
relations per factor—either two or three depending on
the pattern of error correlations or constraints imposed
on factor loadings. Rule 14.2b refers to the specification
that for every pair of factors, there must be at least two
indicators, one from each factor, whose error terms are
not correlated. Rule 14.2c concerns the requirement for
every indicator that there is at least one other indicator
in the model with which it does not share an error cor-
relation. Rule 14.2, as a whole, assumes that all factor
variances are free parameters and that there are mul-
tiple indicators of every factor.
RULE 14.2 For a CFA model with error covariances
to be identified, all three conditions listed next must
be satisfied:
For each factor, at least one of the (Rule 14.2a)
following is true:
1. There are at least three indicators whose errors
are uncorrelated with each other.
2. There are at least two indicators whose errors are
uncorrelated and either
a. the errors of both indicators are not correlated
with the error term of a third indicator for a
different factor, or
b. an equality constraint is imposed on the
loadings of the two indicators
For every pair of factors, there are at least (Rule 14.2b)
two indicators, one from each factor, whose
error terms are uncorrelated
Pt3Kline5E.indd 260
For every indicator, there is at least one (Rule 14.2c)
other indicator in the model with which its
error term is not correlated
Rule 14.3 covers sufficient requirements for identify-
ing multiple loadings for the same indicator. Basically,
this rule requires that each factor on which an indica-
tor loads has a minimum number of indicators without
error correlations (i.e., each factor meets Rule 14.2a).
The same rule also requires that each of every pair of
such factors has an indicator that does not share an
error correlation with the target indicator (i.e., the one
with multiple factor loadings). If an indicator with load-
ings on multiple factors shares error correlations with
other indicators, then the additional requirement stated
as Rule 14.4 must also be satisfied. This rule requires
that for each of multiple factors on which an indicator
depends, at least one indicator with a single factor indi-
cator does not share an error correlation with the target
indicator. The requirements of Rules 14.3 and 14.4 are
usually addressed by specifying a sufficient number of
indicators that depend on just one factor.
RULE 14.3 For multiple loadings to be identified,
both of the following must hold:
1. Each factor on which the indicator loads must
satisfy Rule 14.2a for a minimum number of
indicators with no error correlations
2. Every pair of those factors must satisfy Rule 14.2b
that each factor has an indicator that shares no
error correlation with a corresponding indicator
on the other factor of that pair
RULE 14.4 For error correlations that involve
indicators with multiple loadings to be identified,
both of the following must be true:
1. Rule 14.3 is satisfied
2. For each of the multiple factors on which the
indicator depends, there must be at least one
indicator with a single loading that does not have
an error correlation the target indicator
Let’s apply the identification heuristics just consid-
ered to the CFA models in Figure 14.8. To save space, I
use very compact symbolism in the figure where indi-
cators are designated as X and factors are represented
as A, B, or C, but do not forget that variance parameters
are associated with each exogenous variable in the fig-
3/22/2023 2:56:19 PM

ure. Scaling constants are also not shown in the figure,
but they are assumed. The single-factor, four-indicator
model in Figure 14.8(a) has two error covariances, or
E2 E4 and E3 E4
The model is just-identified because df M = 0, its fac-
tor (A) has at least three indicators whose error terms
are uncorrelated (X1–X3) (Rule 14.2a), and all other
requirements of Rule 14.2 (Table 14.8) are met.
The single-factor, four-indicator model in Figure
14.8(b) also has two error covariances, but in a different
pattern, or
E1 E2 and E3 E4
Although this model has at least two indicators whose
error terms are independent, such as X2 and X3, it nev-
ertheless fails Rule 14.2a because factor A does not
have three indicators whose error terms are indepen-
dent of each other. There are also no other factors in
the model, so the alternative requirement in Rule 14.2
that factor A have at least two indicators with unrelated
error terms and the errors of both of those indicators do
not covary with the error term of a different factor does
not apply; therefore, Figure 14.8(b) is not identified. But
this model would be identified if an equality constraint
were imposed on the pattern coefficients of X2 and X4.
That is, the specification that
Pt3Kline5E.indd 261
Confirmatory Factor Analysis 261
A → X2 = A → X3
would be sufficient to identify the model in Figure
14.8(b) because then Rule 14.2 would be met (Kenny
et al., 1998).
The two-factor, four-indicator model in Figure 14.8(c)
with a single error correlation is just-identified because
df M = 0 and all three requirements for Rule 14.2 are
satisfied (e.g., each factor has two indicators that share
no error correlation with the indicator of another fac-
tor). But the two-factor, four-indicator model in Figure
14.8(d) with a different error correlation is not identified
because factor B in this model does not have two indi-
cators with unrelated error terms. It is generally easier
to identify cross-factor error correlations (e.g., Figure
14.8(c)) than within-factor error correlations (e.g., Fig-
ure 14.8(d)) when there are only two indicators per fac-
tor without imposing additional constraints.
The three-factor, six-indicator model in Figure
14.8(e) with two cross-factor error correlations is overi-
dentified because the degrees of freedom are positive
(df M = 4) and Rule 14.2 is satisfied. This model also
demonstrates that adding indicators—along with a
third factor in this case—identifies additional error cor-
relations compared with the two-factor model in Figure
14.8(c). The model in Figure 14.8(f) has an indicator
that loads on two factors. Because this model meets the
requirements of Rule 14.3 and has positive degrees of
freedom (df M = 3), it is identified.
3/22/2023 2:56:19 PM
 262 Multiple‑Indicator Approximation of Concepts

(a) Identified (b) Not identified

E1 E2 E3 E4 E1 E2 E3 E4

X1 X2 X3 X4 X1 X2 X3 X4

A A

(c) Identified (d) Not identified

E1 E2 E3 E4 E1 E2 E3 E4

X1 X2 X3 X4 X1 X2 X3 X4

A B A B

(e) Identified (f) Identified

E1 E2 E3 E4 E5 E6 E1 E2 E3 E4 E5

X1 X2 X3 X4 X5 X6 X1 X2 X3 X4 X5

A B C A B

FIGURE 14.8. Identification status of confirmatory factor analysis models with correlated errors or indicators that load on
multiple factors. All models shown in very compact graphical symbolism where scaling constants (1) and variance parameters
for factors and error terms are assumed.

Pt3Kline5E.indd 262 3/22/2023 2:56:19 PM

 15

Structural Regression Models

The most common kind of model in SEM that approximates theoretical concepts with common factors is a
structural regression (SR) model, also called a latent variable path model, or a full LISREL model
from the time when LISREL was one of the first computer programs to analyze such models; today, any mod‑
ern SEM computer tool can do so. The structural part of an SR model represents hypotheses about direct
or indirect effects among observed variables or common factors, and the measurement part represents the
correspondence between common factors and their indicators. The capability to test hypotheses about
both structural and measurement relations or about error covariances within a single model affords much
flexibility. The specification of SR models with continuous indicators and requirements for their identification
is considered first. Next, two different strategies are outlined for analyzing full SR models where every
variable in the structural model is a common factor and each has multiple indicators. The strategies address
the problem of how to locate the source(s) of specification error by separating the evaluation of the measure‑
ment part of the model from analysis of its structural part. The detailed example for this chapter follows the
two-step approach just mentioned. Also discussed in this chapter are partial SR models with single indi‑
cators for some, but not all, variables in the structural part of the model. A method for specifying the model
that explicitly controls for measurement in single indicators yet does not affect model fit is also explained.
Reflective measurement is assumed in this chapter, but the next chapter deals with the analysis of formative
measurement models in techniques for composite SEM.

FULL SR MODELS is specified as one among multiple indicators for a com-

Presented in Figure 15.1(a) is a manifest-variable
path model depicted in full McArdle–MacDonald
RAM graphical symbolism. Exogenous variable X1
is assumed to be measured without error, an assump-
tion often violated in practice. This assumption is not
required for the endogenous variables in this model,
but random error in Y1 or Y4 is manifested in their dis-
turbances. Figure 15.1(b) is a full SR model with both
structural and measurement components. Its measure-
ment model has the same three indicators represented
in the path model, X1, Y1, and Y4. Unlike the path model,
though, each of these three indicators in the SR model
mon factor. Consequently, all observed variables in
Figure 15.1(b) have error terms.
The structural model of Figure 15.1(b) represents the
same basic pattern of direct and indirect causal effects
as the path model of Figure 15.1(a) but among common
factors, or
A→B→C
The structural model just listed is recursive, but it is
also generally possible to specify an SR model with a
nonrecursive structural component. Each endogenous
factor in Figure 15.1(b) has a disturbance (DB, DC).

263

Pt3Kline5E.indd 263 3/22/2023 2:56:19 PM

 264 Multiple‑Indicator Approximation of Concepts

(a) Path model

DY1 DY4
1 1

X1 Y1 Y4

(b) Full SR model

EX1 EX2 EX3 EY1 EY2 EY3 EY4 EY5 EY6

1 1 1 1 1 1 1 1 1

X1 X2 X3 Y1 Y2 Y3 Y4 Y5 Y6

1 1 1

A B C

1 1
DB DC

FIGURE 15.1. Examples of a manifest-variable path model (a) and a corresponding full structural regression model with mul‑
tiple indicators for each common factor in the structural part (b) shown in full McArdle–MacDonald RAM graphical symbolism.

Unlike in manifest-variable path models, disturbances
for endogenous common factors in Figure 15.1(b)
reflect only omitted causes and not also measurement
error in the factor’s indicators, which are represented
in the measurement part of the model. For the same
reason, estimates of the coefficients for the paths
A→B and B→C
in Figure 15.1(b) are adjusted for measurement error,
but those for the paths
X1 → Y1 and Y1 → Y4
in Figure 15.1(a) are not so adjusted. When means are
not analyzed, observations and parameters are counted
for SR models in the same ways as they are for path
models and CFA models (i.e., Rules 7.1, 7.2, and 14.1).
Exercise 1 asks you to verify that df M = 25 for Figure
15.1(b).
Because df M ≥ 0 and all unmeasured variables—fac-
tors, indicator error terms in the measurement part, and
disturbances in the structural part—are scaled (through
ULI constraints), Figure 15.1(b) meets the necessary,
but insufficient, requirements for identification. A suf-
ficient condition that can prove identification for full
SR models is the two-step identification rule (Ander-
son & Gerbing, 1988; Bollen, 1989). The rule’s name
hints at its use: Evaluation of whether full SR models
are identified is conducted separately for each part of
the model, measurement and structural. A theme of this
evaluation is that a valid (i.e., identified) measurement

Pt3Kline5E.indd 264 3/22/2023 2:56:19 PM


model is needed before it would make sense to assess
the structural part of a full SR model. It reflects the
view that the analysis of an SR model is essentially a
path analysis conducted with the estimated variances
and covariances among the common factors. Thus, it
must be possible for the computer to derive a unique,
positive definite factor covariance matrix before coef-
ficients for direct effects between factors can be esti-
mated. The two-step identification rule is stated next:
RULE 15.1 A full SR model is identified when means
are not analyzed if
1. the measurement part respecified as a CFA model
is identified (evaluate the CFA model against Rules
14.1–14.4); and
2. the structural part is identified (evaluate the
structural model against Rule 7.4)1
The two-step identification rule is a sufficient condi-
tion: Full SR models that satisfy both parts of Rule 15.1
are identified. Evaluation of Rule 15.1 is demonstrated
next for Figure 15.2(a), which is the same model in Fig-
ure 15.1(a) but now depicted using more compact graph-
ical symbolism. As mentioned, df M = 25 (i.e., ≥ 0) and
all unmeasured variables are scaled in Figure 15.2(a),
but these facts are insufficient to prove identification.
To find out, we apply the two-step rule: The respecifica-
tion of the original full SR model as a CFA measure-
ment model is presented in Figure 15.2(b). Because this
basic CFA model has at least two indicators per factor,
it is identified. The first part of the two-step rule is met.
The structural part of the original SR model is shown
in Figure 15.2(c). Because the structural part viewed
as a path model is recursive, it, too, is identified, and
because the original SR model in Figure 15.2(a) meets
both parts of the two-step rule, it is identified—specifi-
cally, overidentified.
TWO‑STEP MODELING
Suppose that a researcher specified the full SR model in
Figure 15.2(a). The data are collected and the researcher
uses one-step modeling to analyze this model, which
1 Rule 7.4 concerns recursive structural models (i.e., they are
identified). If the structural part of an SR model is nonrecursive,
then evaluate its identification status against the rules or graphi-
cal criteria outlined in Chapter 19.
Pt3Kline5E.indd 265
Structural Regression Models 265
means that its measurement and structural components
are estimated simultaneously in a single step (i.e., the
model as shown in the figure is analyzed). The results
indicate poor fit. Now, where is the model misspecified?
The measurement part? The structural part? Or both?
With one-step modeling, it can be hard to precisely
locate the source of the problem. Two-step modeling by
Anderson and Gerbing (1988) parallels the two-step heu-
ristic (Rule 15.1) for the identification of full SR models:
1. In the first step of the analysis, the initial SR
model is respecified as a CFA measurement model,
which is then analyzed to determine whether it fits the
data. If the fit of this CFA model is poor, then not only
may the researcher’s hypotheses about measurement be
wrong, but also the fit of the original SR model may be
even worse if its structural model is overidentified. Sup-
pose that the fit of the three-factor CFA model in Figure
15.2(b) is poor. This model has three paths among the
factors that represent all possible factor covariances. In
contrast, the structural part of the initial SR model in
Figure 15.2(a) has only two paths that represent pre-
sumed direct effects. If the fit of the CFA model with
three paths among the factors is poor, then the fit of the
SR model with only two paths may be even worse. The
first step thus involves finding an adequate measure-
ment model.
2. Given a retained CFA measurement model from
the first step, the second step compares the fits of the
original SR model (with modifications to its measure-
ment part, if any, from the first step) and those with dif-
ferent structural models to one another and the fit of the
CFA model with the chi-square difference test. (This
assumes that hierarchically related models are com-
pared.) Here is the procedure: If the structural part of
an SR model is just-identified, the fits of the SR model
and the CFA respecification of it are identical because
these models are equivalent. For example, if the path
A → C were added to the SR model of Figure 15.2(a),
then it would have just as many degrees of freedom, or
df M = 24, as does the CFA model of Figure 15.2(b). (You
should verify this statement.) The original SR model
of Figure 15.1(a) with its overidentified structural part
is thus nested under the CFA model of Figure 15.2(b).
But it may be possible to trim a just-identified structural
part of an SR model without appreciable deterioration
in fit. Structural portions of SR models are respecified
according to the same general principles as in manifest-
variable path analysis.
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 266 Multiple‑Indicator Approximation of Concepts

(a) Original full SR model

X1 X2 X3 Y1 Y2 Y3 Y4 Y5 Y6

1 1 1

A B C

(b) Respecified as CFA model

X1 X2 X3 Y1 Y2 Y3 Y4 Y5 Y6

1 1 1

A B C

(c) Structural model

A B C

FIGURE 15.2. Evaluation of the two-step rule for identification of a full structural regression model presented in compact
graphical symbolism for indicator error terms in the measurement part and disturbances in the structural part.

There are some challenges when applying two-step
modeling. One is that possibilities for respecification
include all the basic options in CFA for the measure-
ment model plus all those in path analysis for the struc-
tural model. A second, related obstacle is the garden
of forking paths (Gelman & Loken, 2014), where each
respecification decision can lead to multiple options
for further changes to the original model (Chapter 11).
These possibilities can expand geometrically for very
complex SR models. A third complication is that the
method capitalizes on chance variation when hierarchi-
cally related models are tested and respecified using
the same data. Without fitting any retained SR model
to new data, it is unknown whether that model will
replicate. The only way for researchers to avoid data-
dependent respecification or getting lost in a maze of
respecification choices is to rely more on theory and
results from prior studies for guidance.2
Equivalent models are a fourth challenge. It was
mentioned that a CFA model at Step 1 and a corre-
2 This is true for any kind of structural equation model, not just
SR models, and also true for other SR model testing strategies,
not just two-step modeling.

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sponding SR model with a just-identified structural
part at Step 2 will be equivalent. Thus, the only basis
for preferring the SR model with stronger hypotheses
about causal effects among factors over the CFA model
with no causal effects (only covariances) among the
same factors is rational (i.e., argument, not analysis) or
is supported by study design (e.g., temporal precedence
in measurement). Equivalent models can also exist
within each step; specifically, there could be (and prob-
ably are) equivalent versions of a CFA model retained
at Step 1 (Chapter 14) just as there could be versions of
an SR model retained at Step 2 with equivalent struc-
tural models while holding constant the measurement
part of the model (Chapter 11). Thus, reports from two-
step modeling should (1) acknowledge the existence of
equivalent models at each step and (2) explain why any
retained models were preferred over equivalent ver-
sions.
Suppose that the CFA model analyzed at Step 1 in
two-step modeling does not fit the data. Fan and Han-
cock (2006) cautioned against viewing the measure-
ment model as something that can be easily “patched
up” through post hoc addition of cross-loadings or
error covariances until fit is satisfactory while having
no effect on the integrity of parameters at Step 2, or
path coefficients for direct effects among factors. That
is, the measurement part of an SR model is not just a
vehicle to get to estimates for the model’s structural
part. In computer simulations, Fan and Hancock (2006)
estimated the impact of adding cross-loadings or error
covariances to sample measurement models when the
population model had no such features, as summarized
next.
Over conditions that included varying magnitudes
of standardized factor loadings (.4, .6, .8), number of
indicators per factor (3, 5, 7), and sample size (N = 200,
400, 800) for a five-factor measurement model, Fan
and Hancock (2006) reported that the extent of param-
eter bias in the structural model was relatively small,
but convergence failure was somewhat more likely in
conditions with the smallest numbers of indicators per
factor, factor loadings, and sample size. Superfluous
cross-loadings tended to reduce structural parameter
estimates slightly; intrafactor error covariances inflated
estimates slightly; and interfactor error covariances
had basically little, if any, distorting effects. Overall,
the degree of bias in standard errors in the structural
model due to overparameterization of the measurement
model was about 5%. These results should not be taken
as license to respecify measurement models in any way
Pt3Kline5E.indd 267
Structural Regression Models 267
that improves fit. Instead, it is reassuring that including
excessive cross-loadings or error covariances in mea-
surement models that are otherwise correct does not
substantially bias estimates of causal effects between
factors.
If a measurement model is retained at Step 1 in two-
step modeling, there are two basic options for testing
the structural model at the Step 2: (1) The initial struc-
tural model is more sparse (overidentified) in model
building (forward search), and free parameters that cor-
respond to direct effects or disturbance covariances are
added to the model over a series of comparisons with
the chi-square difference test. (2) In model trimming
(backward search), the initial structural model is more
complex, such as just-identified with all possible paths,
and selected free parameters are constrained (usually
to zero) over subsequent comparisons of respecified
models.
Assuming a correct measurement model, Chou and
Bentler (2002) noted that the likelihood of detect-
ing the SR model with the true structural component
depends very much on the initial model specified in
model building. The reason is that as the initial model
departs from the true model, the less likely it is that
the proper respecification will occur. Model building
can also “lock in” an incorrect specification early in the
modification process. In contrast, starting with an ade-
quate but overparameterized model may lead to more
correct respecifications in model trimming. In com-
puter simulations, Chou and Bentler (2002) compared
rates of successful specification searches in model
building versus trimming for SR models with differ-
ent numbers of exogenous versus endogenous factors
all with two indicators per factor. Causal directional-
ity in all tested structural models was correct, which
is typically unknown in analyses of real data. Given
this limitation, Chou and Bentler (2002) found that the
correct model was detected about 60% of the time in
model trimming. The success rate in model building
was lower, about 20%, but hit rates in both methods
improved appreciably when respecification was guided
by a priori information.
As alternative versions of the structural part of the
model are tested, researchers should observe only slight
changes in the loadings of indicators on their respec-
tive common factors. If so, then the assumptions about
measurement may be invariant to changes in the struc-
tural part of an SR model. But if factor loadings change
appreciably when different structural models are speci-
fied, then (1) the measurement model is clearly not
3/22/2023 2:56:19 PM
 268 Multiple‑Indicator Approximation of Concepts
invariant, and (2) interpretational confounding is a
risk (Burt, 1976). This means that the empirical mean-
ing of a common factor, or the values of loadings for
its indicators, do not remain constant, as either causes
or outcomes of that factor are varied in the structural
model. Appreciably unstable loadings in Step 2 of two-
step modeling jeopardize consistent interpretation of
what the indicators measure. It is generally easier to
detect interpretational confounding in two-step model-
ing than in one-step modeling.
Some methodologists have expressed the concern
that values of standard global fit statistics (Chapter 10)
are influenced more by the measurement component of
SR models than by the structural part of these mod-
els (Anderson & Gerbing, 1988). One reason is that the
degrees of freedom for the measurement model can
far exceed those for the structural model. For exam-
ple, the structural model in Figure 15.2(c) has only a
single degree of freedom, much lower compared with
those for the measurement model in Figure 15.2(b), or
df M = 24 as a CFA model. In a review of 14 published
studies, McDonald and Ho (2002) calculated separate
values of the RMSEA for the structural and measure-
ment parts of SR models. They found that evidence
for misspecification in the structural part was gener-
ally negated by better fit of the measurement part of
retained SR models.
O’Boyle and Williams (2011) described the root
mean square error of approximation of the path
component (RMSEA-P) with its 90% confidence inter-
val that estimates the fit of the just the structural com-
ponent of an SR model. It is calculated based on the
difference between the chi-square and degrees of free-
dom for the whole SR model with both its measurement
and structural parts and the corresponding values for
the measurement part expressed as a CFA model, such
as Figure 15.2(a) versus Figure 15.2(b). So defined, its
formula has the same general form as for the standard
RMSEA (Equation 10.11). An online calculator for the
RMSEA-P is freely accessible.3
In their review of 43 published analyses, O’Boyle and
Williams (2011) found that RMSEA-P values for the
structural model only were just as favorable as RMSEA
values for the whole SR model and for the correspond-
ing CFA measurement model in just a handful of stud-
ies, about 5 or so. In about 20 studies, the differences
were more striking in that evidence for fit of the struc-
3 https://fgoeddeke.shinyapps.io/rmseap/
Pt3Kline5E.indd 268
tural model was relatively poor. A limitation of these
results is that O’Boyle and Williams (2011) applied
fixed thresholds for the RMSEA that supposedly indi-
cate “good” fit, but I cannot endorse such thresholds
for the reasons discussed in Chapter 10. Another prob-
lem is that global fit statistics like the RMSEA-P are
no substitute for examining the residuals, or local fit
(McDonald & Ho, 2002). The real details about the fit
of SR models lie in those residuals, not solely in values
of global fit statistics whether they are adjusted or not
adjusted for the difference between the structural and
measurement models.
Based on computer simulation results for CFA and
SR models under varying sample sizes, regardless of
whether the primary focus is structural or measurement
and the novelty of the research area, Mai et al. (2021)
developed flexible thresholds for the CFI and SRMR
other approximate fit indexes that supposedly detect
models with “good” fit in studies of technology man-
agement. These thresholds are called “flexible” rather
than “dynamic” because they do not take into account
the researcher’s specific model (other than its general
type; e.g., CFA vs. SR) or parameter estimates. Again,
I cannot recommend blind reliance on such thresholds,
whether static, dynamic, or flexible, especially if local
fit is not also carefully evaluated. To be fair, Mai et al.
(2021) described limitations of their tailored-fit evalu-
ation strategy, including the fact that no simulation
study can capture the whole range of models and data
analyzed in the real world, but there is no proven set of
thresholds for approximate fit indexes that work over
all types of models and data.
OTHER MODELING STRATEGIES
Two-step modeling is the not the only strategy for ana-
lyzing full SR models. There is also four-step model-
ing, which expands on on two-step modeling to include
more exploratory analyses that lead to more confirma-
tory analyses over possibly a longer series of studies
(Mulaik & Millsap, 2000). It assumes that each com-
mon factor has at least four indicators, or a sufficient
number to test for unidimensionality with the vanish-
ing tetrad test (Equation 14.5). Four indicators are also
the minimum number so that a basic single-factor CFA
model is overidentified. The researcher tests a sequence
of at least four hierarchically related models. As in two-
step modeling, if the fit of a model in four-step model-
3/22/2023 2:56:19 PM

ing with fewer constraints is poor, then a model with
even more constraints should not even be considered.
The basic steps are outlined next:
1. The least restrictive model specified at the first
step is an EFA model where each indicator loads on
all factors and the number of factors is the same as
for models analyzed in subsequent steps. This model
should be analyzed with the same estimation method,
such as default ML when the indicators are continuous
and normally distributed, as used in subsequent steps.
The techniques of ESEM or E/CFA could be used
instead of EFA at this step. This first step is intended to
test the provisional correctness of hypotheses regard-
ing the number of factors, but it cannot confirm that
hypothesis if the model fit is adequate (Hayduk & Gla-
ser, 2000).
2. Step 2 in four-step modeling corresponds to
Step 1 of two-step modeling: A CFA model is speci-
fied where some cross-loadings are fixed to zero, which
designates those indicators that do not depend on par-
ticular common factors. If the fit of the CFA model at
this step is reasonable, then it is possible to go on to
test an SR model; otherwise, the measurement model
should be revised.
3. In Step 3, the target SR model is specified with
the same pattern of fixed-to-zero cross-loadings prop-
erties as represented in the CFA model from the Step
2. In a typical sequence, the structural part of the SR
model will include fewer direct effects or unanalyzed
associations than the total number of pairwise factor
covariances in the CFA model from Step 2. But if the
structural part of the SR has as many paths as the CFA
model, then the fit of the two models, at Steps 2 and 3,
will be identical (i.e., they are equivalent). In this case,
Step 3 would be skipped (go to the next step).
4. The last step (Step 4) involves tests of prespeci-
fied hypotheses about parameters freed from the out-
set of the method (i.e., since Step 1). These tests may
involve imposing zero or other constraints that each
increase df M by one. Steps 3 and 4 of four-step model-
ing are basically a more specific statement of activities
that would fall under the Step 2 of two-step modeling.
Criticisms of four-step modeling by Hayduk and
Glaser (2000) include its reliance on having at least
four indicators per factor, which is not always prac-
Pt3Kline5E.indd 269
Structural Regression Models 269
tical or desirable when fewer indicators, including a
single best indicator, have better psychometric than
four indicators. Mulaik and Millsap (2000) noted that
having at least four indicators increases df M, which
can offset, to some extent, the limitations of a smaller
sample (e.g., estimated power in the MacCallum–
RMSEA method increases with higher df M values).
Both two-step and four-step modeling capitalize on
chance variation when models are tested and respeci-
fied using the same data. Both methods are better
than one-step modeling, where there is no separation
of measurement issues from structural issues. Also,
neither method is a gold standard for testing SR mod-
els, but there really is no such thing (Bentler, 2000).
There are also other methods, such as Green et al.’s
(2001) adjusted Bonferroni method for eliminating
model parameters in forward specification searches;
see also Bollen (2000) for more information about
testing strategies for SR models.
DETAILED EXAMPLE OF TWO‑STEP
MODELING IN A HIGH‑RISK SAMPLE
Presented in Figure 15.3 is an initial full SR model
of scholastic achievement and classroom adjustment
among students (mean grade levels of about 7–8) as a
function of general cognitive ability and degree of risk
for psychopathology. One risk indicator is based on
parental diagnosis of a major psychiatric disorder, such
as schizophrenia or bipolar disorder, and the second
indicator is the degree of low family SES (i.e., higher
scores indicate lower SES). Indicators of cognitive
ability are scores for verbal reasoning, visual–spatial
analysis, and memory from an individually adminis-
tered IQ test for children. There are two endogenous
factors, including scholastic achievement, which is
measured by reading, arithmetic, and spelling tasks
from a standardized test, and classroom adjustment
with three teacher-informant indicators about student
motivation, emotional stability, and harmony of social
relationships. In the structural model, achievement and
classroom adjustment are both specified as caused by
cognitive ability and risk, but there is no direct effect
or disturbance covariance between the two endogenous
factors. That is, the model assumes that any association
between the two endogenous factors is explained by
their common causes, the two exogenous factors. Exer-
cise 2 asks you to verify that df M = 39 for Figure 15.3.
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 270 Multiple‑Indicator Approximation of Concepts

Listed in Table 15.1 for analyses 1–2 are annotated Step 1 (CFA Model)
script files for analyzing Figure 15.3 in the two-step
For analysis 1 in Table 15.1, the model in Figure 15.3
method. The lavaan (Rosseel et al., 2023) and sem-
was respecified as a four-factor basic CFA model with
Tools (Jorgensen et al., 2022) packages are used in both
the same pattern of factor–indicator correspondence. In
analyses. All input and output files are freely accessible
contrast to the original SR model, which has five paths
on the website for this book. For pedagogical reasons,
among the four factors, the CFA model has all possible
I generated the hypothetical correlations in Table 15.2
paths (6) among the same four factors (i.e., df M = 38 for
to match the patterns of association reported by Wor-
the CFA model). In the MacCallum–RMSEA method,
land et al. (1984) for the same variables in a sample of
the power of the chi-square test for CFA model in analy-
N = 158 at-risk students. Worland et al. (1984) did not
sis 1 is low, only .46.4 Thus, the likelihood of detect-
report standard deviations, so I generated realistic val-
ing a measurement model that does not perfectly fit
ues based on studies conducted with similar measures
published around the same time (e.g., Spruill & Beck,
1986). 4 Parameters: e0 = 0, e1 = .05, df M = 38, N = 158, a = .05.

EVe EVi EMe ERe EMa ESp

1 1 1 1 1 1

Verbal Visual Memory Reading Math Spelling

1 1

1
Cognitive Achievement DAch

1
Risk Adjustment DAdj

1 1

Parent
Low SES Motivation Harmony Stability
Disorder

1 1 1 1 1
EPD ELo EMo EHa ESt

FIGURE 15.3. Initial full structural regression model of scholastic achievement and classroom adjustment as a function of
cognitive ability and risk for psychopathology shown in full McArdle–MacDonald RAM graphical symbolism.

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 Structural Regression Models 271

TABLE 15.1. Analyses, Script Files, and Packages in R for Analyses of Full
or Partial Structural Regression Models
Analysis Script files R Packages
1. Step 1 in two-step modeling for a full SR model worland-sr-step1.r lavaan
of achievement and classroom adjustment semTools

2. Step 2 in two-step modeling for a full SR model worland-sr-step2.r lavaan

of achievement and classroom adjustment semTools

3. Single-factor CFA models for tests of the CSB sauve-csb-1-factor.r lavaan

(models 1–5)

4. Partial SR model of cognitive level and symptom sauve-partial-sr.r lavaan

unawareness with single-indicator specification semTools

Note. Output files have the same names except the extension is “.out.” SR, structural regression; CFA, confir-
matory factor analysis; CSB, CogState Schizophrenia Battery.

TABLE 15.2. Input Data (Hypothetical Correlations and Standard Deviations) for Analysis
of a Full Structural Regression Model of Achievement and Classroom Adjustment
among Students at Risk for Mental Disorder
Variable 1 2 3 4 5 6 7 8 9 10 11
Cognitive
1. Verbal —
2. Visual   .70 —
3. Memory   .65   .60 —

Achievement
4. Reading   .55   .50   .45 —
5. Arithmetic   .50   .45   .40   .70 —
6. Spelling   .35   .35   .30   .55   .50 —

Adjustment
7. Motivation   .30   .30   .30   .50   .45   .44 —
8. Harmony   .25   .20   .22   .41   .28   .34   .40 —
9. Stability   .35   .32   .32   .48   .45   .42   .60   .45 —

Risk
10. Parent Disorder –.25 –.24 –.22 –.21 –.18 –.15 –.15 –.12 –.17 —
11. Low SES –.22 –.26 –.30 –.25 –.22 –.18 –.17 –.14 –.20   .42 —

SD 13.75 14.80 12.60 14.90 15.25 13.85 9.50 11.10 8.70 12.00 8.50

Note. N = 158.

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 272 Multiple‑Indicator Approximation of Concepts

the population data matrix over random samples is just Step 2 (SR Model)
under 50%. The target sample size for power ≥ .90 is
Results from Step 1 of the two-step method just sum-
N = 352, or over twice as large as the actual sample size
marized about the measurement model give the green
(N = 158).
light (permission to proceed) to directly analyze the
Analysis of the four-factor CFA model with default
original SR model with five paths in Figure 15.3 in
ML estimation in Step 1 of the two-step method con-
Step 2 of the method—see analysis 2 in Table 15.1.
verged to an admissible solution. Shown in the top part
This second analysis also with default ML converged
of Table 15.3 are values of selected global fit statistics
to an admissible solution. Reported in the lower part of
for the CFA model. The model passes the chi-square
Table 15.3 are values of global fit statistics for the SR
test, but power here is low, and we need to consider
model. Although the model passes the chi-square test—
more information about fit. Values for the RMSEA
chiML (39) = 49.747, p = .116—the fit of the SR model
and CFI are the best-possible results for each index—
with 5 paths among the factors is significantly worse
respectively, 0 and 1.0—and SRMR = .023 is not prob-
than that of CFA measurement model with 6 paths,
lematic. The 90% confidence interval for the RMSEA,
or chiD (1) = 33.535, p < .001. Although values of the
or (0, 0) is degenerate, which means it falsely suggests
RMSEA, CFI, and SRMR for the whole SR model are
that RMSEA = 0 has no sampling error. Confidence
not grossly problematic, the value of the RMSEA-P for
interval degeneracy can result when sample estima-
just the structural part of the model is troubling, or .455,
tors are equal or close to the boundaries of their values
90% CI (.314, .581).
(Kline, 2013a), which is zero for the lower bound of
Local fit of the model in Figure 15.3 is poor, too.
the RMSEA. None of the absolute correlation residuals
For example, absolute correlation residuals for several
exceed .10, and the largest correlation residual is .075
pairs of indicators for the achievement and adjustment
for the spelling and motivation variables—see the out-
factors exceed .10, and the corresponding standardized
put file for analysis 1 (Table 15.1). Likewise, none of the
residuals are usually significant, too. Selected examples
standardized residuals are significant at the .05 level, so
are listed next as indicator pair (achievement factor,
local fit seems generally satisfactory. Values of omega
adjustment factor), correlation residual, and standard-
reliability coefficients range from .577 for the risk fac-
ized residual—see the output file for analysis 2 in Table
tor to .851 for the cognitive ability factor. Thus, mea-
15.1 for more detailed information about the residuals:
surement of risk is less precise, but this factor has just
two indicators (i.e., information is limited). Given all
Reading, Motivation, .219, 3.466
these results, the basic four-factor CFA measurement
model analyzed at Step 1 is retained. Spelling, Motivation, .242, 3.348
Reading, Harmony, .199, 2.903

TABLE 15.3. Values of Selected Global Fit Statistics for Two-Step Modeling
of a Full Structural Regression Model of Achievement and Classroom Adjustment
among Students at Risk for Mental Disorder
RMSEA RMSEA-P
Model chiML dfM p chiD dfD p (90% CI) (90% CI) CFI SRMR
Measurement
Four-factor CFA 16.212 38 .999 — — — 0 (0, 0)a — 1.000 .023

Structural regression
Five paths 49.747 39 .116 33.535 1 < .001 .042 (0–.073) .455 (.314, .581) .983 .074
Six paths 16.212 38 .999 — — — 0 (0, 0)a — 1.000 .023

Note. The CFA measurement model and the SR model with six paths among factors are equivalent versions. CI, confidence interval.
aCI is degenerate (i.e., invalid).

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Based on all these results about global fit and local
fit, the initial SR model in Figure 15.3 with five paths
among the factors is rejected.
The absence of a path between the achievement and
adjustment factors in Figure 15.3 is clearly inconsistent
with the data. The three options to add such a path and
keep the structural model recursive are listed next:
Achievement → Adjustment
Adjustment → Achievement
DAch DAdj
In other words, add a direct effect between the factors
(two options) or allow their disturbances to covary. In
my experience, it would be hard to justify either direct
effect over the other: Poor scholastic skills could pos-
sibly worsen classroom adjustment just as behavioral
problems at school could negatively affect achievement.
Specification of reciprocal causation, or
Achievement  Adjustment
would make the structural model nonrecursive, but
the model would not be identified without imposing
constraints I believe would be unrealistic. We discuss
nonrecursive structural models in Chapter 19, but such
models have very particular identification require-
ments.
In this pedagogical example, next we respecify
Figure 15.3 by allowing the disturbances between the
achievement and adjustment factors to covary. This
respecified SR model is an equivalent version of the
CFA model analyzed at Step 1: Both models not only
have the maximum possible number of paths among
the factors (6), but also the values of their fit statistics,
residuals, and predicted covariances or correlations are
all identical within slight rounding error. They differ
only in their assumptions about causal effects among
factors, either none (CFA model) or in the patterns rep-
resented in the structural part Figure 15.3 plus a distur-
bance correlation (SR model).5
The input and syntax files for analysis of the respec-
5I believe it is plausible in this example that general cognitive
ability and family-related risk affect both school achievement
and classroom adjustment: Values of IQ scores are reasonably
stable among older children and adolescents, and family environ-
ment predates school enrollment.
Pt3Kline5E.indd 273
Structural Regression Models 273
ified SR model are listed for analysis 2 in Table 15.1.
This second analysis in lavaan of an SR model con-
verged to an admissible solution and, as expected,
values of fit statistics for the respecified SR model
are identical to those for the CFA model analyzed
as Step 1—see Table 15.3. Reported in Table 15.4
are parameter estimates for the measurement part
of the respecified SR model with standard errors for
all results, unstandardized and standardized. All the
results in the table—factor loadings, error variances,
and variances and covariance for the exogenous fac-
tors (Cognitive, Risk)—equal their counterparts in the
four-factor CFA model analyzed at Step 1 of two-step
modeling (see the output file for analysis 1, Table 15.1).
This is expected because the structural part of the
revised SR model with 6 paths has zero degrees of
freedom. The estimated correlation between the exog-
enous cognitive ability and risk factors, –.459, makes
sense: It is negative (higher risk, lower ability), and its
absolute value supports the hypothesis of discriminant
validity (i.e., it is not virtually 1.0).
Listed in Table 15.5 are estimates for the struc-
tural part of the respecified SR model. Given a 1-point
increase in the cognitive factor in its metric (i.e., the
common variance of its verbal reasoning indicator)
while controlling for the risk factor, the score on the
achievement factor is expected to increase by .719 points
in its metric (i.e., the common variance of its reading
skill indicator). In the standardized solution, an increase
of a full standard deviation in cognitive ability predicts
an increase in achievement of .657 standard deviations,
while controlling for risk. The absolute effect of risk on
achievement is relatively smaller: A 1-point increase
in the unstandardized metric of risk (i.e., the common
variance of its parental disorder indicator) predicts a
.175-point decrease in achievement, and an increase of
a full standard deviation in risk predicts lower achieve-
ment by .100 standard deviations, all while controlling
for cognitive ability. Exercise 3 asks you to interpret the
standardized path coefficients for effects on classroom
adjustment, and Exercise 4 asks you to compute R2 for
each endogenous factor in Table 15.5. The disturbance
correlation of .643 is the estimated partial correlation
between achievement and adjustment after controlling
for cognitive ability and risk. Thus, at least one common
unmeasured cause that is independent of both exoge-
nous factors affects achievement and adjustment in the
same direction; that is, an increase in omitted causes
lead to increases in both factors.
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 274 Multiple‑Indicator Approximation of Concepts

TABLE 15.4. Maximum Likelihood Estimates PARTIAL SR MODELS

for Indicators and Exogenous Factors in a Full WITH SINGLE INDICATORS
Structural Regression Model of Achievement
and Classroom Adjustment among Students There is an alternative to representing a single indica-
at Risk for Mental Disorder
tor in the structural part of a partial SR model as one
Unstandardized Standardized would in manifest variable path model (Figure 15.1(a)).
Parameter Estimate SE Estimate SE It requires an a priori estimate of the proportion of vari-
ance in an observed variable that is due to measurement
Factor loadings error (.10, .20, etc.). This estimate may be based on the
Cognitive researcher’s experience with a measure or on results of
Verbal 1.000 — .868 .032 prior empirical studies, including estimation of score
Visual 1.000   .090 .806 .037 reliability in the researcher’s sample. Recall that one
Memory .788   .077 .747 .043
minus a reliability coefficient, 1 – rXX, estimates the
proportion of total variance due to the type(s) of mea-
Risk surement error estimated by the method used to gener-
Parent Disorder 1.000 — .620 .100 ate the coefficient. Because a particular coefficient may
Low SES .773   .224 .677 .104 estimate only one kind of error, the quantity 1 – rXX
may underestimate the full extent of measurement
Achievement error—see the Psychometrics Primer on this book’s
Reading 1.000 — .876 .031 website. Another alternative is to conduct a sensitivity
Arithmetic .925   .083 .791 .038 analysis where the results are estimated for a range of
Spelling .678   .080 .639 .054 1 – rXX values: If the results in model testing are robust
over alternative-but-plausible estimates of score preci-
Adjustment sion, then greater confidence in such results may be
Motivation 1.000 — .761 .049 warranted.
Harmony .861   .136 .561 .065 Suppose that X1 is the only measure for an exog-
Stability .940   .114 .781 .048 enous factor A and that Y2 is the single indicator for
endogenous factor B. There are multiple indicators
Error variances (3) for a second endogenous variable, factor C. Given
rXX = .80 and rYY = .75 for, respectively, indicators X1
Verbal 46.254 9.782 .246 .056
and Y1, we can say that (1) at least 1 – .80 = .20, or 20%
Visual 76.171 12.153 .350 .060 of the total variance in X1 and (2) at least 1 – .75 = .25,
Memory 69.732 9.717 .442 .064 or 25% of the total variance in Y1 are due to random
Parent disorder 87.999 18.345 .615 .124 measurement error. Now we can specify a partial SR
Low SES 38.899 10.207 .542 .141 model like the one in Figure 15.4. Note in the figure
Reading 51.273 11.238 .232 .054 that X1 is specified as a single indicator of factor A and
Arithmetic 86.341 13.049 .374 .060 has an error term. The unstandardized error variance
is specified as a fixed parameter that equals (1 – rXX)
Spelling 112.797 14.078 .592 .068
times the observed variance, or .20 s X2 1, given rXX = .80.
Motivation 37.737 6.463 .421 .074 For example, if the observed variance of X1 is 30.00,
Harmony 83.953 10.590 .686 .073 then 20% of this value, or .20 (30.00) = 6.00, is speci-
Stability 29.306 5.386 .390 .075 fied as the error variance. Because factor A must be
scaled, the unstandardized loading for X1 is fixed to
Exogenous factor variances and covariance equal 1.0. With the specification of an error term for
Cognitive 141.612 22.097 1.000 — X1, the variance of factor A, its direct effect on fac-
Risk 55.090 19.991 1.000 — tor B, and the disturbance variance for factor B are
all estimated controlling for measurement error in the
Cognitive Risk –40.520 12.448 –.459 .098
single indicator.
Note. Standardized estimates for disturbances are proportions of un- The logic for specifying Y1 as a single indicator with
explained variance. an error term for endogenous factor B in Figure 15.4

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 Structural Regression Models 275

TABLE 15.5. Maximum Likelihood Estimates for the Structural Part

in a Full Structural Regression Model of Achievement and Classroom
Adjustment among Students at Risk for Mental Disorder
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Direct effects
Cognitive → Achievement   .719   .109 .657 .079
Risk → Achievement –.175   .190 –.100 .107
Cognitive → Adjustment   .261   .070 .431 .103
Risk → Adjustment –.146   .127 –.151 .127

Disturbance variances and covariance

Achievement 84.318 16.325 .498 .077
Adjustment 38.008 8.188 .732 .080
DAch DAdj 36.374 7.967 .643 .085

Note. Standardized estimates for disturbance variances are proportions of unexplained variance.

is similar: Briefly, given rYY = .75 for this indicator, its
error variance is fixed to equal .25 times the observed
variance of this indicator, or .25sY21. Because Y1 has an
error term, the direct effects of factors A and B and the
disturbance variance for factor C (which has multiple
indicators) are all estimated controlling for measure-
ment error. Four points should be mentioned about this
method for single-indicator respecification:
1. It does not affect the complexity of the model (i.e.,
df M is not changed) or the global model fit.
2. When a manifest outcome variable is measured
with error but it has only a disturbance, such as Y1 in
the path model of Figure 15.1(a), absolute standard-
ized path coefficients tend to be too small. This hap-
pens because (a) measurement error shows up in the
disturbance, which (b) increases the overall proportion
of unexplained variance. When this error is controlled,
such as for Y1 in Figure 15.4, absolute standardized path
coefficients tend to increase because the proportion of
unexplained variance is lower in the respecified model.
But unstandardized path coefficients are unchanged by
the specification of separate measurement error and

(1 − rXX) s 2 (1 – rYY) s 2
X1 Y1

X1 Y1 Y4 Y5 Y6

1 1 1

A B C

FIGURE 15.4. Example of a partial SR model with single indicators—respectively, X1 and Y1—of an exogenous concept and
an endogenous concept approximated by, respectively, factors A and B. Shown in compact graphical symbolism for measure‑
ment errors and disturbances. rXX, rYY are, respectively, reliability coefficients for X1 and Y1.

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 276 Multiple‑Indicator Approximation of Concepts
disturbance terms for a single indicator. An exercise in
the next section demonstrates the pattern of expected
results just described.
3. A common question is, why not just specify the
error variance for a single indicator as a free param-
eter and let the computer estimate it? Such a specifi-
cation may result in an identification problem. That is,
whether the measurement error variance for a single
indicator is identified depends on other features of the
model, such as whether the structural model is recur-
sive or nonrecursive (Bollen, 1989, pp. 172–175). It is
generally safer to fix the error variance to a constant
based on an a priori estimate—see Hayduk and Littvay
(2012) for examples.
4. A manifest variable path model such as Figure
15.1(a) can be respecified to control for measurement
error in every single indicator. This tactic is akin to fit-
ting a path model to a data matrix based on correlations
disattenuated for unreliability (see the Psychometrics
Primer on this book’s website).
5. The method described to this point assumes inde-
pendent measurement errors. Possible consequences of
neglecting to also control for correlated measurement
error and a suggested remedy are discussed in Topic
Box 15.1.
Single indicators in partial SR models are not always
measures of substantive concepts. Covariates included
in the model to control bias can also be viewed as sin-
gle indicators: They are observed variables on which
common factors are regressed and, thus, covariates are
part of the structural component of SR models. Hayduk
and Littvay (2012) recommended the single-indicator
respecification that assigns error terms to demographic
variables because such variables are sometimes mea-
sured with error, such as when a participant by acci-
dent or on purpose reports the wrong age. Specifying a
small, nonzero error variance, such as .05, or 5% of the
total variance, is safer than assuming that demographic
or other control variables are perfectly measured. The
same authors also noted that among multiple indicators
for the same factor, there may be a single best indicator
with the greatest relevance to theory. If so, then fixing
the error variance of the best indicator to a constant
using the method just described may improve fac-
tor measurement compared with freely estimating the
error variances of all indicators. This is because freely
Pt3Kline5E.indd 276
estimated error variances or covariances can become
ad hoc parameters or “fudge factors” that absorb differ-
ent types of specification errors.
If all single indicators in the structural part of an SR
model are concept measures (i.e., there are no covari-
ates), those variables can be included in a measurement
model that is evaluated at Step 1 in two-step modeling.
The model would not be a conventional CFA model
with multiple indicators per factor, but it is still a mea-
surement model, especially if each single indicator is
assigned an error term in as Figure 15.4. For example,
Brydges et al. (2017) administered a self-report mea-
sure of attention deficit hyperactivity disorder (ADHD)
symptoms to 142 adults ages 18–40 years. Participants
were also given tests of fluid intelligence, processing
speed, and working memory. Speed was measured with
three reaction time (RT) tasks, simple, two-choice, and
four-choice RT. The choice tasks required participants
to indicate where on the computer screen a target stimu-
lus appeared. Working memory tasks included memory
span (recall of pictures shown on a computer screen in
sequence), backward digit span (recall of spoken digits
in reverse order), and a computerized Corsi blocks test
(recall of the order in which nine identical, spatially
separated blocks were illuminated). Their measurement
model included two factors (speed, memory) each with
three indicators and other observed variables treated as
single indicators (Brydges et al., 2017, p. 370). Results
from analyses of the measurement model just described
informed the specification of partial SR models tested
by these authors at a second analysis step.
Brown (2015, p. 124) described the analysis of mea-
surement models where covariates are included as
single indicators, including a model with two common
factors each with three indicators and two covariates,
age and general health. An advantage of including
covariates in a measurement model at Step 1 of two-
step modeling is that it can help to avoid specification
error when covariates are added to the model only at
Step 2. For example, a covariate may have poor dis-
criminant validity relative to certain factors (i.e., they
are not distinct). Another possibility occurs when val-
ues of absolute correlations between covariates and fac-
tors are much lower than expected, which may presage
low predictive power of the covariate in a structural
model (it is an ineffective control variable) (Brown,
2015). Other suggestions for controlling measurement
through single-indicator respecification in small sam-
ples are offered in Chapter 17.
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 Structural Regression Models 277

TOPIC BOX 15.1

Controlling for Correlated Measurement Error

The respecification that controls for measurement error in single indicators depicted in Figure 15.4 assumes
independent error terms. Next, we consider an example based on Williams et al. (2013) about conse‑
quences of failing to also consider correlated measurement error. Suppose that rXX = rYY = .64 for variables
X and Y in Figure 15.5(a) that assumes independent error terms. Variable X is the single indicator for fac‑
tor A, and variable Y is the single indicator for factor B. The factor correlation is .30. For standardized
variables, the standardized loadings for both single indicators equal the square root of their reliability
coefficients, or .641/2 = .80. Assuming Figure 15.5(a) is the population model, we can use the tracing rule
to generate the expected observed correlation between the two indicators, or

rXY = .30 (.802) = .192

Thus, measurement error attenuates rXY compared with the factor correlation of .30 when the errors are
independent. The true correlation (i.e., r = .30) can be recovered by applying the classical disattenuation
for measurement error to the observed correlation (see the Psychometrics Primer on this book’s website), or
.192
=rˆXY = .30
.64 × .64
(continued)

a) rXY = .192 < .30 b) rXY = .372 > .30

.50

.60 .60

X Y X Y

.80 .80 .80 .80

A B A B

.30 .30

FIGURE 15.5. Predicted correlations between X and Y for models with independent error terms (a) and with corre‑
lated error terms (b). All variables are standardized, and rXX = rYY = .64. Standardized factor loadings are the square
root of the reliability coefficient, or .641/2 = .80, and the standardized residual path coefficients for the error terms are
the square root of the complement of the reliability coefficients, or (1 – .64)1/2 = .60.

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 278 Multiple‑Indicator Approximation of Concepts

The alternative scenario of dependent measurement errors is depicted in Figure 15.5(b), in which the
error correlation is .50, not zero. The coefficient next to the symbols for the indicator error terms in the
figure, or .60, is the standardized residual path coefficient, which is the correlation between the error terms
and the indicators. It equals for standardized variables the square root of the complements of reliability
coefficients, or (1 – .64)1/2 = .60. These residual path coefficients are irrelevant in Figure 15.5(a) with inde‑
pendent error terms, but in Figure 15.5(b) these path coefficients belong to an additional tracing between
variables X and Y; specifically, their correlation implied by the model in Figure 15.5(b) is

rXY = .30 (.802) + .50 (.602) = .372

Now rXY is a positively biased estimator of the factor correlation because rXY > r = .30. This bias is made
even worse if the researcher were to apply the classical disattenuation for measurement error that assumes
independent errors, or
.372
=rˆXY = .58
.64 × .64
which even further overestimates r = .30 compared with rXY.
As noted by Williams et al. (2013), measurement error can bias sample estimates, but not necessar‑
ily in a downward direction (underestimation). This is especially true when measurement error terms are
not independent such as in Figure 15.5(b). In this case, blind application of corrections for disattenuation
that assume independent errors can actually increase bias instead of reducing it. For single indicators like
variables X and Y in Figure 15.4, it is possible to add a parameter for an error covariation, but its value
should generally be specified as a fixed nonzero parameter; otherwise, the model may not be identified.
Also, parameters are typically fixed to nonzero constants in the unstandardized solution, not in the stan‑
dardized solution as in Figure 15.5. Suppose that rXX = .75, s X2 = 15.00, rYY = .80, and sY2 = 25.00, and the
hypothesized correlation between the measurement error terms of X and Y is .30. Given these values, the
error covariance for this pair of indicators could be specified as fixed to equal

(1− .75) 15.00 × (1− .80) 25.00 × .30 =

1.299

which is the product of the two error standard deviations and the expected error correlation (.30).

EXAMPLE FOR A PARTIAL SR MODEL
The partial SR model analyzed next was introduced in
Chapter 3. For convenience, the diagram for the final
version of this model is presented here as Figure 15.6.
Before fitting the model in the figure to the data sum-
marized in Table 15.6, I’ll briefly recap how we (i.e.,
Sauvé et al., 2019) arrived at the final version: The
sample consisted of 193 patients with nonaffective psy-
chotic disorders who attended a treatment program at
a large health institute in Montréal. A total of 61 were
classified as first episode of psychosis (FEP) and the
rest, or 132 patients, were classified as exhibiting recur-
rent multiple episodes (MEP). Data from both groups
were analyzed together for this example. The patients
were administered a total of 12 tests from the computer-
administered CogState Schizophrenia Battery (CSB)
(Pietrzak et al., 2009). Patient unawareness and misat-
tribution of four symptoms—hallucinations, delusions,
flat affect, and asociality—were rated in interviews
based on the Scale to Assess Unawareness of Mental
Disorder (SUMD) (Amador et al., 1993). Scores in
each area are summed, and higher total scores indicate
greater unawareness (i.e., less awareness of symptoms).

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 Structural Regression Models 279

ISL .360

ISLR SUMD
1
1
GML
Cognitive Symptom
Unaware
GMR

OCL

CPAL

FIGURE 15.6. Final latent variable model of cognitive capacity and symptom unawareness. Values of identifying constraints
are shown, including scaling constants for factors or error terms (1) and the error variance for the single indicator of symptom
unawareness (.360). ISL, International Shopping List; ISLR, International Shopping List Immediate Recall; GML, Groton Maze
Learning task; GMR: Groton Maze Learning task Delayed Recall; OCL, One-Card Learning task; CPAL, Continuous Paired
Associate Learning task; SUMD, Scale to Assess Unawareness of Mental Disorder. Shown in compact graphical symbolism for
error terms and disturbances. From “Cognitive Capacity Similarly Predicts Insight into Symptoms in First- and Multiple-Episode
Psychosis.” by G. Sauvé et al., 2019, Schizophrenia Research, 206, p. 239. Copyright © 2019 Elsevier B.V. Adapted with
permission.

TABLE 15.6. Input Data (Correlations, Standard Deviations) for Analysis of a Partial
Structural Regression Model of Cognitive Level and Symptom Unawareness
Indicator 1 2 3 4 5 6 7
Cognitive level
1. ISL —
2. ISLR   .753 —
3. GML   .329 .334 —
4. GMR   .316 .307 .672 —
5. OCL   .398 .347 .411 .451 —
6. CPAL   .430 .439 .526 .532 .470 —

Symptom awareness
7. SUMD –.144 –.155 –.215 –.108 –.146 –.143 —

M 22.166 7.083 6.073 4.370 .951 1.241 2.933

SD 4.713 2.670 1.664 1.009 .116 .121 1.225

Note. Input data are from Sauvé et al. (2019), N = 193. ISL, International Shopping List; ISLR, International Shopping List
Delayed Recall; GML, Groton Maze Learning task; GMR, Groton Maze Learning task Delayed Recall; OCL, One-Card
Learning task; CPAL, Continuous Paired Associate Learning task; SUMD, Scale to Assess Unawareness of Mental Disorder.
Means are reported but not analyzed.

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 280 Multiple‑Indicator Approximation of Concepts
The analysis was conducted over two steps, measure-
ment and structural. Because we did not expect all 12
CSB tests to measure general ability in the same way, we
analyzed at Step 1 a series of single-factor CFA models
for these tasks. After retaining an adequate measure-
ment model for CSB tests, in the Step 2 analysis we
specified an SR model where the SUMD is represented
as the single indicator with an error term for a symptom
unawareness factor, which is regressed on the cognitive
ability factor. The SR model just described (i.e., Figure
15.6) is equivalent to a CFA model where the two factors,
cognitive ability and symptom unawareness, simply
covary. Because general cognitive ability is relatively
stable among adults and predates illness insight, we
argued that the SR model analyzed at Step 2 is more spe-
cific and informative than its equivalent CFA version.
Before inspecting the data, we developed two guide-
lines for respecifying a single-factor CFA model for
CSB tests at the first analysis step (Sauvé et al., 2019):
1. An indicator should share at least 30% of its total
variance with the common factor, which corre-
sponds to a standardized factor loading of at least
.55 (i.e., .552 = .30). This minimum proportion of
common variance seemed consistent with some
prior factor analytic results with CSB tests (Chou et
al., 2015); specifically, a more demanding criterion,
such as .50 for a minimum proportion of common
variance, would be unrealistic.
2. After eliminating CSB tests from the model that
did not meet the first guideline just described (i.e.,
≥ 30% of variance is common), error covariances
could be added to the model, but only for pairs of
scores from the same test (e.g., ISL and ISLR in
Figure 15.6).
Listed in Table 15.1 as analysis 3 are the syntax and
output files for analyses of single-factor CFA measure-
ment models in lavaan. The initial model included
all 12 tests of the CSB, but not all attained a stan-
dardized loading of at least .55. A total of three tests
were removed from the initial model, and the respeci-
fied model was fitted to the same data. This process
was iterative: If any indicator in a respecified model
attained a standardized loading < .55, then that indica-
tor was removed from the model, and so on. A single-
Pt3Kline5E.indd 280
factor CFA model with the six indicators represented in
Figure 15.6 met the criterion for minimum factor load-
ings, but the fit to the data was relatively poor until the
two error covariances depicted in the figure were added
to make up the final measurement model for CSB tests.
Values of selected fit statistics for the final single-factor
CFA model for just the CSB tests are reported next.
The estimation method is default ML, and the analysis
converged to an admissible solution:
chiML(7) = 5.220, p = .633
RMSEA = 0, 90% CI [0, .073]
CFI = 1.000, SRMR = .023
The final single-factor measurement model passed the
exact-fit test, values of approximate fit indexes are not
problematic, all absolute correlation residuals are < .10,
and no standardized residuals are statistically signifi-
cant—see the output file for analysis 3 in Table 15.1.
Given an adequate measurement model of general
cognitive ability for CSB tests, the SR model in Fig-
ure 15.6 was analyzed at Step 2. Total scores on the
symptom unawareness measure (SUMD) were speci-
fied as the single indicator of an underlying symptom
unawareness factor. The unstandardized error variance
was fixed to equal the product of the complement for
the median SUMD reliability coefficient reported by
Raffard et al. (2010), or (1 – .76) = .24, and the sample
variance, or 1.2252 = 1.501 (Table 15.6). The value of
the product just described, or .360, is represented in
Figure 15.6 as the unstandardized error variance for the
SUMD, which is specified as a fixed parameter. Fixing
the unstandardized loading of the SUMD single indi-
cator on its factor to 1.0 completes the single-indicator
respecification that controls for unreliability.
Exercise 5 asks you to verify that df M = 12 for Fig-
ure 15.6, and Exercise 6 asks you to estimate the power
of the chi-square test for this analysis where N = 193
in the MacCallum–RMSEA method. (Hint: It is low.)
Listed for analysis 4 in Table 15.1 are the input and
output files for fitting the partial SR model in Figure
15.6 to the summary data in Table 15.6. The analysis
in lavaan with default ML estimation converged to
an admissible solution, and values of selected global fit
statistics listed next do not suggest an obvious problem
with global fit:
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chiML(12) = 9.885, p = .626
RMSEA = 0, 90% CI [0, .062]
CFI = 1.000, SRMR = .027
The value of the largest absolute correlation residual for
the partial SR model is .069 and no standardized resid-
uals are significant—see the output file for this analysis
(Table 15.1). Given all the results just summarized, the
model in Figure 15.6 is retained.
Parameter estimates for the partial SR model of cog-
nitive level and symptom unawareness are reported
in Table 15.7. The cognitive ability factor explains, on
average, about 41% of the variance in its six indicators
(AVE = .414). As expected, (1) the standardized load-
ing for the SUMD single indicator, .871, equals within
rounding error the square root of the reliability coef-
ficient specified in the analysis for this measure, or
.76. Also, (2) the complement of the squared standard-
ized factor loading for the SUMD single indicator, or
1 – .8712 is equal within rounding error to the comple-
ment of the reliability coefficient specified for this mea-
sure, or 1 – .76 = .24. The standardized disturbance
variance for the symptom unawareness factor is .936.
This means that the cognitive ability factor explains a
total of 1 – .936 = .064, or 6.4% of the total variance in
the symptom unawareness factor. The unstandardized
regression coefficient is –.105; thus, for every 1-point
increase on the cognitive factor, the symptom unaware-
ness factor is expected to decrease by .105 points (i.e.,
symptom understanding increases by this amount). In
the standardized solution, an increase in cognitive level
of a full standard deviation predicts a decrease in symp-
tom unawareness of about a quarter of a standard devia-
tion (.254).
These results just summarized suggest that although
patients suffering from psychotic disorder who have
greater cognitive capacity as measured with computer-
administered tests have better comprehension of their
symptoms, the magnitude of this relation is not extraor-
dinarily large (R2 = .064). Results of other analyses by
Sauvé et al. (2019) based on the results in Table 15.7
indicate that the effect of cognitive level on symptom
awareness did not vary appreciably by patient status
(first episode vs. multiple episodes). Exercise 7 asks
you to respecify the model in Figure 15.6 by repre-
senting the SUMD variable as one would in a mani-
Pt3Kline5E.indd 281
Structural Regression Models 281
fest variable path model, such as Y4 in Figure 15.1(a),
and then compare the results with those in Table 15.7
for the symptom unawareness outcome specified as an
observed variable, not as a common factor with a single
indicator.
SUMMARY
Structural regression (SR) models in SEM have explicit
measurement and structural components. The measure-
ment part of the model associates common factors and
indicators, just as in CFA models. But SR models also
have a structural part that represents hypotheses about
direct or indirect causal effects. If every variable in the
structural model is a common factor, then (1) the SR
model is fully latent and (2) causal hypotheses con-
cern common factors that approximate latent variables;
otherwise, the structural model has at least one single
indicator for a theoretical concept and the whole model
is partially latent. It is possible to specify that the error
variance of a single indicator is fixed to a nonzero con-
stant provided by the researcher. The constant is usu-
ally the product of the observed unstandardized vari-
ance for the indicator and the proportion of this vari-
ance that is due to measurement error. This proportion
can be specified as the complement of a score reliabil-
ity coefficient for indicator, preferably estimated in the
researcher’s own sample. This specification forces the
computer to control for measurement error in a single
indicator when estimating parameters for the structural
model. In order for an SR model to be identified, both
its measurement and structural components must be
identified. Two-step modeling in the analysis helps to
isolate potential sources of poor model fit into its two
components, measurement versus structural. Specifi-
cally, an acceptable measurement model is required
before going to the second step, which involves testing
hypotheses about the structural model. The evaluation
of SR models represents the apex in SEM family for
analyses that assume reflective measurement. The next
chapter deals with composite models as analyzed in
techniques for composite SEM that generally assume
formative measurement. Depending on the research
context, a composite model may be a viable—or even
preferred—alternative to an SR model.
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 282 Multiple‑Indicator Approximation of Concepts

TABLE 15.7. Maximum Likelihood Estimates for a Partial

Structural Regression Model of Cognitive Level and
Symptom Unawareness
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Factor loadings
Cognitive
ISL 1.000 — .546 .061
ISRL   .555 .059 .535 .062
GLM   .428 .070 .663 .055
GMR   .261 .042 .672 .054
OCL   .029 .005 .634 .069
CPAL   .037 .006 .778 .067

Unawareness
SUMD 1.000 — .871 .014

Error variances and covariances

ISL 15.498 1.784 .701 .067
ISLR 5.059 .587 .713 .066
ISL ISLR 5.764 .873 .651 .045
GML 1.543 .206 .560 .072
GMR   .562 .076 .555 .072
GML GMR   .383 .102 .412 .075
OCL   .008 .001 .598 .087
CPAL   .006 .001 .395 .104
SUMD   .360 — .241 .025

Factor variance
Cognitive 6.599 1.806 1.000 —

Direct effect and disturbance variance

Cognitive → Unaware –.105 .040 –.254 .088
Unaware 1.060 .146 .936 .045

Note. Standardized estimates for disturbance variances and error variances are pro-
portions of unexplained variance ISL, International Shopping List; ISLR, Interna-
tional Shopping List Delayed Recall; GML, Groton Maze Learning task; GMR,
Groton Maze Learning task Delayed Recall; OCL, One-Card Learning task; CPAL,
Continuous Paired Associate Learning task; SUMD, Scale to Assess Unawareness
of Mental Disorder.

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LEARN MORE
The classic work by Anderson and Gerbing (1988) outlines
the rationale of two-step modeling, Bentler (2000) describes
types of models where neither two-step nor four-step model‑
ing would be ideal, and Ropovik (2015) outlines the potential
hazards of ignoring the chi-square test followed by model
retention based solely on values of approximate fit indexes
when testing models with common factors.
EXERCISES
1. Prove that df M = 25 for Figure 15.1(b).
2. Show that df M = 39 for the full SR model in Figure
15.3.
3. Interpret the standardized path coefficients in Table
15.5 for effects on classroom adjustment.
4. Calculate R2 for each of the two endogenous factors
in Table 15.5.
5. Show that df M = 12 for Figure 15.6.
Pt3Kline5E.indd 283
Structural Regression Models 283
Anderson, J. C., & Gerbing, D. W. (1988). Structural equa‑
tion modeling in practice: A review and recommended
two-step approach. Psychological Bulletin, 103(3)
411–423.
Bentler, P. M. (2000). Rites, wrongs, and gold in model test‑
ing. Structural Equation Modeling, 7(1), 82–91.
Ropovik, I. (2015). A cautionary note on testing latent vari‑
able models. Frontiers in Psychology, 6, Article 1715.
6. Use the MacCallum–RMSEA method to estimate
the power of the chi-square test for Figure 15.6 for
a = .05, e0 = 0, and e1 = .05.
7. Respecify Figure 15.6 by representing SUMD as a
single indicator in same way as variable Y4 in the
manifest variable path model in Figure 15.1(a) (i.e.,
with just a disturbance but no separate measure-
ment error term). Fit the respecified model as just
described to the data in Table 15.6. Describe any
differences in the results compared with those in
Table 15.7 for Figure 15.6.
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 16

Composite Models

Composite-based methods for SEM, referred to here as composite SEM, approximate formative concepts
without disturbances, or emergent variables. The measurement models analyzed are composite–formative
with composite indicators (M → C block; e.g., Figure 13.2(c)). Composites constructed from error-prone
indicators in such models contain measurement error, too. Such models are practically always identified in
composite SEM because of how they are specified. Specifically, such models are parameterized in terms of
the correlations among indicators, weights for sets of indicators that form a composite, and path coefficients
for direct effects between composites. The researcher has relatively little freedom to specify models within
this framework, so analysis options are more or less limited to identified models (Henseler, 2021). The same
framework generally precludes approximation in composite SEM of formative concepts with error terms, or
composite latent constructs, based on causal–formative models with causal indicators (M → L block; e.g.,
Figure 13.2(b)), where measurement error is represented at the construct level. Such models are not generally
identified, given their parameterization as just described.
More traditional SEM techniques, such as CFA, approximate latent variables with common factors
analyzed in reflective models with effect indicators (L → M block; e.g., Figure 13.2(a)), where measurement
error is represented at the level of the indicators. Assumptions for effect indicators in reflective models are not
generally appropriate for composite or causal indicators in formative models, and vice versa (Chapter 13).
It is theoretically possible to analyze causal–formative models for composite latent constructs in traditional
SEM, but such models have quite strict requirements for identification that are described later in this chapter.
Both kinds of models just mentioned are parameterized in terms of the variances and covariances of the
exogenous variables and path coefficients and factor loadings for endogenous variables when means are
not analyzed (e.g., Rule 7.1). Software for traditional SEM, widely available since the mid-1970s (Chapter
5), has extensive capabilities for evaluating both local and global model fit in the framework just described
(e.g., Chapters 14–15).

Composite–formative models for emergent variables
can also be analyzed in computer tools for traditional
SEM, but until recently doing so has been relatively
difficult. This is because “translating” the parameter-
ization of composite models in terms of correlations,
weights, and path coefficients into the parameterization
based on variances, covariances, path coefficients, and
loadings in standard SEM computer software can be
tricky (e.g., Kline, 2013c). Special software for ana-
lyzing composite structural equation models—also
described later in this chapter—has been available
since the mid-1980s, but it generally had limited capa-
bilities for global fit testing, which narrowed the role of
composite SEM to more exploratory than confirmatory

I thank Jörg Henseler for his astute comments on a draft this chapter. Any remaining shortcomings of this presentation are entirely mine.

284

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studies. But recent technical developments and concep-
tual refinements summarized next are quickly chang-
ing the status quo:
1. Newly developed methods for global fit testing of
composite models are available in both commer-
cial and free software for composite SEM that
analyze composite–formative models for emergent
variables. Information about local model fit, or the
residuals, can also be obtained when using these
computer tools.
2. There is a now a method to specify and analyze
composite–formative models in standard SEM
computer tools that is (a) relatively straightforward
and (b) capitalizes on the advantages of global
estimation methods, such as maximum likelihood
(ML), in deriving parameter estimates and evaluat-
ing both local fit and global model fit for composite
models.
I believe the developments just summarized render
obsolete any broad characterization of techniques for
composite SEM as a junior, kiddy, or wannabee ver-
sion of traditional SEM (Chapter 1). Specifically, I
believe these two members of the SEM family will
eventually merge as simply options for proxies (i.e.,
common factors or composites) in measurement mod-
els that approximate reflective or formative constructs.
In the meantime, researchers who are familiar with
both composite and more traditional SEM can test an
even wider range of hypotheses about causal effects
between target concepts. Now, entire books are writ-
ten about composite-based SEM, including Hair et al.
(2022), Henseler (2021), Hwang and Takane, (2015),
and Latan and Noonan (2017), among others, so it is
impossible to cover the whole range in a single chap-
ter. Instead, the goal is to provide you with a sense
of both the promise and the challenges of contempo-
rary approaches to composite SEM. Software options
are described, and there is a detailed example where
reflective models and composite models are fitted to
the same data.
MODERN COMPOSITE ANALYSIS
IN SEM
Summarized next and elaborated afterward are two
contemporary approaches to analyzing composite mod-
els in SEM that support formal testing of global model
Pt3Kline5E.indd 285
Composite Models 285
fit and the evaluation of local model fit through inspec-
tion of the residuals:
1. The combination of the partial least squares path
modeling (PLS-PM) algorithm (Wold, 1982) for
estimating parameters of composite models that
analyze correlation matrices and recently developed
techniques for inferential testing of global model fit
based on nonparametric bootstrapping (Schuberth
et al., 2018). Estimators in the PLS-PM algorithm
include ordinary least squares (OLS) for recursive
models and two-stage least squares (2SLS) with
instruments for nonrecursive models, among other
options. These estimators and bootstrap tests and
confidence intervals do not assume normality. Spe-
cial software is required for this option.
2. Henseler–Ogasawara (HO) specification (Schu­
berth, 2021) provides a method for researchers to
include composites in their models that can be ana-
lyzed with standard SEM computer tools such as
Mplus, LISREL, Amos, and lavaan, among oth-
ers. The HO specification also applies to models
with both common factors that approximate latent
variables and composites that approximate emer-
gent variables.
An advantage of the second method just described
is that the whole range of capabilities in traditional
SEM, including global fit testing, evaluation of local
fit, the option to analyze covariance matrices instead of
correlation matrices, and modern techniques for deal-
ing with missing data, such as full information maxi-
mum likelihood (FIML), is available. Another is that
no special software is needed, which is convenient for
researchers already familiar with standard SEM com-
puter programs. Schuberth (2021) described additional
methods for analyzing composites, but they are not as
flexible as the two modern approaches demonstrated in
this chapter.
DISAMBIGUATION OF TERMS
Newcomers to composite SEM encounter what can
seem like a bewildering variety of overlapping names
and terms for estimation algorithms or techniques.
Thus, the aim of the discussion that follows is to help
readers navigate some of the vocabulary in this area.
The PLS-PM algorithm is an iterative computational
method for weighting composites and estimating asso-
3/22/2023 2:56:25 PM
 286 Multiple‑Indicator Approximation of Concepts
ciations between them with regression-based methods
that analyze a single equation at a time. It was devel-
oped by Wold (1982) and later expanded by Lohmöller
(1989), among others. The PLS-PM algorithm is the
main calculational engine for the technique referred to
by the same name, or just PLS-PM, which is based on
Wold’s (1982) ideas about “soft modeling” as a more
flexible alternative to “hard modeling” (i.e., traditional
SEM), one that at the time emphasized predictive rela-
tions estimated with composites over causal relations
estimated with common factors (Falk & Miller, 1992).
Early computer programs for the PLS-PM technique,
such as Lohmöller’s (1984) LVPLS (Latent Variable Path
Analysis with Partial Least Squares), added relatively
few capabilities beyond the basic PLS-PM algorithm.
For example, there was no inferential test of global model
fit in the original algorithm or a method to take explicit
account of measurement error in composites. Lack of
control for measurement error in the original PLS-PM
algorithm meant that (1) absolute estimates of correlations
among constructs are generally too small, but (2) abso-
lute estimates of path coefficients for causal effects
between them can be too small or too large (­Dijkstra &
Henseler, 2015b). It might seem that the original PLS-PM
algorithm is completely vulnerable to the biasing effects
of measurement error when composites are analyzed, but
this is not exactly true—see Topic Box 16.1.
But today there are so many extensions of the origi-
nal PLS-PM algorithm that the phrase “partial least
square path modeling” has relatively little meaning
without elaboration. For example, Dijkstra and Hensel-
er’s (2015a, 2015b) method of consistent PLS (PLSc) is
for estimating population reflective models when latent
variables are approximated with composites, not com-
mon factors as in CFA. The method disattenuates cor-
relations between composites estimated in the PLS-PM
algorithm for unreliability in observed variables. Some
computer programs that implement PLSc, described
in the next section, permit the researcher to manually
specify the reliabilities of composite scores, if such
coefficients are already known. Otherwise, composite
reliability can be estimated in the data by the coeffi-
cient rA, or rho-A, which is a consistent estimator when
the population model is reflective but the proxies are
composites.1 Rademaker et al. (2019) described the
1 The subscript (“A”) in the symbol rA designates Mode A for the
generating composite scores in the PLS-PM algorithm. Options
for weighting indicators in this algorithm are described later in
this chapter.
Pt3Kline5E.indd 286
estimation of measurement error correlations within
blocks of indicators in the PLSc method. Next, consis-
tent estimates for path coefficients are generated from
construct correlations disattenuated for measurement
error. Results of computer simulations by Dijkstra and
Henseler (2015a, 2015b) indicated that bias in PLSc
parameter estimates was generally similar to that of the
ML estimator in common factor models with a slight
advantage in PLSc results for nonnormal data.
Three additional extensions of the PLM-PM algo-
rithm are briefly described next: Schamberger et al.
(2020) described robust PLS, in which the minimum
covariance determinant (MCD) method to estimate con-
struct correlations while minimizing distorting effects
of outliers is used. The method iteratively selects repre-
sentative subsamples unaffected by outliers to estimate
population variances and covariances. The estimator is
robust up to the point where just under of the 50% of
the data consists of outliers. In contrast, Pearson cor-
relations can be greatly distorted by a single outlier
even in large samples. Robust construct correlations
are then analyzed in the PLS-PM algorithm to gener-
ate estimates of path coefficients. Their robust PLSc
method is both robust and consistent when approximat-
ing reflective constructs with composites instead of
common factors. The method of confirmatory tetrad
analysis (CTA) is incorporated in a modified PLS-PM
algorithm by Gudergan et al. (2008) called CTA-PLS.
It relies on a bootstrap vanishing tetrad test (VTT) to
distinguish a set of effect indicators for a reflective con-
struct from a set of composite indicators for a formative
construct; specifically, failing the VTT does not sup-
port the hypothesis of reflective measurement. But any
respecification of the measurement model should be
consistent with theory, not just analysis results (Chapter
13). Henseler (2021, chap. 5) described other extensions
of the PLS-PM algorithm.
We must also disambiguate the term confirma-
tory composite analysis (CCA), because it is used to
describe two very different approaches for analyzing
composite models. The original method of CCA was
developed by Henseler et al. (2014) and Schuberth et
al. (2018) as a composite-based analogue to CFA. Both
CCA and CFA share the same basic steps—specifica-
tion, identification, analysis, respecification (if neces-
sary), and reporting—and both feature inferential tests
of global model fit. The original global test in CCA is
based on an approach by Beran and Srivastava (1985)
for deriving confidence intervals in nonparametric
bootstrapping from covariance matrices. The same
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 Composite Models 287

TOPIC BOX 16.1

Composites and Measurement Error

The impact of measurement error is reduced when composites are estimated as linear combinations over
≥ 2 indicators even in methods such as the basic PLS-PM algorithm, where error variances are not directly
estimated for observed variables. Suppose that variables X1 and X2 are continuous. The variance of the
sum C = X1 + X2 can be expressed as

sC2 = s X2 + s X2 + 2cov X X (16.1)

1 2 1 2

which equals the sum of the total variance for each of X1 and X2 and twice their covariance. Each total
variance in Equation 16.1 reflects common (shared) variance and unique variance. Measurement error is
part of unique variance, but only common variance in X and Y contribute to their covariation. Thus, com‑
mon variance is counted basically four times in Equation 16.1—twice within the total variances and twice
among the covariances—­but unique variance is counted only twice within the total variances for a ratio
of 4:2, or 2:1.
A general expression for the variance of C summed over n ≥ 2 elements Xi is
n n n
sC2
= ∑ s X2 i
+ 2∑ ∑ cov X X
i j
(16.2)
=i 1 =i 1 i < j

Equation 16.2 says that with each additional element in a composite beyond two, common variance
increases quadratically while unique variance increases linearly. With n = 3 indicators, for example, com‑
mon variance is counted 9 times, or 3 times within the total variances and 6 times among the covariances
(2 × 3(2)/2 = 6). But unique variance is counted just 3 times within the total variances for a ratio of 9:3,
or 3:1, for the overall contribution of common versus unique variance. Exercise 1 asks you to demonstrate
that common variance versus unique variance contribute to a composite based on summing n = 4 elements
is 4:1. The facts just stated explain how composite reliability increases geometrically with its number of
elements (Rigdon, 2012).
Equations 16.1 and 16.2 describe composites with unit-­weighted (i.e., 1.0) elements. Differential
weights can change the relative contribution of common variance versus unique variance. For example,
the variance of C = w1 X1 + w 2 X2 is

sC2 =w1s X2 + w 2s X2 + 2 w1w 2cov X X (16.3)

1 2 1 2

where w1 and w 2 are weights. If w1 ≠ w 2 and the greater weight is applied to the element, X1 or X2, with
the most reliable scores, then the effect of underweighting unique variance compared with common vari‑
ance is exaggerated, which reduces the overall effect of measurement error even more. As Rigdon (2012)
noted, the creation of a composite itself partly achieves the goal of controlling for measurement error in
observed variables.

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 288 Multiple‑Indicator Approximation of Concepts
method underlies the Bollen–Stine bootstrap as it is
more often called in the behavioral sciences (Chapter
9). Schuberth et al. (2018) developed parallel versions
for sampling from correlation matrices, which are gen-
erally analyzed in composite SEM. The fit statistic is
the SRMR, which measures the approximate average
absolute discrepancy between the observed and model-
implied correlations (Chapter 10). The null hypothesis
for bootstrapped significance tests based on the SRMR
and related distance measures in CCA is
H0: P = P(qz) (16.4)
which predicts no difference between the population
correlation matrix P (uppercase Greek letter rho) and
the predicted correlation matrix P(qz), where qz repre-
sents model parameters estimated from standardized
scores (i.e., normal deviates).
The Henseler et al. (2014) and Schuberth et al. (2018)
technique of CCA also includes the features summa-
rized next: Unlike the basic PLS-PM algorithm, esti-
mation in CCA does not rely solely on OLS or 2SLS
estimators. This is because other estimators, such as
full-information methods for composites based on
generalized structured component analysis (Hwang &
Takane, 2015) or ML estimators when composite mod-
els are represented in HO specification and analyzed
using standard SEM computer tools, among others, are
available in CCA. There are specific identification rules
in CCA for counting numbers of observations and free
parameters, scaling unmeasured variables, and deter-
mining whether the measurement or structural parts of
composite models are identified (Henseler et al., 2021,
chap. 4). Thus, identification is just as important for
composite models analyzed in CCA as it is for reflec-
tive models analyzed in CFA.
Hair et al. (2020) also used the term “confirmatory
composite analysis,” but it refers to sets of criteria,
analysis strategies, and rules of thumb for statistical
measures of model quality applied to measurement
or structural parts of a composite model within the
PLS-PM framework. As discussed later in the chapter,
there are methods in the PLS-PM algorithm to weakly
simulate reflective measurement through selection of
options for weighting composites. But reflective mea-
surement models analyzed in techniques such as CFA
are quite different from their simulated counterparts
in the PLS-PM algorithm. In contrast, it is compos-
ite models for emergent variables that are analyzed
in CCA by Henseler et al. (2014) and Schuberth et al.
(2018). There is less emphasis on global fit testing in
Pt3Kline5E.indd 288
the methods described by Hair et al. (2020), but there is
a greater emphasis on evaluating the predictive perfor-
mance of models, such as out-of-sample prediction for
new cases. Hubona et al. (2021) referred to the suite of
Hair et al. (2020) methods and statistics as PLS-CCA
to distinguish it from CCA by Henseler et al. (2014) and
Schuberth et al. (2018).
SPECIAL COMPUTER TOOLS
Three modern computer programs that can analyze
a wide range of composite models with many of the
options and advances just described are described next.
Two are commercial products, but the third option is
free:
1. The R package cSEM (composite SEM) (Rade-
maker & Schuberth, 2022) analyzes linear, nonlinear,
multiple-group, and hierarchical models with multiple
estimators, including derivatives of the PLS-PM algo-
rithm and methods based on canonical correlation anal-
ysis, principal component analysis, and generalized
structured component analysis, among other options.2
It can estimate error correlations within a block of
indicators using consistent methods when composites
approximate reflective constructs. Nonparametric tests
of global model fit are available, and the technique of
CCA is supported (see Henseler, 2021, chap. 4). Mod-
els are specified using lavaan syntax. A different R
package with comparable features is seminr (Ray et
al., 2022).
2. The commercial program ADANCO (Advanced
Composite Modeling) (Henseler, 2022) has a graphical
user interface.3 It runs on Windows and Apple (macOS)
platform computers. The user specifies the model by
drawing it on screen without the need for syntax. The
ADANCO program analyzes a wide range of compos-
ite models, including hierarchical models and models
with mediators or moderators. Multiple estimators,
including variations of the PLS-PM algorithm and
methods based on principal components or canonical
correlation, among others, are available plus nonpara-
metric tests of global model fit. The technique of CCA
is supported (see Henseler, 2021, chap. 8). The program
can be downloaded in a 1-year trial version for a nomi-
nal cost.
2 https://m-e-rademaker.github.io/cSEM/
3 https://www.composite-modeling.com/
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 Composite Models 289

3. A popular commercial program with a graphical MOTIVATING EXAMPLE

user interface that runs on Windows or Apple (macOS)
platform computers, SmartPLS (Ringle et al., 2022)
analyzes models with estimators based on derivatives
of the PLS-PM algorithm or other methods, including
least squares methods based on total scores.4 Media-
tion, moderation, multiple-group, hierarchical, and
nonlinear models can be analyzed. The techniques
of PLS-CTA and PLS-CCA are available plus meth-
ods that assess out-of-sample prediction and or detect
unobserved heterogeneity that could potentially limit
the generalizability of the results (Hair et al., 2022,
chap. 8). There are two versions: Professional, which
requires a purchase of a license, and Student, which
is free but features more limited capabilities and is
restricted to datasets with N ≤ 100 cases. A future ver-
sion of SmartPLS will include capabilities for tradi-
tional (covariance-based) SEM. This development will
support the ongoing integration of composite SEM and
traditional SEM. (The HO specification is another such
development.)
4 https://www.smartpls.com/
A partial structural regression (SR) model that is a sub-
set of a larger model analyzed by Shen and Takeuchi
(2001, p. 406) for effects of acculturation and SES on
stress and depression is introduced next. The partici-
pants were 983 native-born Chinese Americans (5.5%
of the sample) and immigrants of Chinese descent
(94.5% of the sample) living in Southern California,
United States (U.S.). Their mean age was 38.7 years, a
total of 56% were men and 44% were women, and all
participants were employed.
Presented in Figure 16.1 is the model analyzed in
this example. Its structural part represents the hypoth-
eses that depression is directly affected by stress and
SES and that acculturation indirectly affects depres-
sion through stress. In the measurement part of the
model, indicators of acculturation include a self-report
measure about daily language use, patterns of social
contact, and participation in cultural activities where
higher scores indicate greater adaption to U.S. culture.
The reliability coefficient for the self-report scale is

Acculturation Percent Generation

Interpersonal Job
Scale Life U.S. Status

1 1

Acculturation Stress

SES Depression

1 1 1.369

Education Income SCL90D

FIGURE 16.1. Partial structural regression model of stress and depression as a function of acculturation and socioeconomic
status. The error variance for the single indicator of depression is fixed to equal 1.369.

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 290 Multiple‑Indicator Approximation of Concepts

rXX = .97. Other acculturation indicators included the
percentage of lifetime spent in the United States and
generation status, or the length of time the respon-
dent’s family resided in the United States. Both vari-
ables just mentioned were expected to share unique
variance (see the error covariance in the figure). This
is because except for first-generation immigrants,
most participants beyond the first generation would
have spent nearly all of their lives in the United States
(Shen & Takeuchi, 2001).
Indicators of SES in Figure 16.1 include annual
family income and level of education. Participants
completed two measures about stress, one about inter-
personal (relationship-oriented) stressors and the other
about job-related stressors. Higher scores indicate
greater levels of stress in each area. The single indicator
for depression is the Symptom Checklist-90 Depression
scale (SCL90D), where higher scores indicate greater
levels of clinical depression (Derogatis et al., 1976). Its
reliability coefficient is rXX = .90. Given a sample vari-
ance of 3.70 for the SCL90D, the error variance for this
single indicator is fixed to equal (1 – .90) 3.702, or 1.369
(see Figure 16.1). Exercise 2 asks you to verify that Fig-
ure 16.1 is identified, and Exercise 3 asks you to show
that df M = 16.
The data for this analysis are summarized in Table
16.1. These data are based on, but not exactly equiva-
lent to, data analyzed by Shen and Takeuchi (2001) for
their larger model. Their original data matrix is ill-
scaled because the ratio of the largest over the small-
est variance is nearly 200. There are Heywood cases
that can crop up in analyses of the original data for the
acculturation scale indicator (see Figure 16.1); specifi-
cally, its error variance can be negative. I believe this
happens because the error variance for this indicator
is nearly zero, given rXX = .97, and negative error vari-
ances are within the limits of sampling error for a pop-
ulation variance that is close to zero. To avoid technical
problems in this pedagogical analysis, I generated the
correlations in Table 16.1 to match the basic patterns of
associations in the original data matrix, and standard
deviations in the table correspond to values based on
rescaling the original variables to reduce heteroscedas-
ticity (Kline, 2011, p. 279). Also reported in Table 16.1
are variance inflation factor (VIF) values for each set of
multiple indicators. Given VIF ≤ 2.20 for all variables,

TABLE 16.1. Input Data (Correlations, Standard Deviations) for Analyses of Models
of Stress and Depression as Functions of Acculturation and Socioeconomic Status
Indicator 1 2 3 4 5 6 7 8 VIF
Acculturation
1. Acculturation scale — 1.93
2. Generation status .44 — 1.43
3. Percent life U.S. .69 .54 — 2.20

SES
4. Education .21 .08 .16 — 1.04
5. Income .23 .15 .19 .19 — 1.04

Stress
6. Interpersonal .12 .08 .08 .08 –.03 — 1.17
7. Job .09 .06 .04 .01 –.02 .38 — 1.17

Depression
8. SCL90D .03 .02 –.02 –.07 –.11 .37 .46 — —

SD 3.60 3.30 2.45 3.27 3.44 2.99 3.58 3.70 —

Note. N = 983; VIF, variance inflation factor computed for each set of multiple indicators; SCL90D, Symptom Checklist-90
Depression scale.

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 Composite Models 291

TABLE 16.2. Analyses, Methods, Script and Data Files, and Packages
in R for Models of Stress and Depression as a Function of Acculturation
and Socioeconomic Status
Analysis Script files R packages
1. Partial SR model with reflective measurement shen-partial-sr.r lavaan
component semTools

2. Zero-error variance model and partially shen-ses-composite.r lavaan

reduced form model for SES only

3. Generate standardized scores for cases based shen-generate-scores.r semTools

on sample correlations, compute VIF values lavaan
psych

4. CCA of a composite model in the PLS-PM shen-cca-ols.r cSEM

algorithm with the OLS estimator semTools
lavaan
psych

5. CCA of a composite model with the ML shen-cca-ml.r lavaan

estimator for HO specification

Note. Output files for all analyses have the same names except the extension is “.out.” The file with standard-
ized scores generated in analysis 3 is shen.csv. CCA, confirmatory composite analysis; PLS-PM, partial
least squares path modeling; OLS, ordinary least squares; ML maximum likelihood; HO, Henseler–Ogasawara.

there is relatively little concern about extreme multicol-
linearity within each of the three sets of multiple indi-
cators (there a single indicator for depression).
Listed in Table 16.2 are the syntax and output files for
fitting Figure 16.1 to the data in Table 16.1 in lavaan.
The syntax, output, and data files for all analyses in the
table can be download from this book’s website. To save
space in this example, the model in analysis 1 was not
analyzed over two steps, measurement and structural.
As we shall see, the fit of the initial model is satisfac-
tory, so there is no respecification phase. The analysis
converged to an admissible solution with the default
ML estimator. You should verify in the output file that
Figure 16.1 has acceptable fit to the data. For exam-
ple, the model passes the exact-fit test, or chiML(16) =
21.341, p = .166. The power of this test in the MacCal-
lum–RMSEA method exceeds .99, so it is very likely
over random samples that a model without perfect fit
would be detected.5 Values of no other global fit statistic
indicate deficient overall fit. Although two standardized
residuals are significant at the .05 level, the correspond-
ing absolute correlation residuals are ≤ .047. Thus, the
5 Parameters: e0 = 0, e1 = .05, df M = 19, N = 983, a = .05.
significant standardized residuals in this analysis seem
more attributable to the relatively large sample size
than to absolute magnitudes of discrepancies between
observed and predicted correlations.
Critique of Reflective Measurement
The partial SR model in Figure 16.1 has satisfactory
global fit and local fit, so let’s cheer and get on with
interpreting the parameter estimates, right? Ah, no,
and this is because the hypothesis of reflective mea-
surement is generally implausible, given the indicators
and constructs for this analysis. For example, income
and education are specified as effect indicators that
are caused by a reflective SES factor, but that logic is
flawed: Income and education, among other unmea-
sured variables, cause SES, not the reverse.
Unfortunately, it is impossible to analyze a model
such as Figure 16.2(a) where income and education are
specified as cause indicators of a formative SES con-
struct with a disturbance. The reason is identification:
Although the formative SES factor is scaled by the ref-
erence variable method, Figure 16.2(a) is not identified,
and MacCallum and Browne (1993) explained why:

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 (a) Causal indicators (not identified) (b) Composite indicators (identified)

292

Pt3Kline5E.indd 292
Acculturation Percent Generation Acculturation Percent Generation
Interpersonal Job Interpersonal Job
Scale Life U.S. Status Scale Life U.S. Status

1 1 1 1

Acculturation Stress Acculturation Stress

Education 1 Education 1

SES Depression SES Depression

Income 1.369 Income 1.369

1 1

SCL90D SCL90D

(c) No composite (identified)

Acculturation Percent Generation

Interpersonal Job
Scale Life U.S. Status

1 1

Acculturation Stress

Education

Depression

Income 1.369
1

SCL90D

FIGURE 16.2. Structural regression models with causal indicators for a latent socioeconomic status composite with a disturbance (a). Zero-error variance model
with composite indicators for an SES composite with no disturbance (b). A partially reduced form model with no SES composite (c). Model (a) is not identified, models
(b) and (c) are equivalent.

3/22/2023 2:56:26 PM

Unless a formative factor with cause indicators only
has direct effects on at least two other variables in the
model, its disturbance is not identified. This require-
ment is the 2+ emitted paths rule. Bollen and Davis
(2009, pp. 503–504) described additional requirements
for models that satisfy the 2+ emitted paths rule, but
they are only sufficient, not necessary, conditions. Wait,
there’s more: In models with multiple indirect pathways
from reflective factors to other such factors that pass
through formative factors with disturbances, some path
coefficients in the structural model may be underidenti-
fied (e.g., MacCallum & Browne, 1993, p. 537).
In Figure 16.2(a), the disturbance variance for the
latent SES composite is underidentified because this
formative factor with a disturbance emits a single direct
effect. An option to identify this parameter is to add
a direct effect from SES to stress. Now the formative
SES factor would emit two direct effects (on stress and
depression), which would satisfy the 2+ emitted paths
rule. But the hypothesis that SES directly causes stress
is not part of the original model in Figure 16.1, where
SES has no direct effect on stress. A second option to
identify the disturbance variance for SES in Figure
16.2 is to add effect indicators that are caused by SES,
not the reverse. Possible examples include measures of
perceived family wealth or financial security that are
expected to depend on a common SES factor. An SES
factor with two cause indicators and two effect indi-
cators would be identified as a stand-alone multiple-
indicators and multiple-causes (MIMIC) model (e.g.,
Figure 13.3), and the presence of at least two effect
indicators would provide a testable implication: The
two effect indicators are uncorrelated after controlling
for their common SES factor, if their error terms are
independent.
But it is not always possible to add variables, such as
effect indicators for SES in this case, to a model after
the data are collected. A second option to identify Fig-
ure 16.2(a) is to fix the disturbance variable for SES to
zero, which drops this parameter from the model. The
result would be Figure 16.2(b) with a formative SES
factor with two composite indicators, income and edu-
cation, but no disturbance. The SES “factor” is now just
a linear combination of its two indicators, which is des-
ignated in the figure by the special hexagon symbol for
a composite. That composite is scaled using the refer-
ence variable method by fixing the unstandardized path
coefficient for the direct effect of education to 1.0. With
no disturbance variance to estimate for SES, the 2+
emitted paths rule no longer applies, so Figure 16.2(b)
Pt3Kline5E.indd 293
Composite Models 293
is identified even though the SES composite emits a
single direct effect. Bollen and Davis (2009) described
models like Figure 16.2(b) as a zero-error variance
model because a composite has no error term.
A disadvantage of the model in Figure 16.2(b) is that
a single coefficient for the SES composite estimates the
combined or weighted effect of education and income
together on depression, while controlling for the direct
effect of stress. Although possible, in theory, to com-
pute separate indirect effects of education and income
on depression through the SES composite, the inter-
pretation of such effects would be problematic. This is
because the SES composite in the figure represents the
combined effect of both its indicators as a set, that is, it
does not control for the effect of one variable versus the
other the other on depression.
MacCallum and Browne (1993) noted that a compos-
ite in a zero-error variance model that emits a single
path such as SES in Figure 16.2(b) can actually be
deleted from the model with no change in overall fit.
All causal paths that passed through the composite in
the original model are replaced by direct effects in the
new model with no composite. That new model, a par-
tially reduced form model (Bollen & Davis, 2009),
is an equivalent version of the original model with the
composite. An example is the model in Figure 16.2(c),
which has no SES composite. Instead, the depression
factor is directly regressed on education and income, or
the composite indicators of SES in Figure 16.2(b). The
two models just mentioned are equivalent because any
equation for a variable in Figure 16.2(b) that includes
the composite, such as
SES → Depression
can be substituted with an equation where the com-
posite is replaced by its indicators, or education and
income, in Figure 16.2(c), with no change in model fit.
Table 16.2 for analysis 2 lists script and output files
that fit each of Figures 16.2(b)–16.2(c) to the data
in Table 16.1. Specification of the model in Figure
16.2(b), the zero-error variance model, features a spe-
cial lavaan symbol for formative measurement, “<~,”
which is used in the command
SES <~ 1*educ + income
to regress the SES composite on education and income
and to scale the composite. By default, the disturbance
variance for the SES is fixed to equal zero, which
3/22/2023 2:56:26 PM
 294 Multiple‑Indicator Approximation of Concepts
defines SES as a composite. Releasing this constraint
would specify the formative SES factor with a freely
estimated disturbance variance in Figure 16.2(a), but
that model is not identified. In the output file for this
analysis (see Table 16.2), you should verify that
1. Figure 16.2(b), the zero-error variance model, and
Figure 16.2(c), the partially reduced form model,
are equivalent models with identical global fit sta-
tistics and residuals.
2. The exact-fit test is passed, or chiML(15) = 22.294,
p = .100, and the largest absolute correlation resid-
ual is .063 (i.e., both global and local fit are reason-
able).
3. Value of R2 for indicators of acculturation, stress,
and depression and for the endogenous stress and
depression factors are also identical for both mod-
els.
4. There is a single path coefficient for the direct
effect of the SES composite on depression in Figure
16.2(b), but there are two coefficients each for sepa-
rate effects of education and income on depression
in Figure 16.2(c), all controlling for stress. Their
unstandardized values are very similar, or about
–.095, which indicates that depression is lower
when income or education are higher, again con-
trolling for stress.
Let’s continue our critique of the specification for
reflective measurement in Figures 16.1–16.2 for the
other two factors with multiple indicators, stress and
acculturation. Both interpersonal and job-related stress
are represented as outcomes of a reflective stress con-
struct, but that logic is peculiar, too. Crosswell and
Lockwood (2020) differentiated between exposures to
stressful events, or stressors, and the responses to those
events. Stressors are discrete events with the potential
to alter or unsettle usual psychological functioning. In
contrast, stress responses are the cognitive, behavioral,
or physiological reactions elicited by stressful events.
Thus, problems in relationships or at work are stressors,
not stress reactions; that is, they are not effect indica-
tors under this definition.
The specification of percent of lifetime and genera-
tion status in Figure 16.1 as effect indicators is also
puzzling. This is because these variables are histori-
cal facts determined by family history, or by how long
respondents lived in a particular country, not by any
underlying reflective construct. At best, acculturation
Pt3Kline5E.indd 294
might be an MIMIC factor with two causal indicators,
percent of lifetime and generation status, and a single
effect indicator, or scores on the self-report accultura-
tion scale. This MIMIC factor in a respecified version
of Figure 16.1 would emit two paths, one for its effect
indicator and the other for its direct effect on stress;
thus, its disturbance variance would be identified.
But without a second effect indicator for accultura-
tion, there is no testable implication for the assumption
for local independence, which requires at least a pair
of effect indicators for the same common factor with
uncorrelated error terms. Thus, the option to specify
acculturation as an MIMIC factor is not pursued fur-
ther. Next, we consider a composite-based alternative
to the common factor model in Figure 16.1.
ALTERNATIVE COMPOSITE MODEL
Presented in Figure 16.3(a) is a composite model for
emergent variables in the Shen and Takeuchi (2001)
data set. Optional diagram elements are represented
with dashed lines. The model assumes that (1) indica-
tors for the same composite may covary, but (2) indica-
tors of different composites, such as education for SES
and the SCL90D for depression, are allowed to covary
only through their respective composites. This is a
model-wide proportionality constraint on correlations
between indicators for different composites (Dijkstra,
2017). Note that the error correlation between percent
of life and generation status indicators in the common
factor model of Figure 16.1 is “absorbed” by the cor-
relation between the same two variables in the com-
posite model of Figure 16.3(a). This is because any
unique variance represented as shared by this pair of
variables in Figure 16.1 is part of their overall correla-
tion in Figure 16.3(a). The more compact diagram in
Figure 16.3(b) features symbolism from the graphical
user interface of the ADANCO computer program.
Correlations among indicators for the same composite
are assumed, but are not explicitly represented in the
compact diagram. Likewise, the correlation between
the exogenous composites, acculturation and SES, is
assumed but not shown in the compact diagram.
You may have noticed in Figure 16.3 the absence of
graphical symbols for indicator error terms or distur-
bances for the endogenous stress and depression com-
posites, which are specified as outcomes of the accul-
turation and stress composites. This is because error or
disturbance variances are not free parameters in the
3/22/2023 2:56:26 PM
 Composite Models 295

(a) Composite model for emergent variables (PLS-PM algorithm)

Acculturation Percent Generation

Interpersonal Job
Scale Life U.S. Status

w1 w2 w3 w6 w7

p1
Acculturation Stress

p3

p2
SES Depression

w4 w5 w8 = 1

Education Income SCL90D

(b) Compact representation

w1
Accul Scale w6
w2
p1 Interpersonal
Generation Acculturation Stress w7
w3 Job
Percent Life

p3

w4
Education p2 w8 = 1
w5 SES Depression SCL90D
Income

FIGURE 16.3. Composite model of stress and depression as a function of acculturation and socioeconomic status as speci‑
fied in the partial least squares path modeling (PLS-PM) algorithm (a). Compact graphical version (b). Dashed lines represent
optional graphical elements. Dominant indicators are in boldface.

Pt3Kline5E.indd 295 3/22/2023 2:56:26 PM

 296 Multiple‑Indicator Approximation of Concepts
original PLS-PM algorithm. Thus, their values cannot
be fixed, freed, or constrained in the analysis. Error
correlations can be estimated in the PLSc method when
composites estimate reflective constructs, but the idea
of overlapping error variances does not really apply in
a model for emergent variables like the one in Figure
16.3.
Outer Model
The measurement part of Figure 16.3 is also called the
outer model or synthesis model.6 The symbols wi esti-
mate the contribution of each indicator to its respec-
tive composite. Methods to generate weights for the
outer model in the PLS-PM algorithm are described in
the next section. Weights for single indicators are an
exception—their weights are 1.0, or unit weights. For
example, the weight for the single indicator of depres-
sion in the figure is w8 = 1.0, which says that indicator
and composite are identical.
Weights in the PLS-PM algorithm are usually
applied to standardized variables—raw scores con-
verted to normal deviates—which all have the same
variance, or 1.0. An advantage is that weights for stan-
dardized variables are not influenced by differences in
raw score metrics over indicators for the same compos-
ite. A disadvantage is that the basis for standardiza-
tion—the standard deviations in a particular data set—
is not invariant to sampling error (i.e., those values
change over samples). Weights are usually scaled by the
computer so that all composites are standardized, too.
In this way, variances of composites are fixed to 1.0,
which scales them (i.e., a unit variance identification
[UVI] constraint).
Analyzing standardized composites can give rise to
sign indeterminacy, which means that absolute values
for weights can be uniquely determined but not their
signs. As a result, weights can generally be multiplied
by –1.0 without affecting model fit, and it can happen
in composite analyses that indicators have weights with
signs opposite to what is expected (Henseler, 2021).
In CFA, common factors are oriented in the refer-
ence variable method by fixing a single unstandard-
ized loading to 1.0. An analogous method in composite
analyses involves the specification of dominant indi-
cators. This means that the researcher selects one indi-
cator (i.e., the dominant indicator) that should correlate
positively with its composite. If the estimated correla-
6 J. Henseler, personal communication, January 16, 2022.
Pt3Kline5E.indd 296
tion between the composite and the dominant indica-
tor is negative, then the direction of the composite is
reversed by multiplying its scores by –1.0. For example,
the acculturation scale is the dominant indicator for the
acculturation composite in Figure 16.3. This specifica-
tion guarantees that higher scores on both the scale and
its composite indicate greater adoption of United States
cultural elements. By default, the single indicator for
the depression composite in the figure is the dominant
indicator. In cases of high multicollinearity, it can hap-
pen that an indicator has a positive correlation with its
composite, but at the same time a negative weight. Due
to standardization, correlations between observed vari-
ables and composites equal standardized factor load-
ings.7
Inner Model
The inner model is the structural part of Figure 16.3. It
represents hypotheses about causal effects or noncausal
associations among emergent variables estimated by
their respective sets of composites. Its parameters
include the correlation between the exogenous compos-
ites, acculturation and SES, and the path coefficients
p1–p3 for direct effects on endogenous composites,
stress and depression. For standardized variables, coef-
ficient p1 is interpreted as a Pearson correlation because
there are no causes of stress other than acculturation,
but coefficients p2 and p3 take the form of standardized
partial regression coefficients because depression has
two correlated causes, stress and SES.
Model Parameters
and Degrees of Freedom
The number of observations for a composite model
analyzed equals the number of unique elements in the
sample correlation matrix in lower diagonal form and
excluding the 1.0s in the main diagonal. This number
can be derived using a simple rule:
RULE 16.1 If v is the number of observed variables
in the model, the number of observations equals
v(v – 1)/2 for a composite model
In Figure 16.3, there are v = 8 indicators in the model,
so the number of observations is 8(7)/2, or 28.
7 J. Henseler, personal communication, January 23, 2022.
3/22/2023 2:56:26 PM

The parameters of Figure 16.3 are defined next
(Rademaker, 2022):
RULE 16.2 Parameters of a composite model where
all observed variables contribute to proxies for
emergent variables include:
1. the number of paths (including covariances) in the
inner model;
2. the number of weights (wi) in each block of
indicators minus one; and
3. the number of unique correlations (i.e.,
observations) in each block minus one
If we apply Rule 16.2 to Figure 16.3(a), there are 4 paths
in the inner model; a total of
(3 – 1) + (2 – 1) + (2 – 1) + (1 – 1) = 4
freely estimated weights across the four blocks of indi-
cators in the outer model; and a total of
3(2)/2 + 2(1)/2 + 2(1)/2 + 1(0)/2 = 5
unique correlations over the four blocks for a total of 4 +
4 + 5 = 13 parameters altogether. With 28 observations
available to estimate 13 parameters with no constraints,
the model degrees of freedom are df M = 28 – 13 = 15.
Henseler (2021, chap. 8) described more extensive rules
for computing df M in models where some, but not all,
composites are proxies for reflective constructs.
Identification Requirements
Three general requirements for identification must be
satisfied by composite models like Figure 16.3:
RULE 16.3 Necessary but insufficient requirements
for identification of composite models are
1. df M ≥ 0;
2. every composite must be scaled; and
3. the orientation of every composite must be
determined
The second requirement just stated about scaling is
met when the computer automatically fixes the vari-
ances of composites to 1.0. The third requirement is
the sign rule (Henseler, 2021). It can be met by speci-
fying a dominant indicator for composites with mul-
Pt3Kline5E.indd 297
Composite Models 297
tiple indicators, such as education for SES in Figure
16.3.
A rule for the inner model is stated next:
RULE 16.4 The inner part of a composite model is
identified if
1. every composite has at least one nonzero path
with another variable or all but one of its weights
are fixed; and
2. the inner model is recursive
The first part of Rule 16.4 concerns that fact the “stand-
alone” composites that emit no paths are not identi-
fied unless all weights for their indicators, except for
one, are fixed in advance; otherwise, a composite must
be part of a nomological network, or connected with
other variables in the model, to be identified (Henseler,
2021). The second part of Rule 16.4 concerns recursive
structural models, which are identified. Nonrecursive
inner models can also be analyzed in composite SEM,
if they are identified (Chapter 19).
Figure 16.3 satisfies each of the three parts of Rule
16.3 because df M = 15 (i.e., ≥ 0), every composite is
scaled when its variance is fixed to 1.0 in the analysis,
and each composite is oriented through specification
of a dominant indicator. These two features, scaling
and orientation, also identify the outer model in the
figure. Rule 16.4 is also met because each composite
of the inner model in the figure is connected with at
least one other composite, and the whole inner model is
recursive. Henseler (2021, chap. 4) described extended
identification rules for models where some composites
approximate latent variables in reflective measurement
models.
PARTIAL LEAST SQUARES PATH
MODELING ALGORITHM
Outlined in Table 16.3 are the four basic steps in the
original PLS-PM algorithm (Rigdon, 2013). At initial-
ization (Step 1), weights in each block of composite
indicators are fixed to equality, such as w1 = w2 = w3
in Figure 16.3 for the indicators of acculturation, and
the weights are scaled to standardize each composite.
These starting values for weights are the initial values
in Step 2, which proceeds through iterations alternating
between outer estimation of composites as weighted
combinations of their indicators in the outer model and
3/22/2023 2:56:26 PM
 298 Multiple‑Indicator Approximation of Concepts

TABLE 16.3. Analysis Steps in the Partial Least Squares Path Modeling Algorithm
Step Name Description
1 Initialization Starting values for weights wi (equal within blocks)

2 Iterative steps Continue until stopping criterion is reached (change in outer

weights is less than predefined minimum)
2a Outer estimation Express each composite as a weighted combination of its
indicators
2b Estimate inner weights Estimate inner weights eij for each pair of adjacent composites in
the inner model
2c Inner estimation Regress each composite on others adjacent to it based on the eij
weights from step 2b
2d Estimate weights Update weights wi

3 After convergence
3a Calculate composite scores Use wi estimates in final iteration
3b Estimate path coefficients OLS regression of each endogenous composite on its presumed
cause(s), given the inner model

4 Estimate standard errors or Nonparametric bootstrapping

confidence intervals

inner estimation of composites as weighted combina-
tion of other composites based on the structural part
of the model. The inner weights eij mentioned in Table
16.3 only play a role during the iterative phase of the
PLS-PM algorithm, and their values are not typically
printed by the computer as part of the output. Estimates
of wi and eij are updated within each iteration so that
(1) the composites remain standardized and (2) predic-
tion of endogenous composites is optimal (i.e., R2 is
maximized).
Iterative estimation at Step 2 in the PLS-PM algo-
rithm terminates when the stopping criterion is
reached—see Table 16.3. That criterion is a predefined
minimum change in values of weights wi between two
successive iterations. If this change is less than the cri-
terion value, iterative estimation has converged to the
final set of estimates for the weights. Convergence fail-
ure can happen in the PLS-PM algorithm, but perhaps
only in cases rarely encountered in practice (Henseler,
2010). Failure of iterative estimation is a much more
frequent problem in CFA.
After convergence, two things happen at Step 3:
Scores for each composite are computed based on
the final set of wi values (Step 3a; Table 16.3). Unlike
indeterminant factor scores based on common factors
in CFA, there is only a single, unique way to com-
pute weights in the PLS-PM algorithm. Some com-
puter programs also generate loadings for the outer
model. A loading estimates the Pearson correlation
between an indicator and its composite. Loadings can
be expressed as transformations of the outer weights
based on the sample correlation matrix, and vice versa
(e.g., Henseler, 2021, p. 93). In contrast, wi values are
not generally interpreted as correlations; instead, they
are scaled to generate standardized scores on the com-
posites. Next (Step 3b), path coefficients pi are esti-
mated in a series of regression analyses, given the pat-
tern of correlations or direct effects specified for the
inner model. Because the PLS-PM algorithm makes no
distributional assumptions, it relies on nonparametric
bootstrapping in Step 4 to estimate standard errors or
confidence intervals for weights, loadings, correlations,
and path coefficients.
Options for Weights
Computer programs for PLS-PM analyses generally
offer a choice of methods for calculating weights wi for
the outer model and inner weights eij at Step 2b (Table
16.3). The choice of inner weights is not generally as
important as the choice of weights for the indicators.
For example, in perhaps most analyses with second-

Pt3Kline5E.indd 298 3/22/2023 2:56:26 PM


order constructs, the results should be very similar
over different options for the inner weights (Noonan &
Wold, 1982). Perhaps the most general choice is fac-
torial (factor) weighting, where the inner weights are
the estimated correlations between each pair of com-
posites. They apply in both recursive and nonrecur-
sive models, they take account of correlations between
explanatory composites like SES and acculturation in
Figure 16.3, and they are a good general choice when
correlations within blocks of indicators for the same
composite are relatively low. Esposito Vinzi et al.
(2010), Henseler (2021), and Hair et al. (2022) describe
additional options for inner weights.
There are two general types of weights for composite
indicators, user-defined and empirical. User-specified
weights or fixed weights are predefined values estab-
lished before data analysis. An example is the specifi-
cation of unit weights (1.0) for multiple indicators of the
same composite, which equalizes their contributions
to the composite. Unit weights are typically rescaled
in the analysis so that the composite is standardized.
This means that weights within each block of com-
posite indicators will be equal, but their values in the
final iteration may not equal 1.0. Unit weights are not
affected by sampling error, and they might be preferred
in very small samples with relatively low R2 values or
low correlations among indicators, such as < .20 for
both (Becker et al., 2013).
Three options for generating empirical weights
or unknown weights estimated in the data (Esposito
Vinzi et al., 2010; Henseler, 2021) are described next:
1. The option PLS Mode A generates correlation
weights, which are generated as bivariate correla-
tions between composites and their indicators, but they
ignore intercorrelations among indicators for the same
composite. Conceptually, Mode A weights are gener-
ated by regressing each indicator on its associated com-
posite; that is, an indicator is modeled as the criterion
and its predictor is the composite. Correlation weights
do not maximize in-sample prediction and they are
not consistent estimators when the population model
is reflective (Henseler, 2021). The R2 values generated
by correlation weights may be the closest to population
values compared with other weighting schemes for the
outer model. Correlation weights might be preferred in
small- to medium-size samples (e.g., N = 100–500) or
when R2 values are low to medium (e.g., R2 = .20–.60),
especially when indicators for the same composite are
appreciably collinear (Becker et al., 2013).
Pt3Kline5E.indd 299
Composite Models 299
2. The method PLS Mode B generates regression
weights, which are basically partial regression coef-
ficients that control for intercorrelations among indi-
cators of the same composite. Conceptually, Mode B
weights are generated by regressing each composite on
all its indicators, which models the composite as the
criterion with the indicators as predictors. Because
regression weights take account of all intercorrelations
within a block of indicators, their values maximize in-
sample prediction at the cost of lower performance in
out-of-sample prediction relative to correlation weights.
In small samples, R2 values generated by regression
weights can overestimate the corresponding population
values by appreciable amounts (Becker et al., 2013).
Regression weights can also be adversely affected
by strong collinearity within blocks of indicators. For
example, it can happen that some indicator weights are
negative even though bivariate correlations between a
composite and its indicators are all positive. This result
is not a computer error, but it can complicate interpre-
tation; specifically, if indicators represent quantities
such as prices of goods or frequency counts, then nega-
tive coefficients are not very meaningful. Regression
weights generated in PLS Mode B are consistent esti-
mators for composite models like Figure 16.3 (Dijkstra,
2017). Regression weights generally perform as well as
correlation weights in larger samples, such as N > 500
or so, or when R2 > .60 or so, but regression weights
might be preferred when correlations among indicators
are relatively low (Becker et al., 2013).
3. The method PLS Mode BNNLS, implemented
in the R package cSEM, is an advanced option that
avoids negative weights when all bivariate correlations
among indicators and their composite are positive. It is
based on nonnegative least squares (NNLS), a type
of constrained least squares estimation that generates
positive regressions weights for sets of variables that
are positively correlated. Dijkstra and Henseler (2011)
applied NNLS to construct best-fitting proper indices
(BFPI) in composite analyses that (a) take into account
nonlinear relations between blocks of variables and (b)
generate indicator weights that are sign-restricted (i.e.,
> 0) in predefined ways.
You should know that PLS Mode A and Mode B
are merely different weighting schemes that gener-
ate, respectively, correlation weights versus regression
weights for the outer model (Rigdon, 2013). In both
modes, composites as proxies for concepts are ana-
lyzed. Unfortunately, Mode A is too often equated with
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 300 Multiple‑Indicator Approximation of Concepts
“reflective measurement” and Mode B with “formative
measurement” in some widely cited publications about
the PLS-PM method published roughly before 2015—
see Henseler (2021, p. 96) for an extensive list. It is
also true that specification of Mode A is represented
in the graphical user interface of some computer tools,
such as SmartPLS, with arrows that point from circles,
which symbolize concepts, to rectangles that represent
indicators, a visual display suggesting reflective mea-
surement (e.g., Figure 13.2(a) but without error terms).
In contrast, specification of Mode B in SmartPLS is
represented graphically in the same way except that the
arrows are reversed, that is, they point from rectangles
to circles, which suggests formative measurement (e.g.,
Figure 13.2(b) but with no disturbance).
But conflating Mode A with reflective measurement
and Mode B with formative measurement in the PLS-
PM algorithm is not justified for the reasons summa-
rized next: Model equations are not simultaneously
estimated in Mode A as they are when common fac-
tor models are analyzed in CFA (Rigdon, 2013). It is
total variance, not common variance, that is analyzed
in both Mode A and Mode B. That is, neither weight-
ing scheme removes unique indicator variance from the
data matrix. In contrast, unique variance is removed
from the data matrix when common factor models are
analyzed in CFA. The real difference between Mode
A and Mode B in the PLS-PM algorithm is the choice
between, respectively, analyzing regression-weighted
composites versus correlation-weighted composites
(Rigdon, 2016). The specification of Mode A in PLSc,
a consistent estimator when the population model is
reflective, provides a closer simulation of reflective
measurement due to disattenuation for measurement
error.
PLS‑PM ANALYSIS
OF THE COMPOSITE MODEL
For analysis 3 in Table 16.2, standardized scores for
N = 983 cases that exactly matched the correlation
matrix for the Shen and Takeuchi (2001) data in Table
16.1 were generated with the R package semTools (Jor-
gensen et al., 2022). In the same analysis, I show you
how to compute the VIF for each block of multiple
indicators (3 sets in total) in standard regression analy-
ses. In analysis 4, the composite model in Figure 16.3
was fitted to the generated data just described in the R
package cSEM. The method is the basic PLS-PM algo-
rithm, the estimator is OLS, and PLS Mode A weights
Pt3Kline5E.indd 300
were specified to enhance the possibility that the results
generalize to other samples. The use of Mode A is not
viewed in this analysis as simulating reflective mea-
surement.
The cSEM package automatically checks for solu-
tion admissibility including whether estimation con-
verged, all absolute standardized factors loading are
< 1.0, and all model-implied correlation matrices are at
least positive semidefinite, of which positive definite
matrices (Chapter 4) are a subset, except that a posi-
tive semidefinite matrix has at least one eigenvalue that
is zero while all the rest are positive (i.e., there is no
matrix inverse). No solution admissibility problems
were detected by cSEM.8
The value of the SRMR for the whole model is .025.
In the Schuberth et al. (2018) nonparametric model
fit test, the computer transforms the data so that they
exactly match the model-implied correlation matrix.
Next, bootstrapped samples are selected from the trans-
formed data, say, 1,000 times, and the 95th percentile in
the bootstrapped sampling distribution for the SRMR
is determined. In this analysis, the 95th percentile for
the SRMR is .038. Because the observed value of the
SRMR, or .025, is less than the critical value, or .038,
the model passes the global fit test at the .05 level. The
cSEM program also computes other global fit statistics
that measure the distance between the sample and pre-
dicted correlation matrices, but these test statistics are
not described here—see Henseler (2021, chap. 6) for
more information.
The cSEM package can optionally print values
of parametric global fit statistics of the kind often
reported in covariance-based SEM. Examples include
a model chi-square with df M, the RMSEA, and the CFI,
among others. But you should know that the suitability
of these parametric global fit statistics for a compos-
ite model is unknown; thus, researchers should avoid
interpreting them in the same way as in CFA analyses
with continuous indicators. For example, the chi-square
for the composite model in this analysis is based on the
difference between the sample and predicted correla-
tion matrices, not the corresponding covariance matri-
ces. The standard model chi-square test in covariance-
based SEM assumes unstandardized variables, so the
8I also fitted the same model to the data in SmartPLS 3 and
ADANCO 2.3 with comparable analysis options. Parameters
estimates are equal within very slight rounding error over all
three programs, and results of bootstrapped tests for overall
model fit in cSEM and ADANCO are likewise the same (this
method was not available in SmartPLS 3).
3/22/2023 2:56:26 PM

p value for the chi-square statistic in this analysis with
standardized variables could be meaningless.
It is just as critical in composite SEM to evaluate
local model fit by inspecting the residuals as is done
in CFA and related techniques. The cSEM package
generates the model-implied correlation matrix as an
option, but it does not print correlation residuals, or
differences between the sample and predicted matri-
ces. In the script file for analysis 4 in Table 16.2, I
show you how to subtract the predicted correlation
matrix computed in cSEM from the sample correla-
tion matrix, which generates the correlation residu-
als. None of these residuals exceeded .10 in absolute
value, and their values ranged from –.053 to .052 (see
the output file), so local fit seems acceptable. Values
of parameter estimates and their bootstrap standard
errors appear reasonable, and high multicollinearity
within blocks of indicators for the same composite is
not a problem for these data (Table 16.1). Given all
these results, the composite model in Figure 16.3 is
retained. Parameter estimates for this analysis are
reported below.
HENSELER–OGASAWARA
SPECIFICATION AND ML ANALYSIS
A limitation of the analysis just described is that the
composite model in Figure 16.3 was fitted to a correla-
tion matrix, not a covariance matrix, which may com-
plicate the generalizability of the results to samples
with different variances on the original variables. A
second drawback is that special software is needed (i.e.,
cSEM), but that issue per se is not a major obstacle.
Presented in Figure 16.4 is the HO specification of the
composite model in Figure 16.3 that permits the model
to be fitted to a covariance matrix with the ML method
or other estimators (GLS, WLS, etc.) using a standard
SEM computer tool. The number of free parameters
and the value of df M are unaffected by HO specifica-
tion. For example, we determined that df M = 15 for the
composite model in Figure 16.3; thus, df M = 15 for the
HO specification of the same model, too.
The model diagram for HO specification is presented
in Figure 16.4. This diagram might seem confusing at
first glance. For example, arrows point from the sub-
stantive composites for acculturation, SES, stress, and
depression to their indicators, which does not show, in
an intuitive way, that these composites are weighted
combinations of their indicators. Instead, relations
between substantive composites and their indicators
Pt3Kline5E.indd 301
Composite Models 301
are represented in the figure as loadings instead of
weights, which parallels the specification of common
factor models.
Another feature of Figure 16.4 is the presence of a
second set of composites labeled Ex1–Ex4, which rep-
resent excrescent variables. They are linear combina-
tions that (1) capture remaining indicator variance not
extracted by their corresponding substantive compos-
ites and (2) are unrelated to all other variables in the
model, including each another (Schuberth, 2021). For
example, excrescent variables Ex1 and Ex2 in Figure
16.4 account for variation among the three indicators
of acculturation that does not overlap with their sub-
stantive composite. The number of excrescent variables
required for each set of indicators is one less than the
number of variables in that set. Thus, a single excres-
cent variable is needed for each pair of indicators for
the stress and SES composites—respectively, Ex3 and
Ex4 —and none is required for the single indicator of
depression. Excrescent variables are needed for cor-
rect model parameterization, but analysis results for
them have no meaningful interpretation. Although not
explicitly shown in the diagram, the error variances for
all indicators are fixed to zero except for the single indi-
cator of depression, which is fixed to equal 1.369, just
as in the partial SR model in Figure 16.1.
What is more straightforward is that the HO specifi-
cation depicted in Figure 16.4 can be directly translated
into the syntax for a standard SEM tool—Mplus, EQS,
Amos, LISREL, lavaan, among others—and fitted
to the data without first standardizing the raw scores.
Model parameters are counted in the conventional way,
too, as the variances and covariances of exogenous
variables and direct effects on endogenous variables
when means are not analyzed (Rule 7.1). For Figure
16.4, these include
1. 8 variances (4 for excrescent variables [Ex1–Ex4],
2 for exogenous substantive composites [accultura-
tion, SES], and 2 for endogenous composites [stress,
depression]);
2. 1 covariance between exogenous composites;
3. 9 loadings of endogenous variables (4 for indica-
tors of substantive composites, 5 for indicators of
excrescent variables); and
4. 3 path coefficients for direct effects on endogenous
composites,
which altogether equals 21. When fitted to a covariance
matrix for 7 variables, there are 7(8)/2 = 36 observa-
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 302 Multiple‑Indicator Approximation of Concepts

Ex1 Ex2 Ex3

1 1 1

Acculturation Percent Generation

Interpersonal Job
Scale Life U.S. Status

1 1

Acculturation Stress

SES Depression

1.369
1 1

Education Income SCL90D

Ex4

FIGURE 16.4. Composite model of stress and depression as a function of acculturation and socioeconomic status repre‑
sented in Henseler–Ogasawara specification with emergent variables that approximate formative concepts and excrescent
variables (Ex) that account for all remaining variation after extraction of emergent variables. Error terms for all indicators are
fixed to equal zero except for the single-indicator of depression for which error variance is fixed to 1.369. Variances for all
emergent and excrescent variables are fixed to equal 1.0.

tion, so df M = 36 – 21 = 15 for Figure 16.4, which is the of the percent of life and generation status indicators
same value for the composite model in Figure 16.3. on the acculturation composite—see the syntax file for
Reported in Table 16.2 for analysis 5 are the syn- this analysis. Values of selected global fit statistics are
tax and output files for fitting Figure 16.4 to a covari- reported next:
ance matrix assembled from the data in Table 16.1 in
lavaan. The estimator is default ML. The analysis chiML(15) = 19.334, p = .199
converged to an admissible solution, although it was RMSEA = .017, 90% CI [0, .037]
necessary to specify start values of zero for loadings CFI = .997, SRMR = .017

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The model passes the chi-square test for its fit to the
sample covariance matrix, and values for approximate
fit indexes are not troublesome. None of the standard-
ized residuals for differences between observed and
predicted covariances is significant at the .05 level, and
the largest absolute correlation residual is .051—see the
output file for analysis 5 in Table 16.2. Given all these
results, the model in Figure 16.4 is retained.
Listed in the second column of Table 16.4 are OLS
estimates of loadings for the indicators in Figure 16.3
analyzed with the PLS-PM method in the cSEM pack-
age (analysis 4, Table 16.2). All variables are standard-
ized in this analysis, so the unstandardized and stan-
dardized solutions are the same. The third column of
the table lists ML estimates for the same indicators;
in Figure 16.4 they are analyzed in lavaan with the
default ML estimator (analysis 5, Table 16.2). Distinct
unstandardized and standardized solutions are avail-
able in this analysis with covariances. Over both sets
of results, all indicators have relatively highly correla-
tions with their respective composites. For example,
the range of correlations for composite indicators of
acculturation is .750–.895 in OLS estimation, and the
TABLE 16.4. Ordinary Least Squares (OLS) and Maximum Likelihood
(ML) Estimates of Loadings for Composite Indicators in a Model of Stress
and Depression as Functions of Acculturation and Socioeconomic Status
Indicator
Acculturation
Acculturation scale
Generation status
Percent life in U.S.
SES
Education
Income
Stress
Interpersonal
Job
Depression
SCL90D
aStandardized (bootstrap standard error).
bUnstandardized (standard error) standardized.
Pt3Kline5E.indd 303
Composite Models 303
range of correlations for the same indicators of accul-
turation is .755–.991 in ML estimation. Unstandard-
ized loadings are available only for the ML estimator,
and these results are consistent with expectations. For
example, education is the reference indicator for the
SES composite (see Figure 16.4). Its unstandardized
loading is fixed to 1.0, and there is no standard error.
Only the unstandardized estimates in Table 16.5 would
be directly comparable over samples with appreciably
unequal variances on the same measures.
Listed in the second column of Table 16.5 are the
OLS estimates for structural (inner model) parameters
(i.e., path coefficients) of Figure 16.3, and in the third
column of the table are the corresponding ML esti-
mates for Figure 16.4. Only the ML estimates feature
distinct unstandardized and standardized solutions.
Values of standardized results are similar across both
estimators, so only ML estimates are described next.
Stress is expected to increase by .122 standard devia-
tions for an increase in acculturation of one standard
deviation. Thus, respondents of Chinese descent living
in the United States who reported greater adaption to
that culture reported higher level of stress. Depression
Estimator
OLSa MLb
.895 (.040) 1.000 (—) .991
.750 (.070) .519 (.051) .755
.858 (.042) .507 (.086) .547
.644 (.169) 1.000 (—) .728
.874 (.167) 1.173 (.196) .811
.794 (.020) 1.000 (—) .728
.864 (.013) 1.440 (.122) .899
1.000 (—) 1.000 (—) .948
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 304 Multiple‑Indicator Approximation of Concepts

TABLE 16.5. Ordinary Least Squares (OLS) and Maximum Likelihood

(ML) Estimates of Structural Parameters for a Model of Stress
and Depression as Functions of Acculturation and Socioeconomic Status
Estimator
Parameter OLSa MLb
Direct effects
Acculturation → Stress .117 (.028) .076 (.020) .122
SES → Depression –.121 (.032) –.190 (.046) –.129
Stress → Depression .504 (.023) .839 (.064) .535

Covariance
Acculturation SES .275 (.045) 2.447 (.367) .289

Disturbance variances
Stress — 1.000 (—) .728
Depression — 1.440 (.122) .899

Note. Values of R2 for stress and depression in OLS estimation are, respectively, .014 and .268, and the cor-
responding values in ML estimation are, respectively, .015 and .298.
aStandardized (bootstrap standard error).

bUnstandardized (standard error) standardized.

is estimated to decrease by .129 standard deviations,
given an increase in SES of 1 standard deviation while
controlling for stress. When holding SES constant,
depression should increase by .535 standard deviations,
given an increase in stress of 1 standard deviation.
Exercise 4 asks you to compare standardized estimates
for the indirect effect of acculturation on depression
through stress in the output for analysis 4 of Figure 16.3
(i.e., OLS) with the corresponding estimates in the out-
put for analysis 5 of Figure 16.4 (i.e., ML).
To sum up and offer perspective, I believe that esti-
mates for the partial SR model in Figure 16.1 are suspect
because they assume reflective measurement, which is
generally implausible for the reasons explained. But the
composite SEM method of CCA offers a meaningful
alternative in this case. One approach fits a composite
model to a correlation matrix in the PLS-PM algorithm
with the added capabilities to test global model fit and
evaluate local fit through the inspection of residuals.
The second approach fits a composite model specified
so that it can be analyzed with standard SEM computer
tools and fitted to a covariance matrix. Of the two meth-
ods, the second approach just mentioned based on HO
specification is quite accessible to researchers familiar
mainly with standard SEM software. It also offers a
bridge between the analysis of composites as proxies
for emergent variables in formative measurement mod-
els and the analysis of common factors as proxies for
latent variables in reflective models. For example, both
types of proxies can be analyzed in the same model,
given a substantive basis to do so—see Henseler (2021)
for examples. A family reunion indeed.
SUMMARY
Rigdon et al.’s (2017) perspective on the comparison of
SEM techniques that model concepts as common fac-
tors versus composites provides an excellent summary
for this chapter: There is no single modeling technique
that works in all situations, so the question, “Which
one is best?” is pointless. The choice between the two
approaches may also be of secondary importance com-
pared with the decisions about research design, sam-
pling, measurement, and data integrity. This is because
no statistical technique, however complex or sophisti-
cated, can fix up bad data. Avoid falling into mechanis-
tic, ritualized, or cookie-cutter use of either approach
that relies on unsubstantiated “golden rules” about
cut-off values for fit statistics or effect sizes. There are
relatively few occasions when a single statistical model
is consistent with the data to the exclusion of all other

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models. This is the lesson of equivalent models but now
extended to multiple alternative techniques such as con-
ducting SEM with common factors versus composites.
Choose the method with the strongest theoretical justi-
fication. For example, a research problem grounded in
classical measurement theory would point to traditional
SEM as the likely best choice, but work based on other
assumptions about measurement, such as synthesis the-
ory, is more consistent with composite SEM. In more
exploratory research where the strict assumptions of
traditional SEM are unlikely to hold, composite SEM
techniques allow for greater flexibility. Neither tech-
nique is a silver bullet, or a magic cure for complex
research problems. Above all, focus on the actual phe-
nomenon to be studied and “don’t let the modeling get
in the way of the learning” (Rigdon et al., 2017, p. 12).
Part IV deals with special problems and more advanced
analyses. Best practices are covered in the last chapter,
which may be the most important one in the book.
EXERCISES
1. Verify that the relative contribution of common
variance versus unique variance is 4:1 for a com-
posite with n = 4 equally weighted elements (see
Topic Box 16.1).
2. Prove that Figure 16.1 is identified.
Pt3Kline5E.indd 305
Composite Models 305
LEARN MORE
Henseler (2021) gives a modern perspective on composite-
based SEM, the book by Latan and Noonan (2017) deals
with advanced applications of PLS-PM, and Rigdon et al.
(2017) compare composite-based and common-factor-based
approaches to statistical modeling and offer suggestions for
applied researchers about their use.
Henseler, J. (2021). Composite-based structural equation
modeling: Analyzing latent and emergent variables.
Guilford Press.
Latan, H., & Noonan, R. (Eds.). (2017). Partial least squares
path modeling: Basic concepts, methodological issues
and applications. Springer.
Rigdon, E. E., Sarstedt, M., & Ringle, C. M. (2017). On
comparing results from CB-SEM and PLS-SEM. Journal of
Research and Management, 39(3), 4–16.
3. Show that df M = 16 for Figure 16.1.
4. Compare the standardized estimates for the indirect
effect of acculturation on depression through stress
in analysis 4 for Figure 16.3 with those for the same
effect in analysis 5 for Figure 16.4 (see Table 16.2).
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Pt3Kline5E.indd 306 3/22/2023 2:56:29 PM
 Part IV

Advanced Techniques

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Pt4Kline5E.indd 308 3/22/2023 2:05:46 PM
 17

Analyses in Small Samples

Analysis of complex statistical models in small samples is challenging when using multivariate statistical
techniques, and SEM is no exception. One reason is that most estimation and inference methods in SEM
are asymptotic, or they assume large random samples. Applied in small samples, such as N < 200, itera-
tive methods can fail to converge, solutions can be inadmissible due to Heywood cases or other anomalous
results with no meaningful interpretation, or parameter estimates can be very biased. Sometimes researchers
who are reluctant to use SEM in smaller samples opt to use simpler techniques, but small-sample bias can
be even worse in procedures like multiple regression or manifest-variable path analysis with no control for
measurement error (Rosseel, 2020). Discussed in this chapter are ways to cope when applying SEM in small
samples. Suggestions are offered for specification, parameter estimation, and evaluation of model fit. Some
of these options have been available for some time, but others, including special estimation strategies and
test statistics for small samples, are newer and perhaps less familiar to applied researchers. Their application
is demonstrated in the analysis of a common factor model in a small sample.

SUGGESTIONS FOR ANALYZING
COMMON FACTOR MODELS
Iterative estimation failure or inadmissible solutions
are more likely in analyses of reflective measurement
models where some factors have only two indicators
or the sample size is less than 100–150 cases or so
(Boomsma, 1985; Gerbing & Anderson, 1987). The
options for analyzing models under these conditions
are listed next, followed by a discussion of each:
1. Use indicators with good psychometric character-
istics that will also have standardized loadings > .70
or so for continuous indicators. Such models are less
susceptible to Heywood cases (Wothke, 1993). This is
good advice for any sample size, but it is especially so
in small samples.
2. Imposing equality constraints on the unstandard-
ized loadings of indicators for the same factor may help
to prevent inadmissible solutions (Marsh & Hau, 1999).
This tactic makes more sense if the indicators share the
same metric; otherwise, fixing loadings for indicators
of the same factor to nonzero constants that reflect dif-
ferences in their standard deviations is an option.
3. Consider local estimation methods that analyze a
single equation at a time such as model-implied instru-
mental variables using two-stage least squares (MIIV-
2SLS) (Bollen, Fisher, Giordano, et al., 2022) (Chapter
14). Because the MIIV-2SLS estimator is not iterative,
there are no convergence problems. The method does
not rely on normality assumptions, and it might better
isolate effects of specification error than simultaneous
methods such as ML.
4. Estimation for the measurement and structural
parts of the model is decoupled in the structural-
after-measurement (SAM) approach (Rosseel & Loh,
2021). First, parameters in the measurement model are

309

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 310 Advanced Techniques
estimated. Next, structural parameters are estimated
while keeping fixed the measurement parameters from
Step 1. This two-step estimation may better isolate
specification error in the measurement model from esti-
mation in the structural model compared with simulta-
neous methods.1
5. It is generally easier to test more complex mod-
els in smaller samples using composite SEM. This is
because composite-based methods can produce results
for complex models that would require prohibitively
large samples in traditional SEM (Willaby et al., 2015).
But results in composite SEM can be very biased in
small samples, too, so they are not foolproof (Kock &
Hadaya, 2018).
6. Analyzing item-level data in small samples is
challenging. This is because models with items as indi-
cators can be relatively large when analyzed with meth-
ods for ordinal, not continuous, data. An alternative is
parceling, which involves making aggregates of two
or more items, or parcels, by summing or averaging
the items. Next, the parcels are specified as indicators,
which simplifies the model. Finally, estimation meth-
ods for continuous, not categorical, data are used. Par-
celing also tends to reduce error variance in the analy-
sis, but its assumptions are quite restrictive (Rioux
et al., 2020). There are also many decision points, or
researcher degrees of freedom, where results in parcel-
ing can be appreciably changed at each point (Sterba &
Rights, 2023).
Structural‑After‑Measurement
Approach
The basic idea behind the SAM approach, or estima-
tion of structural parameters after measurement param-
eters, is not new. For example, Burt (1976) described
limited-information estimation of measurement param-
eters in the first analysis step that are held constant in
the second step when estimating structural parameters
as way to avoid interpretational confounding. In the
PLS-PM algorithm, the weights for the outer (measure-
ment) model are estimated before the parameters of
inner (structural) model (Table 16.3). In factor score
1 Two-step modeling is a model evaluation strategy to detect
specification error in the measurement model at Step 1 before
the full model is analyzed at Step 2 (Chapter 15). In contrast,
two-step estimation is an estimation strategy that assumes the
measurement model is based on substantive theory and fits the
data (Rosseel & Loh, 2021).
Pt4Kline5E.indd 310
regression (FSR), common factors in the measurement
model are replaced by factor scores, which means that
variables in the structural model are observed (i.e, they
are weighted linear combinations of the indicators).
After correcting the covariance matrix of factor scores
so that it more closely estimates the covariance matrix
for latent variables, the structural model is then esti-
mated with standard regression techniques (Devlieger
et al., 2016).
In Step 1 of the SAM method implemented in lavaan
(Rosseel et al., 2023), by default the computer estimates
a separate single-factor model for each block of indica-
tors in the measurement model. Thus, misspecification
in one block does not affect estimates of factor loadings
or error variances in another block. If a block has insuf-
ficient indicators for a single-factor model without con-
straints (< 3 indicators) or if there are error covariances
between indicators in different blocks, the researcher
can specify a single measurement block that includes
two or more common factors and all their indicators.
In Step 2, the option for global SAM holds measure-
ment parameters constant while the computer estimates
structural parameters. Option local SAM means that
estimates of measurement parameters in Step 1 are
combined with summary statistics for the indicators to
estimate means and covariances for latent variables,
which are used in Step 2 to estimate structural param-
eters. In both options, standard errors are adjusted for
estimation over two steps. In computer simulations,
local SAM outperformed both global SAM and con-
ventional simultaneous estimators in small samples
(Rosseel & Loh, 2021).
Parceling in Small Samples
Suppose that a 120-item questionnaire consists of three
nonoverlapping sets of 40 items each. Each set of items
is expected to measure a distinct domain. The sample
size is N = 150. A model analyzed in categorical CFA
would have 3 factors each with 40 indicators (items) for
a total of 120. The analysis of a such a large model in a
small sample could lead to imprecise estimates or tech-
nical problems in the analysis. To cope, the researcher
divides each set of 40 items into 4 parcels with 10 items
each. Items in each parcel are summed.2 Next, the total
scores replace the individual items as indicators in a
3-factor, 12-indicator (4 parcels/factor) CFA model. If
2 Little
(2013) recommended averaging item scores as opposed
to summing them, if the number of items per parcel is unequal;
otherwise, analyzing total scores over parcels is fine.
3/22/2023 2:05:46 PM

distributions of all parcels are normal, then default ML
could be used to analyze the data; otherwise, a robust
ML estimator is an option.
Rioux et al. (2020) described other potential benefits
to parceling in addition to reducing the number of indi-
cators: Total scores over item sets generally have more
numerous, smaller in width, and more equal intervals
that better approximate a continuous measurement
scale than responses to individual items, which may be
coded as integers that represent discrete points along
a Likert scale (e.g., 0, 1, 2 for, respectively, disagree,
neutral, agree). Total scores tend to be more precise
(reliable) than responses to individual items. Ratios of
common-to-unique variances and levels of communal-
ity are generally higher for parcels than for items, and
these characteristics of parcels can help to avoid esti-
mation problems in small samples. Analyzing parcels
can reduce the potential impact of correlated errors or
loadings of indicators on multiple factors that arise due
to sampling error. For example, when items with corre-
lated errors are aggregated, the effect of this correlation
may be reduced and more completely isolated in the
error term for the parcel.
But there are significant drawbacks, too. One is that
there are many ways to parcel items, including ran-
dom assignment and grouping items based on rational
grounds, among others, and the choice can affect the
results. Parceling is not recommended if unidimension-
ality of items within each parcel cannot be assumed.
This is because analyzing total scores for sets of items
that are really multidimensional can seriously distort
the results so that a misspecified model could neverthe-
less fit the data. The most straightforward option is to
use well-established measures with item sets that are
known in advance to be unidimensional, but these ideal
Father-
Father Mother
Mother
1 1
Family
of Origin
FIGURE 17.1. Two-factor model of family-of-origin experiences and marital adjustment analyzed in a small sample (N =
103).
Pt4Kline5E.indd 311
Analyses in Small Samples 311
conditions are relatively infrequent. An alternative is to
empirically check unidimensionality by fitting a series
of single-factor CFA models for the items within each
parcel. If the model is retained, then aggregating the
items that make up a parcel is supported. There are
two problems with such empirical checks: (1) Data
generated by multidimensional population models can
be consistent with a single-factor model by sampling
error. (2) Respecifying parcels made by adding or drop-
ping items capitalizes on sampling error, especially if a
CFA model with modified parcels is analyzed using the
same data—see Matsunaga (2008), Rioux et al. (2020),
and Sterba and Rights (2023) for more information.
ANALYSIS OF A COMMON FACTOR
MODEL IN A SMALL SAMPLE
In Chapter 14, we fitted the two-factor CFA model in
Figure 17.1 to the data in Table 14.6 from Sabatelli and
Bartle-Haring (2003), who administered measures of
family-of-origin experiences and marital adjustment in
a sample of N = 103 women. The solution was inad-
missible due to a Heywood case; specifically, the error
variance for the intimacy variable is negative, –39.892;
see the output file for analysis 3 in Table 14.1.
Listed in Table 17.1 are two reanalyses of the model
in Figure 17.1, both of which generate admissible solu-
tions. Analysis 1 features the imposition of a constraint
on the unstandardized loadings for both indicators of
marital adjustment. The reference variable is marital
problems, but also constraining the loading for inti-
macy to a = 1.0 (see the figure) is not ideal because
these two variables do not have the same metric. For
example, the standard deviations for intimacy and
EPr EIn
Problems Intimacy
a
Marital
Adjustment
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 312 Advanced Techniques
TABLE 17.1. Analyses, Script Files, and Packages in R for a Two-Factor Model
of Family of Origin Experiences and Marital Adjustment
Analysis
1. Two-factor model, proportionality-constrained
loadings, ML estimation, alternative test
statistics based on correlation residuals
2. Two-factor model, 2SLS estimation with
model-implied instruments
Note. Output files have the same names except the extension is “.out.”
problems are, respectively, 22.749 and 32.936 (Table
14.6), and their ratio is 22.749/32.936 = .691. Thus, the
loading for intimacy is fixed in analysis 1 to a = .691
to reflect the proportionate difference in their standard
deviations. The estimator is default ML. In analysis 2,
Figure 17.1 is fitted to the data with no constraints in
the MIIV-2SLS estimator of the R package MIIVsem
(Fisher et al., 2021). How the method locates model-
implied instruments is explained in Topic Box 17.1.
Analysis 1 with constrained loadings for the two
indicators of marital adjustment in Figure 17.1 con-
verged to an admissible solution. Exercise 1 asks you
to verify that df M = 5 when the loading for intimacy
is fixed to equal a nonzero constant. It is no surprise
that the power of the chi-square test estimated in the
MacCallum–RMSEA method is only .11, given the
small sample size, or N = 103.3 Thus, the likelihood
is only about 10% over random samples that a popula-
tion model without perfect fit would be detected by the
chi-square test. The minimum sample size required for
power ≥ .90 is about 1,320 cases, or over 10 times the
actual sample size (N = 103). Reported next are selected
values of global fit statistics (see the output file for anal-
ysis 1, Table 17.1):
chiML(5) = 8.449, p = .133
RMSEA = .082, 90% CI [0, .174]
CFI = .987, SRMR = .045
Although the model passes the chi-test, its power is
very low as noted. Neither the relatively high value for
the RMSEA (.082) nor the width of its 90% CI is unex-
pected for this statistic in small samples. Values for the
CFI and SRMR are not obviously problematic. We will
3 Other parameters: e0 = 0, e1 = .05, df M = 5, a = .05.
Pt4Kline5E.indd 312
Script files R packages
sabatelli-loadings-ml.r lavaan
semTools
sabatelli-miiv-2sls.r MIIVsem
lavaan
reserve judgment on model fit until other results for this
analysis (i.e., the residuals) are considered. Exercise 2
involves rerunning the analysis just described, except
to fix the loadings for both indicators of marital adjust-
ment to 1.0.
The estimator for analysis 2 in Table 17.1 is MIIV-
2SLS. No global fit statistics are computed by the
MIIVsem package, but Bollen (2019, p. 17) describes
options for overidentification tests of the whole model,
including the vanishing tetrad test (Chapter 14). Instead,
the MIIVsem package computes the Sargan test for
each set of model-implied instruments in Table 17.2.
Sargan test statistics approximate central chi-square
distributions with degrees of freedom that equal the
number of instruments minus one; thus df = 2 for each
result in the table. The null hypothesis is that each set of
multiple instruments is uncorrelated with the error term
for the equation. Failure to reject the null hypothesis for
the Sargan test suggests that the equations in Table 17.2
are consistent with the model in Figure 17.1. See Topic
Box 17.1 for more information.
Listed in the second column of Table 17.3 are the
parameter estimates with constrained factor loadings
in default ML estimation (analysis 1), and reported in
the third column are results for the MIIV-2SLS esti-
mator (analysis 2). Note that (1) standardized estimates
are not computed in the version of the MIIVsem pack-
age used in this analysis. Also, (2) standard errors are
reported in Table 17.3 for MIIV-2SLS estimates only
for indicators that are not reference variables in Fig-
ure 17.1. The MIIVsem package can optionally gen-
erate bootstrap standard errors, but nonparametric
bootstrapping does not apply when the input data are
summary statistics (Table 14.6) instead of a raw data
file. Bootstrap standard errors in small samples can be
very inaccurate, though, so their absence here may not
be a great loss.
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 Analyses in Small Samples 313

TOPIC BOX 17.1

Model‑Implied Instrumental Variables

The R package MIIVsem automatically respecifies Figure 17.1 to replace each factor with its reference vari-
able minus the error term (i.e., latent-to-observed transformation, or L20; Bollen, Fisher, Giordano, et al.,
2021). For example, equations for both indicators of the marital adjustment factor are listed next:

Problems = Marital + EPr (17.1)

Intimacy = a × Marital + EIn

where a is the unstandardized loading for intimacy, which is a free parameter (the loading for problems
is fixed to 1.0), and EPr and EIn are the indicator error terms. The marital factor is replaced by its scaling
indicator minus the corresponding error term, or

Marital = Problems – EPr (17.2)

Next, substituting Equation 17.2 for the factor in Equation 17.1 generates the L20 respecification for inti-
macy, or

Intimacy = a × Problems + EIn – a EPr (17.3)

The predictor in Equation 17.3, marital problems, is correlated with the composite error term for inti-
macy (i.e., EIn – a EPr), which rules out OLS regression but not 2SLS regression with instruments. Figure 17.1
implies a total of three instruments for Equation 17.3, or all indicators of the family-­of-­origin (FOE) factor.
You can apply the tracing rule to Figure 17.1 to verify that FOE indicators are all independent of errors
for marital adjustment indicators, or both EPr and EIn in Equation 17.3 Listed in Table 17.2 are the model-­
implied instruments for each indicator in the model that is not a reference variable. The MIIVsem package
reports the Sargan test for each set of multiple instruments in the table. A significant result suggests that
at least one model-­implied instrument fails to meet the requirements for an instrumental variable, which
suggests a specification error. Applied in a small sample, though, the Sargan test may have relatively low
power to detect errors. See Jin (2022) for other cautions about the Sargan test.

TABLE 17.2. Model-Implied Instruments for Nonscaling Indicators

in a Two-Factor Model of Family-of-Origin Experiences and Marital
Adjustment and Sargan Test Results
Criterion Predictor Model-implied instruments Sargan df p
Intimacy Problems Father, Mother, Father-Mother 4.980 2 .083

Mother Father Intimacy, Problems, Father-Mother 1.763 2 .414

Father-Mother Father Intimacy, Problems, Mother 3.590 2 .166

Note. All results computed by MIIVsem; N = 103.

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 314 Advanced Techniques

Unstandardized factor loadings in Table 17.3 are
generally similar over the two estimators, ML and
2SLS. There are somewhat greater differences over the
two sets of results for error variances and factor vari-
ances. This is especially true for the intimacy factor,
for which the ML error variance estimate (106.214) is
about twice as large as the 2SLS estimate (50.871). The
estimated factor correlation in the ML solution is .469,
so better marital adjustment is associated with higher
levels of respect and acceptance between dyads in early
family experiences. For Exercise 3, you are asked to
compute the factor correlation from the factor covari-
ance of 157.495 in the 2SLS estimates in the table.
Reported in Table 17.4 are the correlation residuals for
each estimator. Residuals in the top part of the table are
from ML estimation, and results in the bottom part of
the table are from 2SLS estimation. An absolute correla-
tion residual in ML estimation, shown in boldface in the
table, just exceeds .10 for the problems and father indica-
tors of, respectively, marital adjustment and FOE. Spe-
cifically, the model overestimates the correlation in this
pair of indicators by about .10 (the sample value is .265;
Table 14.6). The corresponding standardized residual for
this indicator pair, –3.994 (see the output file for analy-
sis 1, Table 17.1), is significant, too. These are relatively
poor results for a such a small model. The computer was
unable to calculate all possible standardized residuals,
which is not surprising in a small sample. None of the
normalized residuals is significant, but these tests are
even less powerful than standardized residuals.
The MIIVsem package does not compute either
model-implied correlations for indicators or correlation

TABLE 17.3. Maximum Likelihood (ML) and Two-Stage Least

Squares (2SLS) Estimates for Analyses of a Two-Factor Model
of Family-of-Origin Experiences and Marital Adjustment
Parameter ML 2SLS
Factor loadings
Marital adjustment
Problems 1.000 (—) .840a 1.000 (—)b
Intimacy .691 (—) .885 .805 (.155)

Family of origin
Father 1.000 (—) .929 1.000 (—)
Mother .935 (.091) .850 .899 (.089)
Father-Mother .821 (.100) .710 .787 (.099)

Error variances
Problems 335.923 (80.080) .294 422.427 (—)
Intimacy 106.214 (34.373) .216 50.871 (—)
Father 24.457 (11.060) .138 20.856 (—)
Mother 51.489 (11.730) .278 54.195 (—)
Father-Mother 101.712 (16.070) .497 103.301 (—)

Factor variances and covariance

Marital 806.040 (132.946) 1.000 702.393 (—)
Family 153.095 (26.669) 1.000 158.501 (—)
Marital Family 164.822 (42.788) .469 157.495 (—)

Note. Loading for intimacy fixed to .691 in the ML results; N = 103.

aEstimate (standard error) standardized.

bEstimate (standard error).

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 Analyses in Small Samples 315

TABLE 17.4. Correlation Residuals for Maximum Likelihood (ML)

and Two-Stage Least Squares (2SLS) Analyses of a Two-Factor
Model of Family of Origin Experiences and Marital Adjustment
Variable 1 2 3 4 5
ML
1. Problems 0
2. Intimacy –.004 0
3. Father –.101 .036 0
4. Mother .030 .048 .002 0
5. Father-Mother .035 .056 .003 –.016 0

2SLS
1. Problems 0
2. Intimacy –.010 0
3. Father –.086 .001 0
4. Mother –.086 .001 .003 0
5. Father-Mother –.086 .001 .003 .002 0

residuals. To obtain the correlation residuals for the
2SLS estimator in Table 17.4, I used lavaan to specify
the model in Figure 17.1 but where all unstandardized
parameters are fixed to equal their 2SLS counterparts
in Table 17.3. Next, I fitted the model with fixed param-
eters as just described to the covariance matrix in Table
14.6. The predicted correlation matrix in this analysis is
based on the 2SLS parameter estimates, and getting the
correlation residuals is as easy as specifying this output
option in lavaan—see the syntax file for analysis 2,
Table 17.1. These residuals from the lavaan analysis
are reported in the bottom part of Table 17.4 for the
2SLS solution. None of the absolute correlation residu-
als based on 2SLS results exceeds .10, including the
residual for the indicator pair problems and father. In
terms of local fit, I prefer the results for the 2SLS esti-
mator over those for the ML estimator in this example.
CONTROLLING MEASUREMENT ERROR
IN MANIFEST‑VARIABLE PATH MODELS
Failure to control for measurement error in both stan-
dard regression analysis and manifest-variable path
analysis can lead to parameter estimates biased in
directions and magnitudes that can be difficult to
predict and also inflation of Type I error rates in sig-
nificance testing (Cole & Preacher, 2014; Westfall &
Yarkoni, 2016). An option is single-indicator respecifi-
cation, which moves the effects of measurement error
from the structural model to the measurement model
(e.g., Figures 15.4–15.6). The method requires speci-
fication of the score reliability for a single indicator.
There are four basic options (Savalei, 2018):
1. Estimate reliability in the data (i.e., the researcher’s
sample).
2. Specify reliability based on results in other sam-
ples, such as the normative sample described in a
test manual.
3. Fix reliabilities to arbitrary-but-common values in
the research literature, such as .70 or .80.
4. Specify reliability based on prior knowledge or
experience with a measure about the proportion of
total variance due to measurement error. Ideally,
this choice is preregistered as part of the analysis
plan.
A drawback of Options 1 and 2 just listed is that empiri-
cal reliability coefficients are subject to sampling error,
which can add variability to parameter estimates based
on single-indicator respecification (Oberski & Satorra,
2013). Empirical estimates based on the alpha coef-
ficient—the most widely reported type of reliability
coefficient—can be problematic, too. This is because
if the assumptions of unidimensionality and tau-equiv-
alence are implausible, then alpha is not an accurate

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 316 Advanced Techniques
reliability measure—see the Psychometrics Primer on
this book’s website.
In computer simulations for models with a single
indirect effect among three conceptual variables, Sava-
lei (2018) compared three versions of single-indicator
(SI) respecification in path models: SIa based on the
alpha coefficient estimated in the data, and two varia-
tions based on fixed reliabilities of either .70 or .80—
respectively, SI7 and SI8—with analyses of a multi-
ple-indicator common factor model in small samples
(N = 30–200). Single indicators in the path models were
composites of the corresponding blocks of indicators in
the common factor model. Other simulation variables
included the magnitude of an indirect effect, the size of
the direct effect of the causal variable on the outcome
variable, and three levels of population composite reli-
ability (rXX = .65, .75, .85) selected so that the SI7 and
SI8 models were never exactly correct.
Savalei (2018) reported that bias in estimates for path
models with no control for measurement error was sub-
stantial and ranged from about 10% to 40% when reli-
ability is low. Results for fixed-reliability models SI7
and SI8 suggested appreciably lower amounts of bias
when reliabilities are, respectively, rXX = .65 or .75 and
rXX = .75 or .85 (i.e., the specified reliability is close
to the population value). But if the SI7 or SI8 models
underestimated reliability, such as SI7 (i.e., reliability
is .70) when rXX = .85, then the degree of bias could be
relatively extreme, or exceeding 80% in some condi-
tions. The power of fixed-reliability SI methods under
the same conditions was also lower compared with SIa.
In larger samples (e.g., N = 200), where mainly bias,
and not sampling error in reliability estimates, affects
estimate accuracy, the SIa method was optimal. The
fixed-reliability methods SI7 and SI8 performed nearly
as well, but only if the “guess” (.70 or .80) about reli-
ability on which each method is based is close to the
true values. None of the methods studied by Savalei
(2018) had sufficient power to detect smaller direct
effects even when N = 200. Overall, Savalei (2018) rec-
ommended the use of fixed-reliability SI methods in
small samples.
ADJUSTED TEST STATISTICS
FOR SMALL SAMPLES
Just as there are corrected model chi-squares that
account for nonnormality (e.g., Satorra–Bentler scaled
chi-square; Equation 10.7), there are also versions that
reduce the tendency of the uncorrected chi-square
Pt4Kline5E.indd 316
(Equations 10.1–10.2) to reject too many true models in
small samples, especially when the number of observed
variables exceeds 30 or so. Deng et al. (2018) reviewed
about a dozen alternative test statistics based on correc-
tions by Bartlett (1950), Swain (1975) (cited in Deng et
al., 2018), or Yuan (2005), among others, that account
for sample size, model size, or distributional charac-
teristics. Jiang and Yuan (2017) described more recent
corrected chi-squares for small samples and nonnormal
distributions.
Rosseel (2020) reviewed computer simulation stud-
ies of adjusted model chi-squares for small samples
published since 2007. Although some corrected test
statistics performed better than others over variations
in sample size or model size for normal or nonnormal
distributions, no single version worked best in all situa-
tions. This assessment concurs with the observation by
Jiang and Yuan (2017, p. 493) that “there does not exist
a test statistic that performs universally well” in small
samples and that more work in this area is needed.
Given all these results, Rosseel (2020) suggested that
perhaps the use of the chi-square test in small-sample
analyses should be abandoned.
Alternatives include the use of confidence intervals
or tests of exact model fit or close model fit based on
correlation residuals described by Maydeu-Olivares et
al. (2018). The test statistics are standardized measures
of model misfit (Maydeu-Olivares, 2017a). They include
the SRMR, or the square root of the average covariance
residuals each standardized by the product of the stan-
dard deviations for each pair of measured variables,
and the correlation root mean residual (CRMR), or
the square root of the average squared correlation resid-
ual. Values for the SRMR and CRMR are not always
equal for the same model and data, but their values
should be similar. Unlike the Schuberth et al.’s (2018)
bootstrapped SRMR-based global fit test for compos-
ite models (Chapter 16), the Maydeu-Olivares et al.
(2018) tests rely on unbiased estimators of population
SRMR and CRMR (i.e., there is no bootstrapping). In
computer simulations by Maydeu-Olivares et al. (2018),
their tests performed reasonably well in small samples
of N = 100–200 for a model with two common factors
(i.e., a relatively small model).
The confidence intervals and tests just described are
implemented in lavaan, and the results are accessed
through the “lavResiduals( )” function. The CRMR
is the test statistic for Bollen-type correlation residuals,
and the test statistic for Bentler-type correlation residu-
als is the SRMR (see Topic Box 9.3 for a summary of
the two types of correlation residuals just mentioned).
3/22/2023 2:05:47 PM

The method also generates a test statistic for each cor-
relation residual (Maydeu-Olivares, 2017a). These test
statistics are normal deviates (i.e., z), but I would not
refer to them as “standardized residuals,” which in
simultaneous estimation methods are test statistics for
covariance residuals, not correlation residuals.
Tests statistics in the Maydeu-Olivares et al. (2018)
method for both types of correlation residuals avail-
able in lavaan are included in the output file for
analysis 1 of Figure 17.1 with the default ML estimator
(Table 17.1). For Bollen-type residuals, CRMR = .044
with an estimated standard error of .015. The result
for the exact-fit test is p = .307, so the null hypothesis
that the population and model-implied correlations are
equal (Equation 16.1) is retained at the .05 level. The
unbiased version of the CRMR, designated as "ucrmr"
in the output, equals .023, and the 90% confidence
interval is [–.023, .071], which includes zero within
its bounds. The standard chi-square test of the exact-
fit hypothesis that the population and model-implied
covariances are equal (Equation 9.3)—or chiML (5)
= 8.449, p = .133—points to a similar conclusion at a
somewhat more extreme level of statistical significance.
Again, the small sample size in this analysis (103 cases)
limits the power of these global fit tests. Exercise 4 asks
you to describe the results of the Maydeu-Olivares et al.
(2018) tests based on Bentler-type correlation residuals
for the same model and data.
BAYESIAN METHODS
AND REGULARIZED SEM
Two more advanced methods are mentioned next, but it
is beyond the scope of this chapter to describe them in
detail; see the sources cited next for more information.
Bayesian estimation of structural equation models in
small samples involves the specification of informative
priors, which are probability distributions for values of
a target parameter based on specific knowledge, such
as the results from previous empirical studies. In con-
trast, weakly informative priors represent some, but
not all, current knowledge, and such probability distri-
butions are typically wider (more variable, less precise)
than those for informative priors.4 In small samples,
the specification of informative priors helps the com-
puter to narrow the range of parameter estimates and in
4I avoided use of the more controversial term “noninformative
priors,” which are typically based on minimal prior knowledge
instead of absolutely none (Chakraborty & Ghosh, 2012).
Pt4Kline5E.indd 317
Analyses in Small Samples 317
this way is analogous to user-specified starting values
in standard (non-Bayesian) ML estimation. In computer
simulations, Smid and Rosseel (2020) found that Bayes-
ian estimation with informative priors generally out-
performed frequentist estimation methods, such as ML,
when analyzing common factor models in small sam-
ples. Both frequentist methods and Bayesian estimation
with weakly informative priors were also more prone
to iteration failure or Heywood cases in such samples.
See McNeish (2016) for more information about using
Bayesian methods for SEM in small samples.
Penalized likelihood estimation—also called reg-
ularization methods—works by penalizing param-
eters in complex models according to criteria specified
by the researcher. If the penalty exceeds the criterion
value during estimation, the corresponding parameter
is automatically removed, which simplifies the model.
The goal is to avoid overfitting the model. Three basic
regularization methods in regression analysis are the
ridge, lasso, and elastic net. The ridge method and
lasso (least absolute shrinkage and selection opera-
tor) method minimize both the residual sum of squares
and a penalty factor that controls the amount of shrink-
age. Penalized coefficients in ridge regression never
equal zero, but lasso regression drives some coefficients
to equal zero, which removes the corresponding predic-
tor from the equation. The elastic net method incorpo-
rates penalties from both the ridge and lasso methods.
It also selects predictors for removal, but the elastic net
method is preferred when (1) there is extreme multicol-
linearity among predictors or (2) there are more predic-
tors than cases (Zou & Hastie, 2005).
Jacobucci et al. (2016) described regularized
structural equation modeling (regularized SEM) as
extending the ridge, lasso, and related penalties to the
analysis of structural equation models. It adds penal-
ties to model parameters specified by the researcher
and offers an alternative strategy for model selection.
For example, instead of selecting among a discrete
number of alternative models in trimming or building
(Chapter 11), the method imposes a sequence of pen-
alties for specific parameters that allows models to be
compared on a more or less continuous scale. Penalties
can also be gradually increased as a further safeguard
against overfitting. An advantage of regularized SEM
is its flexibility: Penalties can be added (or not) to any
part of a structural equation model. It also supports
more exploratory analyses through reduction of model
complexity. Estimates based on regularized methods
are biased toward zero (they are too small in abso-
lute value), but reducing model complexity generally
3/22/2023 2:05:47 PM
 318 Advanced Techniques
decreases error variance, which could be a reasonable
trade-off in small samples (Liang & Jacobucci, 2020).
The R package regsem (Jacobucci, 2021) implements
regularized SEM. Models are specified and fitted to
the data in lavaan before regularization methods are
applied by regsem.
SUMMARY
Deng et al. (2018) cautioned that blind application of
SEM methods intended for large samples can generate
misleading results in small samples or fail outright due
to technical problems in the analysis. Thus, research-
ers who intend to analyze structural equation models in
small samples ought to have a set of coping skills. Sug-
gestions for analyzing common factor models include
the imposition of constraints on loadings for indicators
of the same factor; estimating measurement parameters
before structural parameters; the use of noniterative,
single-equation estimators with model-implied instru-
ments; and analyzing parcels instead of items as indica-
tors. Applying the method of single-indicator respecifi-
cation with a priori values for score reliability might
reduce bias due to measurement error when analyzing
manifest-variable path models in small samples. Other
possibilities available to researchers without advanced
quantitative training include replacement of the model
chi-square test with versions based on correlation resid-
uals that may perform better in small samples. Above
all, specify models that are as parsimonious as possible
EXERCISES
1. Show that df M = 5 for Figure 17.1 when unstandard-
ized loadings for the problems and intimacy vari-
ables are fixed to equal, respectively, 1.0 and .691.
2. Rerun analysis 1 in Table 17.1 but constrain the
loadings for both indicators of marital adjustment,
problems and intimacy, to 1.0. Comment on the
results.
Pt4Kline5E.indd 318
while still representing core hypotheses when sample
size is not large. As Cudeck and Henly (1991, p. 513)
suggested, “It may be better to use a simple model in
a small sample rather than one that perhaps is more
realistically complex but that cannot be accurately esti-
mated.”
LEARN MORE
Deng et al. (2018) describe issues and possible remedies for
SEM analyses in small samples with large numbers of vari-
ables, Marcoulides et al. (2023) discuss the analysis of large
models in small samples and suggest ways to cope, and the
edited volume by van de Schoot and Miočević (2018) is a
valuable resource for researchers who apply complex statis-
tical techniques, including SEM and multilevel modeling, in
small samples.
Deng, L., Yang, M., & Marcoulides, K. M. (2018). Structural
equation modeling with many variables: A systematic
review of issues and developments. Frontiers in Psychol-
ogy, 9, Article 580.
Marcoulides, K. M., Yuan, K. H., & Deng, L. (2023). Struc-
tural equation modeling with small samples and many
variables. In R. H. Hoyle (Ed.), Handbook of structural
equation modeling (2nd ed., pp. 525–542). Guilford
Press.
van de Schoot, R., & Miočević, M. (Eds.) (2020). Small
sample size solutions: A guide for applied researchers.
Routledge.
3. In Table 17.3 for the MIIV-2SLS estimates, com-
pute the factor correlation.
4. For analysis 1 in Table 17.1, describe results for the
SRMR-based confidence intervals and significance
tests for the Bentler-type residuals.
3/22/2023 2:05:48 PM
 18

Categorical Confirmatory Factor Analysis

In basic CFA models, the indicators are continuous variables that are generally analyzed using methods for
continuous data, such as default ML for normal distributions or robust ML for nonnormal distributions (Chap-
ter 14). In categorical CFA, the indicators are ordered categorical variables with (1) an intrinsic
ordering among two or more response categories, but where (2) the intervals between those categories are
not assumed to be equal (i.e., the data are ordinal). An example is when individual Likert items (Likert,
1932) are specified as the indicators in a reflective measurement model. Such items have a discrete number
of response categories. In the detailed example for this chapter, the items involve the frequency of symptoms
for depression experienced in the prior week. The response options for all items, and the corresponding
numerical values that represent each option in the raw data file, are listed next:

0 = < 1 day, 1 = 1–2 days, 2 = 3–4 days, 3 = 5–7 days (18.1)

The numerical scale just listed (0–3) can distinguish only four levels of frequency per week, and it would
be hard to argue that intervals between adjacent categories are all equal. Also, these particular numerical
values (i.e., 0, 1, 2, 3) are arbitrary with no objective or theoretical basis. This is because alternative coding
schemes, such as (1, 3, 5, 7) for the same response options, would work just as well as any other set of four
numbers in either ascending or descending order where the distance between successive categories is the
same. Accordingly, means, variances, and covariances among Likert items are also arbitrary. The estimation
methods for continuous endogenous variables generally analyze covariance matrices, but such summary
statistics for Likert items are generally meaningless for the reasons just explained. Another problem is that
covariances include Pearson correlations (i.e., covXY = rXY SDX SDY ), and such correlations assume continu-
ous variables.

BASIC ESTIMATION OPTIONS
FOR CATEGORICAL DATA
Results from computer simulation studies generally
indicate that use of estimators for continuous variables
to analyze measurement models with Likert items as
indicators is potentially problematic. For example,
Rhemtulla et al. (2012) reported that for Likert items
with fewer than 5 response categories, the robust ML
method for continuous variables generated biased esti-
mates of factor correlations and it generated standard
errors that were generally too small. This distortion
generally inflates the rate of Type I errors in signifi-
cance tests of parameter estimates. Values of model
test statistics, such as mean-and-variance adjusted chi-
squares that correct for nonnormality (Chapter 10),
were generally too high when (1) population response
distributions were marked skewed, or asymmetrical,
and (2) patterns of asymmetry alternated over items in
the same model. Under these conditions, the chi-square
test rejected too many correctly specified models. Oth-
erwise, the adjusted chi-square under robust ML was

319

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 320 Advanced Techniques
more accurate in detecting misspecified models except
in small samples, such as N < 100 or so, where power
is low.
The results from Rhemtulla et al. (2012) just sum-
marized are generally consistent with those reported by
Bernstein and Teng (1989), who in computer simula-
tions categorized continuous indicators in population
factor models to form ordered-categorical indicators
analyzed in sample models. They found that when there
is a single factor in the population but indicators have
few categories, such as 2–4, one-factor models tend to
be rejected too often. That is, categorization can spuri-
ously suggest the presence of multiple factors. Li (2016)
reported that the ML method substantially underesti-
mates factor loadings when ordinal indicators have
only 4 response categories. There is also appreciable
attenuation in psychometric precision in responses to
personality questionnaire items for Likert items with
2–5 response options compared with items with at least
6 options (Simms et al., 2019).
But when Likert items have at least 5–7 response cat-
egories, the accuracy of the ML method with adjusted
test statistics was better, especially when population
response distributions were approximately symmetri-
cal (Rhemtulla et al., 2012). In this case, the ML option
performed as well or even better than the estimation
method for categorical data described in the next sec-
tion that represents Likert items as discretized indica-
tors of underlying (latent) and normally distributed
response variables that are continuous. The option just
mentioned is called continuous/categorical variable
methodology (CCVM) by Muthén (1984) and the latent
response formulation (LRF) by Koziol et al. (2023),
but just the term “CCVM” is used from this point. In
this approach, Likert items-as-indicators are not ana-
lyzed as though they were continuous variables. But
when response distributions for Likert items were very
asymmetrical in Rhemtulla et al.’s (2012) simulations,
the CCVM method generated more accurate estimates
of factor loadings than robust ML, especially when pop-
ulation factor loadings were relatively high. But relative
bias in ML estimates was generally less than 10%, again
for items with at least 5 response options.
To summarize, there may be relatively little harm
in treating data from ordinal indicators as continuous
when the number of response categories is ≥ 5 and dis-
tributions of item responses are generally symmetrical.
An advantage is that models analyzed with methods for
continuous variables are simpler than models analyzed
Pt4Kline5E.indd 320
with special methods for ordinal data such as in CCVM.
Another advantage is that the ML estimator for contin-
uous data generally requires smaller samples compared
with methods used for CCVM. But I would not recom-
mend estimation methods for continuous data in CFA
when categorical variables have 2–4 categories or when
there are ≥ 5 categories but response distributions are
very skewed. In such cases, the CCVM approach is a
better option.
OVERVIEW OF CONTINUOUS/
CATEGORICAL
VARIABLE METHODOLOGY
Muthén’s (1984) CCVM is a general strategy for ana-
lyzing common factor models with any combination of
continuous or categorical observed variables as indica-
tors. The CCVM is distinguished by the features listed
next and elaborated afterward:
1. Input for the analysis recognizes the presence of
categorical variables among the indicators.
2. Parts of the measurement model for categorical
variables are specified in a different way compared
with continuous indicators. Briefly, continuous
indicators are specified as directly regressed on
their common factors such as when analyzing basic
CFA models (e.g., Figure 14.1). In contrast, each
categorical variable is associated with a theoreti-
cal continuous variable estimated in the data, and
that estimated continuous variable is regressed on
a common factor, not the corresponding observed
(categorical) variable.
3. The factor model is fitted to a correlation matrix,
not a covariance matrix. But that correlation matrix
is not observed, that is, it is not computed with
measured variables. Instead, the matrix analyzed
is the estimated correlation matrix for the theoreti-
cal continuous variables presumed to underlie the
categorical data (and perhaps also the continuous
data for models with both continuous and categori-
cal indicators).
4. An estimator that makes no assumptions about indi-
cator distributions is generally used. Corrected test
statistics and a method to generate robust standard
errors for parameter estimates can also be gener-
ated.
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 Categorial Confirmatory Factor Analysis
LATENT RESPONSE VARIABLES
AND THRESHOLDS
In CCVM, each observed categorical variable is associ-
ated with a latent response variable, or the underly-
ing amount of a continuous and normally distributed
continuum required to respond in a certain way on
the corresponding indicator. This amount or thresh-
old is the point on the latent response variable where
one response option is given (e.g., strongly agree), if
the threshold is exceeded. It is also the point where the
next lowest response option is given (e.g., agree), if the
threshold is not exceeded. Dichotomous (binary) items,
such as those coded as 0 for “false” or “incorrect” or
as 1 for “true” or “correct,” have a single threshold that
marks the point on the underlying dimension where the
observed response shifts from false/incorrect to true/
correct. The number of thresholds for polytomous
items with three or more response categories equals
the number of categories minus one.
Suppose that item X has the 3-point Likert scale
listed next:
1 = disagree, 2 = neutral, 3 = agree
The scale just described is considered to be a crude
categorization of X*, the underlying latent continuous
response variable. Item X has two threshold parame-
ters, t1 and t2 (lowercase Greek letter tau). When X*
has a mean of zero and a variance of 1.0, thresholds
are values of the normal deviate z that divide a normal
distribution into ordered categories and thus relate dis-
crete responses on X to continuous X* values. Specifi-
cally, the data generating process is considered to be as
follows:
1, if X * ≤ t1;
 (18.2)
=X 2, if t1 < X * ≤ t2 ;
3, if X * > t .
 2
In other words, an observed response of “1” (disagree)
is predicted if the level of X* is less than or equal to
that of t1 in standard deviation units. For levels of
X* greater than t1 but less than or equal to t2, the
predicted response is “2” (neutral), and X* > t2 cor-
responds to a response of “3” (agree) on item X. An
example follows.
Presented in Figure 18.1(a) is the histogram of
responses to a hypothetical item X with a 3-point Likert
Pt4Kline5E.indd 321
321
scale. Cumulative probabilities over the three catego-
ries are also shown in the figure. Thresholds are based
on the cumulative response probabilities. For example,
the cumulative probability for endorsing “1” (disagree)
is .25, so t1 = –.674, which is the value of the normal
deviate z that falls at the 25th percentile in a normal
curve. You should verify this statement with an online
normal distribution calculator.1 The same result also
says that responses to item X are expected to shift
from “1” (disagree) to “2” (agree) when the level of X*
increases to about two-thirds below the mean. Exercise
1 asks you to interpret the result t2 = .253 in Figure
18.1(b), given the cumulative probability of .60 over the
response categories of “1” (disagree) and “2” (neutral)
together.
When analyzing Likert items as indicators in
CCVM, there is no requirement that all items have the
same number of response categories. This is because it
is not a special problem to analyze items with different
response scales (e.g., some items are true–false, oth-
ers have ≥ 3 response categories). The total number of
thresholds for each item is just one less than the number
of its response options.
POLYCHORIC CORRELATIONS
For a set of categorical indicators, estimated thresh-
olds and sample cross-tabulations of item responses are
used by the computer to estimate the matrix of Pear-
son correlations between the latent response variables.
These estimated correlations are called polychoric
correlations.2 Modern computer programs gener-
ally use simultaneous methods to estimate the whole
polychoric correlation matrix. Pairwise estimation of
Pearson correlations is an older method that required
less computer memory, but this method is less relevant
today given the availability of personal computers with
relative large memory capacities. Fortunately, modern
computers can simultaneously estimate the whole cor-
relation matrix in many, if not most, applied studies
with ordinal data.
1 https://onlinestatbook.com/2/calculators/normal_dist.html
2 Fordichotomous items where all cross-tabulations are 2 × 2
contingency tables, the polychoric correlation is called the tetra-
choric correlation, but I use the more general term “polychoric
correlation,” which includes ordinal items with two or more
response categories.
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 322 Advanced Techniques

(a) Likert-scale item X cumulative probability histogram

1.00
1.00
.90
.80
.70

Proportion
.60
.60
.50
.40
.30
.20 .25
.10

1 2 3
Disagree Neutral Agree
Response Category

(b) Latent response variable X* with thresholds

−3.0 −2.0 −1.0 0 1.0 2.0 3.0

τ1 = −.674 τ2 = .253

X*

FIGURE 18.1. Histogram for observed responses on hypothetical item X with a 3-point Likert scale (a) and the corresponding
latent response variable X* with thresholds, t (b).

Polychoric correlations are typically estimated under
the assumption that the joint distribution of the continu-
ous latent response variables is multivariate normal,
which implies that their univariate distributions are nor-
mal and that their associations with each other are strictly
linear (Chapter 4). Homoscedasticity is also assumed;
that is, the latent response variables have equal variances.
Some computer tools, such as PRELIS in LISREL, offer
methods to evaluate the normality assumption when esti-
mating polychoric correlations for each pair of ordinal
indicators (Jöreskog & Sörbom, 2021). There is evidence
that estimates of polychoric correlations are generally
robust to moderate nonnormality, such as when absolute
values of standardized skew and kurtosis do not exceed,
respectively, 1.25 and 3.75. But they are not robust to
extreme nonnormality, such as when absolute standard-
ized skew and kurtosis exceed, respectively, 5.0 and 50.0
(Flora & Curran, 2004).

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 Categorial Confirmatory Factor Analysis
MEASUREMENT MODEL
AND DIAGRAM
When all observed variables are categorical, the mea-
surement model analyzed in CCVM consists of the
latent response variables as the continuous indicators of
the common factor(s). Both the number of common fac-
tors and the correspondence between factors and their
indicators, the latent response variables, are specified
by the researcher just as in “regular” CFA when analyz-
ing continuous indicators only. Relations between latent
response variables and common factors are assumed to
be linear. However, relations between latent response
variables and their observed counterparts are generally
nonlinear. An example follows.
Presented in Figure 18.2 is the diagram for the sin-
gle-factor CFA model analyzed for the detailed exam-
ple described later in this chapter. The observed vari-
ables X1–X5 are items on a self-report questionnaire.
The response scale for all items is the 4-point Likert
scale defined in Equation 18.1. Thus, each item has a
total of 4 – 1, or 3 thresholds that are estimated in the
analysis. Each item in the diagram is associated with
a latent response variable X* by the graphical symbol
for a unidirectional “zigzag” that represents the set of
threshold parameters for each item (e.g., Edwards et al.,
2012, p. 198). For example, the notation t11–t13 in the
figure represents the three thresholds for item X1 and
X1 X2 X3 X4
τ11–τ13 τ21–τ23 τ31–τ33 τ41–τ43
X1* X2* X3* X4*
1
A
FIGURE 18.2. Single-factor model for five Likert-scale
items (X), each with four response categories shown with
item thresholds (t), latent response variables (X*), and com-
pact graphical symbolism for error terms. In delta scaling,
the total variance for each X* is fixed to equal 1.0. In theta
scaling, the error variance for each X* is fixed to equal 1.0.
Pt4Kline5E.indd 323
323
so on for each of the remaining items. This threshold
structure represents the presumed causal effects of
latent response variables on observed variables (items).
Specifically, when the level on a latent response vari-
able X* exceeds a threshold, then the observed response
on X is expected to shift to the next response category
(e.g., Equation 18.2).
The common factor in Figure 18.2 is designated as A,
and its indicators are the five latent response variables,
each of which has an error term because they are all
endogenous. Unlike error terms for continuous indi-
cators, which represent unique variance as the sum of
specific variance and random measurement error, the
error terms for the latent response variables represent
only specific variance not shared with the common fac-
tor. This is because only observed, not latent, variables
are affected by measurement error. The error terms in
the figure are specified as independent, but correlated
errors for latent response variables can be estimated
within the limits of identification requirements for
doing so with observed variables (Appendix 14.A), and
with a solid rationale, too.
METHODS TO SCALE LATENT
RESPONSE VARIABLES
Latent response variables X* in Figure 18.2 require
scales or metrics so that the computer can estimate
their parameters. There are two general methods: In
delta scaling (parameterization), the total variance
X5 of latent response variables is fixed to 1.0. This metric
is consistent with that of the polychoric correlations,
τ51–τ53 which assume variances of 1.0 for the latent response
variables. In the standardized solution of delta scaling
where all common factor variances are fixed to 1.0,
the factor loadings estimate the amount of standard
X5* deviation change in a latent response variable, given a
change of one standard deviation in the common factor.
Also, thresholds are normal deviates that correspond
to cumulative areas under the curve to the left of a par-
ticular response category (Finney & DiStefano, 2013).
These interpretations are familiar and straightforward.
Specification of theta scaling (parameterization)
instead of delta scaling does not change model fit in
a single sample analysis. The main difference is that
in theta scaling the error variance (not the total vari-
ance) of each latent response variable is fixed to 1.0.
This metric for the error variance is consistent with
the scaling in probit regression. In the unstandardized
3/22/2023 2:05:49 PM
 324 Advanced Techniques
solution, factor loadings estimate the amount of change
in probit (normal deviate) units in the latent response
variable for every one-point change in the common fac-
tor. Thresholds are predicted normal deviates between
the next lowest and next highest response categories
where the latent response variable is not standardized
(its total variance is not 1.0). Interpretation of unstan-
dardized estimates in theta scaling can be more chal-
lenging, given that the total variance of each latent
response variable is not 1.0. Fortunately, the completely
standardized solution in theta scaling is identical to the
corresponding solution in delta scaling, which is easier
to interpret than the unstandardized solution in theta
scaling.
ESTIMATORS, ADJUSTED TEST
STATISTICS, AND ROBUST
STANDARD ERRORS
In the upcoming detailed example, the computer fits
the model in Figure 18.2 to the polychoric correlation
matrix for the latent response variables. In lavaan, the
researcher must specify an estimator, which implies
corresponding default methods for computing an
adjusted (scaled) model test statistic and generating
robust standard errors for parameter estimates (Chapter
10). It may be possible to select a different combination,
such as a researcher-specified method for computing
robust standard errors—see Rosseel et al. (2023).
One option for the estimator is fully weighted
least squares (WLS), which requires no distributional
assumptions for any observed variable. Thus, it can be
applied to the analysis of continuous or categorical data
in CFA (and in other kinds of SEM analyses, too). The
weight matrix for the WLS estimator is the matrix of
variances and covariances of the estimated polychoric
correlations and also the thresholds depending on the
particular computer program (Finney & DiStefano,
2013). This matrix is also the asymptotic covariance
matrix for the parameters just mentioned. A problem
with the WLS estimator is that the size of its weight
matrix can be so large that the computer may be unable
to derive its inverse (Chapter 9). For example, if 250
items in the same questionnaire are analyzed in the
WLS method, the weight matrix represents all the
latent response variables linked with those items and
perhaps all item thresholds, too. Another challenge is
that very large samples are generally needed for the
Pt4Kline5E.indd 324
WLS estimator, which may preclude its use in many
applied studies.
An alternative estimator is diagonal weighted
least squares or diagonally weighted least squares
(DWLS), which is intended to reduce the computational
complexity of the WLS estimator and avoid the neces-
sity for very large samples. Specifically, the weight
matrix for DWLS consists of just the diagonal in the
full weight matrix for WLS. That is, the off-diagonal
elements in the DWLS weight matrix are constrained
to equal zero. Using only the diagonal elements from
the full WLS weight matrix would result in biased
values of model test statistics and standard errors. But
information from the full WLS weight matrix can be
summarized in the DWLS estimator in a different, less
complex way compared with the WLS estimator that
can generate robust standard errors and corrected model
test statistics. These simpler computational methods do
not affect the parameter estimates, only their standard
errors and the value of the model chi-square (Finney
& DiStefano, 2013). This parallels the relation between
default ML and robust ML for continuous data: Both
methods generate the same parameter estimates, but
not generally the same standard errors or values of the
model chi-square, given nonnormal distributions.
The combination of the DWLS estimator with meth-
ods to compute robust standard errors and scaled test
statistics is called robust DWLS or just robust WLS.
The keywords in lavaan for specifying an estimator or
the combination of an estimator with robust computa-
tion of test statistics or standard errors (Rosseel et al.,
2023) are summarized next:
1. Option “DWLS” specifies the DWLS estimator.
There are separate options to request post-estima-
tion adjustment of the model chi-square or standard
errors.
2. Option “WLSMV” specifies the combination of the
DWLS estimator with robust standard errors and a
mean-and-variance adjusted model chi-square that
generally follows central chi-square distributions
with correct means and variances in large samples.
3. Option “WLSM” also specifies the DWLS estima-
tor with robust standard errors, but the model chi-
square is only mean adjusted.
Option 2 just listed may be somewhat more accurate
than Option 3 over random samples, but the difference
may not be striking (Savalei & Rhemtulla, 2013).
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 Categorial Confirmatory Factor Analysis
MODELS WITH CONTINUOUS
AND ORDINAL INDICATORS
Models with indicators of mixed types, continuous or
ordinal, can also be analyzed in the CCVM approach.
As noted by Li (2021), however, relatively little is known
about the impact of mixed scale types on the accuracy
of results from extant estimation methods. In computer
simulation studies of CFA models and structural regres-
sion (SR) models with indicators of mixed scale type,
Li (2021) compared the performance of the WLSMV
method with that of the robust ML method in gener-
ating parameters estimated, corrected test statistics,
and robust standard errors over conditions for varying
sample sizes (N = 200, 500, 1,000), numbers of Likert
response categories (2–7), and categorical response dis-
tribution shape (symmetry, slight asymmetry).
The WLSMV method performed generally better in
Li’s (2021) computer simulations than the robust ML
method across most study conditions and, specifically,
required a smaller sample size (N = 200) to recover rea-
sonably accurate estimates of model parameters and
adjusted test statistics, but estimates of standard errors
were not stable unless the sample size was larger (N =
500). The robust ML method tended to substantially
underestimate factor loadings for ordinal indicators and
overestimate the model chi-square, but bias in estimated
path coefficients and standard errors was relatively
small. For researchers concerned mainly with estimat-
ing structural parameters and less concerned with sig-
nificance testing outcomes the robust ML method is a
practical alternative to the WLSMV method for indica-
tors with at least five or so response categories.
Savalei (2021) cautioned that approximate fit indexes
such as the RMSEA and CFI computed for ordinal
data based on the scaled model chi-square in the robust
DWLS method actually estimate a different quantity
than their counterparts in the ML method for con-
tinuous data. One reason is that the ML fit function
is related to the difference between the observed and
model-implied correlation matrix, but the DWLS fit
function concerns the difference between the estimated
Pearson correlations for latent variables presumed to
underlie categorical observed variables and those pre-
dicted by the model. The two fit functions perfectly
coincide only when the model is correct and all residu-
als are zero in very large samples.
Savalei (2021) described two alternative methods
to compute modified versions of the RMSEA and CFI
for categorical data. One proposed solution is to apply
Pt4Kline5E.indd 325
325
the normal-theory ML estimator to the matrix of poly-
choric correlations and then calculate the RMSEA and
CFI based on values of ML fit functions. The second
method also relies on the ML fit function applied to
categorical data, but it assumes that the data were ana-
lyzed with DWLS. This is accomplished by evaluating
the ML fit function for values of parameter estimates
obtained using DWLS. In computer simulations, values
of the RMSEA and CFI computed in the two methods
generally outperformed their counterparts based on the
DWLS fit function except in samples where N = 200,
where all approximate fit indexes were typically inac-
curate. These results add to the cautionary tale about
relying too much on approximate fit indexes to discern
model fit whether the data are categorical or continu-
ous. But there is a solution: Look to the residuals for the
details of model fit.
DETAILED EXAMPLE FOR ITEMS
ABOUT SELF‑RATED DEPRESSION
The data for this example of categorical CFA are the
responses from 2,004 White men to five items (nos.
1, 2, 7, 11, and 20) from the Center for Epidemiologic
Studies Depression (CES-D) scale (Radloff, 1977).
These items cover somatic complaints or reports of
reduced activity related to depression. The 4-point Lik-
ert response scale for all items indicates the degree to
which each symptom was experienced during the prior
week—see Equation 18.1. These data were collected as
part of the National Health and Nutrition Examination
Survey (NHANES) 1982–1984 Epidemiological Fol-
low-up (Cornoni-HUntley et al., 1983; Madans et al.,
1986). The raw data are available from the website for
the Inter-university Consortium for Political and Social
Research (ICPSR).3 Through permission of the ICPSR,
these raw data are also available on the website for this
book.
Listed in Table 18.1 are the syntax, data, and output
files for estimating the model in Figure 18.2 with five
ordinal indicators for a single common factor (depres-
sion) with the raw data (item responses) for N = 2,004
respondents in lavaan. The scaling method for the
latent response variables is delta, and option WLSMV
specified the DWLS estimator with a mean- and vari-
ance-adjusted chi-square with robust standard errors.
The depression common factor (labeled as factor A
3 https://www.icpsr.umich.edu/web/pages/
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 326 Advanced Techniques
TABLE 18.1. Analyses, Script and Data Files,
and Packages in R for a for a Single-Factor
Model of Depression with Ordinal Indicators
Analysis Script file
1. Single-factor model radloff-categorical-cfa.r
for ordinal data,
option “WLSMV”
Note. The output file has the same name except the extension is
“.out.” The external data file is “radloff.csv.” Option “WLSMV”
specifies the diagonally weighted least squares estimator (DWLS) with
mean- and variance-adjusted test statistics and robust standard errors.
The lavaan package was used for the analysis.
in the figure) is scaled using the reference variable
method.
The number of observations in this analysis with
v = 5 items include 5(4)/2, or 10 polychoric correlations
plus 15 thresholds (3 per item) for a total of 25. The
total number of free model parameters is 20, includ-
ing 15 item thresholds, 4 factor loadings for the latent
response variables, and the variance of the common
depression factor (see the figure), so df M = 25 – 20 =
5. In delta scaling, the error variances of the latent
response variables are not free parameters (they are
fixed to equal 1.0). Because the number of sample ver-
sus estimated thresholds is the same (15), each observed
threshold will equal its model-implied counterpart; that
is, all threshold residuals will be zero.
Estimation in lavaan converged to an admissible
solution. Values of selected robust fit statistics are listed
next
chiWLSMV(5) = 17.895, p = .003
RMSEA = .036, 90% CI [.019, .055]
CFI = .994, SRMR = .022
The exact-fit test is failed, so the model is tentatively
rejected. The sample size in this analysis is relatively
large (N = 2,004), so whether the failed exact-fit test is
due to more to sample size versus poor local fit (i.e., the
residuals) is not yet known. Results on other global fit
statistics do not seem grossly problematic, but note that
interpretative guidelines for approximate fit indexes
developed for models with continuous endogenous
variables may not generalize to methods for ordinal
data (Xia & Yang, 2019).
Next we consider alternative global significance tests
for the categorical CFA model analyzed in this example.
Pt4Kline5E.indd 326
These tests are based on the SRMR, which are printed
by the “lavResiduals()” function for Bentler-type
correlation residuals (Topic Box 9.3; Chapter 17). In
Monte Carlo simulations, Shi et al. (2020) evaluated
the accuracy of confidence intervals and significance
tests for the close-fit hypothesis based on the SRMR
and RMSEA in categorical CFA. Simulation condi-
tions for population two-factor models were based on
varying numbers of items (10, 20, or 30) with either 2
or 5 response categories for four different sample sizes
(N = 100, 200, 500, 1,000) and five different levels of
misspecification based on factor intercorrelations. For
unbiased forms of both approximate fit indexes, sample
mean values were generally close to the corresponding
population values. Confidence intervals and p values
for close-fit tests were generally accurate for the SRMR
in larger samples (N ≥ 500), but results for the RMSEA
indicated appreciably lower accuracy, especially for
larger models with ≥ 20 items or for models with
greater misspecification. Results for the sample (not
bias-corrected) RMSEA were even worse, including in
the largest sample size (N = 1,000). In general, confi-
dence intervals and tests of close fit for the RMSEA
were inaccurate except for models with fewer items (10)
and relatively smaller amounts of misspecification.
For Bentler-type residuals—see the output file for
analysis 1, Table 18.1—sample SRMR = .022 with
an estimated standard error of .005. The result for the
exact-fit test is p = .002, so the model is tentatively
rejected, which is the same conclusion as for the scaled
chi-square test of exact fit. The value of unbiased
SRMR is .019, and the 90% interval is [.010, .029], so
the model passes the close-fit test assuming the popula-
tion SRMR is ≤ .050 with a p value that is close to 1.0.
Remember that passing a close-fit test does not war-
rant ignoring a failed exact-fit test (Appendix 10.A).
In a moment, we will inspect the correlation residuals
for this analysis, but I can tell you now that no obvi-
ous local fit problems are indicated, so the single-factor
model with ordinal indicators in Figure 18.2 is retained.
Parameter estimates for delta scaling are reported
in Table 18.2. The unstandardized factor loadings
estimate the amount of change in each latent response
variable, given a 1-point change in their common fac-
tor, or A (depression) in Figure 18.2. Each standardized
loading estimates the Pearson correlation between the
depression factor and each latent response variable.
These same coefficients also estimate the amount of
the change in standard deviation units in the latent
response variables, given a change of one full standard
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 Categorial Confirmatory Factor Analysis 327

deviation in the depression factor. The squares of these
coefficients indicate the proportions of explained vari-
ance (R2), but these values concern the latent response
variables, not the original items (observed ordinal
variables). Exercise 2 asks you to respecify the model
in Figure 18.2 so that the depression factor is scaled
using the effects coding method instead of the reference
variable method (Chapter 14). The note for Table 18.2
reports on the thresholds (3 per item) with standard
errors. These values are just the descriptive statistics
for each of the five items because the threshold struc-
ture in this analysis has no degrees of freedom (df = 0).
Exercise 3 asks you to demonstrate that the thresholds
for item X1 generated in lavaan correspond to the
cumulative response proportions for this item listed at
the beginning of the output file for this analysis.
Listed in the top part of Table 18.3 are the Bentler-
type correlation residuals, or differences between the
estimated (sample) polychoric correlations and values
predicted by the model for the latent response vari-
ables, and reported in the bottom part of the table are
test statistics (z) for the correlation residuals. A total
of five correlation residuals that range in value from
–.046 to .041 differ significantly from zero at the .05
level. No other absolute residuals exceed .046. Thus,
these significant test results seem more attributable to
sample size, which is reasonably large in this analy-
sis (N = 2,004) for a relatively simple model, than to
marked disagreement between model and data at the
level of the latent response variables. See Koziol (2023)
for additional examples of analyzing dichotomous and
ordinal indicators in categorical CFA.
OTHER ESTIMATION OPTIONS
FOR CATEGORICAL CFA
Additional methods for analyzing models with ordi-
nal indicators are discussed next. The EQS program
(Bentler & Wu, 2008) fits models with categorical or
continuous indicators to correlation structures using a
two-stage method by Lee et al. (1995). In the first stage,

TABLE 18.2. Diagonally Weighted Least Squares

Parameter Estimates with Robust Standard Errors for a
Single-Factor Model of Depression with Ordinal Indicators
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Factor loadings
A → X1* 1.000 — .609 .028
A → X 2* 1.070 .065 .651 .029
A → X 3* 1.285 .065 .782 .020
A → X 4* 1.004 .056 .611 .023
A → X 5* 1.266 .065 .771 .021

Error variances
X1* .630 — .630 .034
X 2* .576 — .576 .038
X 3* .388 — .388 .032
X 4* .627 — .627 .028
X 5* .406 — .406 .033

Factor variance
Depression .370 .034 1.000 —

Note. Latent response variable (X*) scaling is delta. Item thresholds with standard er-
rors in parentheses: X1, .772 (.031), 1.420 (.041), 1.874 (.056); X2, 1.044 (.034), 1.543
(.044), 1.874 (.056); X3, .541 (.030), 1.152 (.036), 1.503 (.043); X4, .288 (.028), 1.000
(.034), 1.500 (.043); X5, .558 (.030), 1.252 (.038), 1.712 (.049).

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 328 Advanced Techniques

TABLE 18.3. Correlation Residuals and Test Statistics

for a Single-Factor Model of Depression with Ordinal Indicators
Variable 1 2 3 4 5
Correlation residuals
X1* 0
X 2*   .041 0
X 3* –.005 –.029 0
X 4*   .030   .020 –.024 0
X 5* –.046 –.013   .024 –.005 0

Test statistics (z)

X1* 0
X 2* 2.043 0
X 3* –.391 –2.102 0
X 4* 1.699 1.046 –2.112 0
X 5* –3.545 –.918 3.610 –.503 0

Note. Correlation residuals are the differences between estimated (i.e., sample) and model-im-
plied polychoric correlations.

a special form of ML estimation is used to approximate
correlations between the latent response variables. In
the second stage, an asymptotic covariance matrix is
computed, and the model is analyzed with a form of
the generalized least squares (GLS) estimator (Chapter
9) designated as arbitrary GLS (AGLS). The Amos
program (Arbuckle, 2021) takes a Bayesian approach
to the analysis of ordinal data. It generates posterior
distributions of parameter estimates and provides the
user with different kinds of graphical displays about
precision of the estimates, but knowledge of Bayesian
methods for ordinal data is required—see Taylor (2019)
for more information.
Another option is a special form of the full-infor-
mation maximum likelihood (FIML) estimator for non-
continuous variables that is available in SEM computer
tools such as Mplus (Muthén & Muthén, 1998–2017)
and OpenMx (Neale et al., 2016). It does not fit the
model to a correlation structure over two steps as in
the robust WLS method. Instead, it directly analyzes
the raw data and estimates the latent response variables
using methods for numerical integration. In nontech-
nical language, this means that the computer attempts
to estimate likelihoods of the data within the joint mul-
tivariate normal distribution for all v latent response
variables, where v is the number of indicators. The joint
distribution is defined by a probability integral, which
is a construct in calculus that represents areas, vol-
umes, or portions of a probability distribution defined
by its integral. The probability distribution for all latent
response variables is defined by its v-tuple probability
integral, where v is the number of such variables. It is
challenging enough to get computers to solve prob-
ability integrals for even a single dimension, much less
over multiple dimensions, so approximate methods are
generally used.
Computer analysis in FIML estimation for categori-
cal data relies on simulated random sampling from
estimated joint probability distributions for the latent
response variables. One such algorithm is the Markov
Chain Monte Carlo (MCMC) method that is also used
in multiple imputation (Chapter 4) to draw random sam-
ples from theoretical probability distributions. Another
method is adaptive quadrature, which divides a prob-
ability integral into progressively smaller intervals until
a stopping criterion is met for approximating the inte-
gral over each interval. More subdivisions are required
for more complex probability integrals, especially if
there are sharp peaks or cusps in regions of the distribu-
tion (Heath, 2018). Computational requirements greatly
increase as the number of dimensions increase to the
point where even modern personal computers with fast
processors and large memory capacities may be insuf-
ficient for bigger models. Another drawback is a reduc-

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 Categorial Confirmatory Factor Analysis
tion in information about model fit in the output. For
example, the Mplus program prints a small number of fit
statistics, such as the AIC and BIC, for models with ordi-
nal indicators estimated in the FIML method, and no
residuals are available, depending on analysis options.
Very large sample sizes are needed for the method, so it
is not a practical alternative to robust DWLS in perhaps
many, if not most, applications of categorical CFA.
The special FIML method for noncontinuous vari-
ables can potentially extract all available information
from an incomplete data file without deleting cases and
with no imputation. When data are missing at random
(MAR), a full information method will generate unbi-
ased estimates (Chapter 9). Some computer tools, such
as Mplus, support multiple imputation in the robust
DWLS method for ordinal data (Asparouhov & Muthén,
2021); otherwise, options may be limited to listwise or
pairwise deletion, which assumes the data are missing
completely at random (MCAR). In computer simula-
tions, Pritikin et al. (2018) compared the performance
of FIML, robust DWLS with listwise deletion, and
robust DWLS with multiple imputation for models with
both ordinal and continuous indicators when the data
loss pattern is MAR. The robust DWLS estimator with
listwise deletion was clearly outperformed by the other
two methods. There was a smaller advantage for FIML
over robust WLS with multiple imputation, but whether
that advantage translates to a meaningful difference in
real data sets is unknown.
ITEM RESPONSE THEORY AND CFA
Both CFA and methods for item response theory (IRT)
(see the Psychometrics Primer on this book’s website)
can analyze data at the level of items or scales (total
or other summary scores over items). There are other
points of contact between the two methods: It is possible
to rescale estimates in categorical CFA, such as factor
loadings and thresholds, to equal item discriminations
or item difficulties in two-parameter IRT models, and
vice versa (Wirth & Edwards, 2007). They share some
of the same estimators, such as FIML, and assumptions
about relations between categorical items and latent
response variables. The Mplus program can estimate
the parameters of three- or four-parameter logistic IRT
models including parameters for guessing, or the prob-
abilities that respondents with low levels of ability could
get items correct simply by guessing at the answers. It
can also analyze items where scoring is based on partial
Pt4Kline5E.indd 329
329
credit instead of dichotomous scoring as correct versus
incorrect. In the past, computer tools for IRT were gen-
erally limited to the analysis of unidimensional models,
but modern IRT software can estimate measurement
models with multiple factors just as in CFA.
I believe that categorical CFA and IRT differ more
in the context of their application and the potential
range of analytical capabilities than in their underly-
ing statistical models. The technique of CFA is usually
applied in sample sizes like N = 200–500 that would
be considered as too small for some of the “industrial
strength” applications of IRT. One difference is the
capability to develop in IRT tailored tests, or sub-
sets of items generated by the computer that optimally
assess an examinee based on the correctness of their
previous answers. If the examinee fails initial items,
the computer presents easier ones. Testing stops when
more difficult items are consistently failed. A reliability
coefficient can be estimated for each person, given the
particular items administered. In contrast, CFA gener-
ally analyzes static measurement models fitted to data
from the whole sample, not just individual cases. Very
large samples and numbers of test items are required
for tailored testing. See Koziol et. al (2023) for more
information about IRT models and analyses for cat-
egorical data.
SUMMARY
There are special methods for estimating structural
equation models with ordinal data, such as items with
Likert response scales. When the number of response
categories is relatively small, such as < 5, a good practi-
cal choice is the robust DWLS method, which fits mea-
surement models with threshold structures to polychoric
correlation matrices estimated for latent response vari-
ables presumed to underlie the observed variables, plus
the option to generate scaled test statistics and robust
standard errors. A reasonable alternative for ordi-
nal indicators with at least five response options and
nearly symmetrical histograms is robust ML for con-
tinuous variables, which may require smaller sample
sizes compared with the robust DWLS estimator. Using
robust DWLS with multiple imputation for incomplete
data files is a better general option than the robust
DWLS method with case deletion. There are relatively
newer methods for testing global model fit based on the
correlation residuals, or differences between estimated
(sample) and model-implied polychoric correlations,
3/22/2023 2:05:50 PM
 330 Advanced Techniques
that may useful in categorical CFA. Full information
ML estimation for categorical data based on methods
that simulate random sampling from multivariate prob-
ability distributions is an alternative to robust DWLS,
but very large samples are needed.
LEARN MORE
Finney and DiStefano (2013) give clear descriptions of esti-
mation options for ordered-categorical data, Rhemtulla et al.
(2012) compare robust WLS and robust ML for continuous
variables as alternative for models with ordinal indicators,
and Shi et al. (2020) describe confidence intervals and test
statistics based on correlation residuals for ordinal data.
EXERCISES
1. Interpret t2 = .253 in Figure 18.1(b), given the infor-
mation in Figure 18.1(a).
2. Rerun analysis 1 in Table 18.1 but scale the scale
depression factor using the effects coding method
instead of the reference variable model. Compare
the results for factor loadings in the respecified
model as just described with those in the original
model.
Pt4Kline5E.indd 330
Finney, S. J., & DiStefano, C. (2013). Nonnormal and
categorical data in structural equation modeling. In G.
R. Hancock & R. O. Mueller (Eds.), Structural equation
modeling: A second course (2nd ed., pp. 439–492). IAP.
Rhemtulla, M., Brosseau-Liard, P. É., & Savalei, V. (2012).
When can categorical variables be treated as continu-
ous? A comparison of robust continuous and categorical
SEM estimation methods under suboptimal conditions.
Psychological Methods, 17(3), 354–373.
Shi, D., Maydeu-Olivares, A., & Rosseel, Y. (2020) Assess-
ing fit in ordinal factor analysis models: SRMR vs.
RMSEA. Structural Equation Modeling, 27(1), 1–15.
3. For analysis 1, show that the thresholds for item
X1 in Table 18.2 generated in lavaan match the
cumulative proportions of responses over the four
response categories (Equation 18.1) listed at the
beginning of the output file for this example.
3/22/2023 2:05:53 PM
 19

Nonrecursive Models with Causal Loops

The assumptions of recursive structural models—whether comprised of single indicators or proxies (common
factors, composites)—that all causal effects are unidirectional and that disturbances are independent simplify
the analysis. For example, recursive structural models are identified (Rules 15.1, 16.4). Partially recursive
models with unidirectional effects and bow-free patterns of disturbance correlations restricted to pairs of
endogenous variables with no direct effects between them (e.g., Figure 7.4(c)) are also identified (Rule 7.4)
and, thus, can be treated in the analysis just like recursive models. The occurrence of Heywood cases or
failure of iterative estimation is also less likely for recursive models.
But the same assumptions about recursive models that ease the analytical burden are also restrictive.
For example, neither causal loops nor correlated disturbances in a bow pattern, which occur between pairs
of endogenous variables with direct effects between them (e.g., Figure 7.4(d)), can be represented in recur-
sive models. These kinds of effects can be specified in nonrecursive structural models, but they have special
identification requirements that involve instrumental variables (e.g., Figure 6.1(f)). Nonrecursive models with
causal loops (e.g., Figure 7.4(b)) have additional special assumptions about reciprocal causation that are
difficult, if not generally impossible, to verify in the analysis. How to deal with the challenges just mentioned
is the focus of this chapter starting next with discussion of causal loops.

CAUSAL LOOPS Y1 ←

Causal loops in nonrecursive models represent the

hypothesis of feedback effects or reciprocal causation
among ≥ 2 endogenous variables. In a direct feedback
loop, for example, two variables Y1 and Y2 are speci-
fied as causes and effects of each other, or Y1  Y2.
An indirect feedback loop involves ≥ 3 variables con-
nected by direct effects that eventually lead back to ear-
lier variables. In model diagrams, an indirect feedback
loop among variables Y1–Y3 would be represented as a
“triangle” with direct effects that connect them in the
order specified by the researcher. An example shown
with compact symbolism for disturbances is presented
next:
→ Y3 Y2 ←
Because each variable in the feedback loop just illus-
trated is involved in an indirect effect, such as Y2 in the
indirect pathway Y1 → Y2 → Y3, feedback is indirect.
You should know that feedback loops in nonre-
cursive models are estimated with data from cross-
sectional designs, not longitudinal designs. That is,
variables in a causal loop are measured at the same

331

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 332 Advanced Techniques
occasion. In contrast, reciprocal effects in longitudi-
nal designs are estimated by (1) measuring variables
hypothesized to mutually influence each other at ≥ 2
different points in time and (2) specifying cross-lag
direct effects between those variables over time. For
example, a causal loop between Y1 and Y2 based on a
cross-sectional design is represented as a nonparamet-
ric model without disturbances or other variables in
Figure 19.1(a). In the panel model of Figure 19.1(b), the
same two variables are each measured in a longitudinal
design at two different points in time, where the second
characters in the double subscripts represent the mea-
surement occasion (e.g., Y12 is variable Y1 measured at
the second time, and so on). The two cross-lag direct
effects are
Y11 → Y22 and Y21 → Y12
which represent, respectively, prediction of Y1 and Y2
each from prior values of the other variable. In contrast,
the autoregressive paths in Figure 19.1(b), or
Y11 → Y12 and Y21 → Y22
represent the prediction of each variable from prior val-
ues of the same variable. Cross-lag and autoregressive
effects are each estimated controlling for the other. For
example, the coefficient for the cross-lag effect of Y2 at
time 1 on Y1 at time 2 in Figure 19.1(b) is estimated
controlling for the autoregressive effect of Y1 on itself
over time, and vice versa. A panel model may be recur-
(a) Direct feedback loop (b) Panel model
(Cross-sectional) (Longitudinal)
Y1 Y11 Y12
Y2 Y21 Y22
FIGURE 19.1. Reciprocal causal effects between endoge-
nous variables Y1 and Y2 represented in nonparametric mod-
els with a direct feedback loop based on a cross-sectional
design (a) and cross-lag direct effects based on a longitudi-
nal design (panel model) (b) shown without disturbances or
other variables.
Pt4Kline5E.indd 332
sive or nonrecursive depending on its pattern of distur-
bances—see Little (2013, chap. 6) or Newsom (2015,
chap. 5) for examples.
Panel models for longitudinal data offer potential
advantages over models with feedback loops for cross-
sectional data. One is temporal precedence, or the
explicit representation of a causal lag that corresponds
to the measurement occasions. Specifying the correct
lag is critical in longitudinal designs: If the interval
between measurements is shorter than the true causal
lag, then there is insufficient time for a cause to affect
the outcome. Conversely, that interval should not be
so long that causal effects have already dissipated. An
option when the true causal lag is unknown or cannot
be reasonably approximated is multiphase longitudi-
nal designs, where different measurement occasions,
some shorter but others longer, are specified for dif-
ferent subsets of participants (Taris & Kompier, 2014).
For example, the variables Y11 and Y22 in Figure 19.1(b)
could be measured 2, 3, or 4 months apart for three
different subgroups, but the specific lags should be
appropriate to the variables under study. There is no
guarantee that any of the multiple lags in a multiphase
study is actually correct.
But the absence of temporal precedence is not always
a liability when estimating reciprocal causation. Finkel
(1995) argued that the lag for some causal effects is so
short that it would be impractical to measure them over
time. Examples are reciprocal effects of the moods of
spouses on each other. Although the causal lags in this
example are not zero, they may be so short as to be vir-
tually synchronous. If so, then representing such effects
as direct feedback loops in nonrecursive models that
are analyzed with cross-sectional data would be more
defensible. Indeed, if causal lags are very short, it could
be more appropriate to estimate such effects in cross-
sectional designs even when panel data are available
(Wong & Law, 1999). Thus, longitudinal data collected
according to a specific measurement schedule are not
automatically superior to cross-sectional data when
true causal lags are very short.
Disturbances of variables that make up a feedback
loop are often assumed to covary. This specification
makes sense because if the variables mutually cause
each other, then it seems plausible that they may share
unmeasured causes. Some of the error in predicting one
variable in a feedback loop, such as Y1 in Figure 19.1(a),
may be due to the other variable in that loop, or Y2. The
presence of disturbance covariances in nonrecursive
models can also assist in the evaluation of whether such
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 Nonrecursive Models with Causal Loops
models are identified. In statistical examples by Wong
and Law (1999), estimating disturbance covariances
improved the chances of detecting true unidirectional
effects between variables specified as mutually causing
each other in direct feedback loops. As for any kind of
model specification, the inclusion of correlated errors
for endogenous variables in feedback loops should have
substantive justification. The reason is to avoid speci-
fying correlated disturbances for structural models or
correlated errors for measurement models simply to
improve model fit.
ASSUMPTIONS OF CAUSAL LOOPS
Data from cross-sectional designs give only a snap-
shot, or an isolated observation, of an ongoing dynamic
process. Therefore, estimation of reciprocal effects
in a feedback loop with cross-sectional data requires
the assumption of equilibrium, or any changes in the
system underlying a presumed feedback relation have
already manifested their effects and the system is in a
steady state. That is, the values of the estimates of the
direct effects in a causal loop do not depend on the spe-
cific time point when data are collected. Kaplan et al.
(2001) reminded us that there is generally no statisti-
cal way to directly evaluate the equilibrium assump-
tion; instead, it must be substantively argued. But
this assumption is not often acknowledged in studies
where feedback effects are estimated in cross-sectional
designs. This is unfortunate because the results of
computer simulation studies by Kaplan et al. (2001)
indicated that violation of the equilibrium assumption
can lead to severely biased estimates. Another assump-
tion is that of stationarity, or the requirement that the
basic causal structure does not change over time. Both
assumptions just described, equilibrium and stationar-
ity, are very demanding (i.e., probably unrealistic).
IDENTIFICATION REQUIREMENTS
It is more difficult to establish whether a nonrecursive
structural model is identified compared with recursive
models. Fortunately, there are some straightforward
ways to determine whether some, but not all, types
of nonrecursive models are identified. Some of these
methods are graphical and are relatively easy to apply
in smaller models, but they are prone to error when
dealing with larger models with many variables. Recall
Pt4Kline5E.indd 333
333
that there are also empirical checks for whether a struc-
tural equation model is identified (Chapter 14), but they
are not foolproof (i.e., passing an empirical check does
not prove identification). The general principles and
practical suggestions for dealing with identification for
nonrecursive models are summarized next:
1. Endogenous variables in causal loops require
instrumental variables depending on their patterns
of disturbance covariances.
2. Adding exogenous variables is one way to remedy
an identification problem of a nonrecursive model.
But this can typically be done before the data are
collected. Thus, it is critical to evaluate a nonre-
cursive structural model for identification right
after it is specified and before the data are col-
lected.
3. A common beginner’s mistake is to specify a com-
plex nonrecursive model of ambiguous identifica-
tion status and then attempt to analyze it. If the anal-
ysis fails (likely), it may not be clear what caused
the problem. Begin instead with a simpler model
that is a subset of the target model and for which the
application of heuristics can prove identification. If
the analysis fails, the problem is not identification;
otherwise, add parameters to the simpler model one
at a time. If the analysis fails after adding a particu-
lar effect, try a different order. If these analyses also
fail at the same point, then adding the correspond-
ing parameter may cause underidentification. If no
combination of adding effects to a basic identified
model gets you to the target, think about how to
respecify the original model in order to identify it,
yet still respect your hypotheses.
Graphical Identification Rules
Graphical methods and special computer tools for
determining whether specific causal effects in directed
acyclic graphs are identified (Chapter 6) can be applied
to recursive structural models (Chapter 8). But exten-
sions of these methods to directed cyclic graphs with
causal loops (i.e., nonrecursive models) are not as well
developed and can be challenging to use—see Wang
et al. (2016). Rigdon (1995) devised a set of neces-
sary and sufficient graphical rules for evaluating the
identification status of nonrecursive models where the
endogenous variables can be partitioned into recur-
sively related blocks. This block classification method
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 334 Advanced Techniques
requires no data and thus can be applied when the model
is specified. It is also useful for structural models with
observed variables only or with proxies for conceptual
variables. The method is not automated (at least to my
knowledge), so it is applied by hand to model diagrams,
which can be more challenging for bigger models.
In Rigdon’s (1995) method, each block in the model
diagram contains either one or two endogenous vari-
ables. Blocks with two variables are reserved for those
involved in direct feedback loops or with disturbance
covariances in a bow pattern (i.e., there is a single direct
effect between that variable pair). Blocks with a single
endogenous variable have strictly recursive relations to
all other variables in the model. Exogenous variables
are ignored when partitioning the endogenous vari-
ables. Any single variable block is identified because
it is recursive. Any two-variable block falls into one of
eight patterns described by Rigdon (1995, p. 370), some
of which correspond to identified blocks, but other pat-
terns describe blocks that are not identified.
Shown in Figure 19.2 are the abstractions from Rig-
don’s (1995) types that represent minimum required
specifications for identifying a two-variable block, Y1
and Y2, with instruments that could be either exog-
enous or endogenous variables. All other specifications
beyond these minimum requirements are irrelevant
(i.e., they have no bearing on whether the two-variable
block is identified or not identified). All other variables
in the model can be ignored, including the ones with
direct effects on both Y1 and Y2. This is because such
variables cannot be instruments (Chapter 6). Symbols
(a) Bow pattern (b) No disturbance
covariance
Y1 Y2 Y1
xor
FIGURE 19.2. Minimum required specifications for identifying blocks of two endogenous variables, Y1 and Y2, based on
Rigdon’s (1995) graphical block classification method. Unlabeled variables are instruments; xor, exclusive or (an instrument
for either Y1 or Y2, but not both).
Pt4Kline5E.indd 334
for individual observed variables (squares) are repre-
sented in Figure 19.2, but the same requirements apply
to nonrecursive structural models with common factors
or composites.
Depicted in Figure 19.2(a) is a bow-pattern distur-
bance covariance. This two-variable block is identified
if the causal variable Y1 has an instrument. This speci-
fication also provides a way to identify the direct effect
of a putative causal variable on an outcome where the
two variables share a disturbance covariance, which is
a type of endogeneity (e.g., Figure 6.1(f)). Shown in Fig-
ures 19.2(b) and 19.2(c) are blocks of two endogenous
variables that share a direct feedback loop, where it is
assumed that both direct effects that make up the loop
are free parameters. Figure 19.2(b), with a direct feed-
back loop between Y1 and Y2, is identified if (1) there is
one instrument (either Z1 or Z2, but not both) and (2)
there is no disturbance covariance (it is fixed to equal
zero). But if the disturbance covariance is also a free
parameter, then separate instruments are needed for
both endogenous variables, such as Z1 for Y1 and Z2 for
Y2 as represented in Figure 19.2(c).
Let’s try some examples. We still assume that all
direct effects in feedback, either direct or indirect, are
free parameters and that all disturbance covariances
are free parameters, too. Represented in Figure 19.3(a)
is the smallest identified model with all possible dis-
turbance covariances (1 in total) for estimating direct
feedback. The sole block of endogenous variables is the
two-variable block Y1  Y2. The instrument for Y1 is X1,
and the instrument for Y2 is X2. With separate instru-
Direct feedback loop
(c) With disturbance
covariance
Y2 Y1 Y2
and
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 Nonrecursive Models with Causal Loops 335

(a) Direct feedback (b) Indirect feedback

X1 Y1

X1 Y1
X2 Y2

X2 Y2 X3 Y3

(c) Block recursive

X1 Y1 Y3

X2 Y2 Y4

FIGURE 19.3. Basic identified nonrecursive models with all possible disturbance covariances for a single direct feedback
loop (a) and for indirect feedback loops with three variables (b). A block recursive model with two recursively related blocks
of direct feedback loops and all possible disturbance covariances within each block (c). The whole model is nonrecursive.

ments for each of Y1 and Y2, the model is identified (see
Figure 19.2(b)). Figure 19.3(b) represents the smallest
identified model with all possible disturbance correla-
tions (3 in total) for estimating indirect feedback among
three endogenous variables, Y1–Y3. All direct effects
between each pair are unidirectional, such as Y1 → Y2,
but they connect Y1–Y3 in a nonrecursive (circular) way.
The endogenous variables in each block share a distur-
bance covariance, which matches the pattern in Figure
19.2(a). The instruments for each two-variable block of
endogenous variables in Figure 19.3(b) are listed next:
1. X1 is the instrument for Y1 in the direct effect
Y1 → Y2;
2. X2 is the instrument for Y2 in the direct effect
Y2 → Y3; and
3. X3 is the instrument for Y3 in the direct effect
Y3 → Y1.
Presented in Figure 19.3(c) is the smallest identified
block recursive model with a pair of direct feedback
loops for two different sets of endogenous variables,
Y1 and Y2 in the first loop from the left and Y3 and Y4
in the second loop, and all possible disturbance vari-
ances in each block (i.e., 1), or 2 in total for the whole
model. Direct effects within each block of two endog-
enous variables are bidirectional, such as Y1  Y2 in the
first loop, but effects between the blocks are recursive,
including the direct effects
Y1 → Y3 and Y2 → Y4
with independent disturbances across the two blocks.
Block recursive models are considered nonrecursive
despite their name. In the figure, the instruments for
Y1 and Y2 in the first block of endogenous variables
are, respectively, the exogenous variables X1 and X2.
The instruments for Y3 and Y4 in the second block are,
respectively, the endogenous variables Y1 and Y2.
For all examples in Figure 19.3, the instruments are
defined by the model’s specifications; that is, they are
model-implied instruments. Specifically, the coefficient

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 336 Advanced Techniques
for the direct effect of the instrument on the outcome
variable in a pair of endogenous variables in Rigdon’s
(1995) block classification method is fixed to zero.
The model must also imply no correlation between an
instrument and the disturbance of the outcome vari-
able for the same pair (Rule 6.5). In Figure 19.3(a), for
instance, variable X1 has a direct effect on Y1 but has
no direct effect on Y2, and there is no model-implied
association between X1 and the disturbance of Y2.
Therefore, variable X1 is a proper instrument for Y1
in its direct feedback relation with Y2 (i.e., Y1  Y2).
Kenny (2012) reminded us that the zero path between
the instrument and the outcome in a nonrecursive block
of two variables should be established by theory, not
statistical analysis. For example, do not regress Y2 on
X1 and X2 in Figure 19.3(a) and select the instrument
by seeing which variables have coefficients that are not
statistically significant.
Even if nonrecursive models like the ones in Figure
19.3 are identified, their analysis can still be foiled by
empirical underidentification. This can occur when the
values of coefficients for key paths in the model are close
to zero, which effectively drops them out of the model
and renders it practically underidentified. Suppose that
the coefficient for the path X2 → Y2 in Figure 19.3(c)
is about zero. The virtual absence of this path means
that Y2 has no instrument, which violates the require-
ment that each endogenous variable in a direct effect
loop with a disturbance covariance has its own instru-
ment (Figure 19.2(c)). Extreme multicollinearity can
also lead to empirical underidentification. For example,
if the absolute correlation between exogenous variables
X1 and X2 in Figure 19.3(c) is nearly 1.0, they are basi-
cally the same variable, which means that the model’s
requirement for two instruments is virtually failed.
RESPECIFICATION OF NONRECURSIVE
MODELS THAT ARE NOT IDENTIFIED
Suppose that Figure 19.4(a) is specified to faithfully
reflect the hypotheses of a particular theory but, unfor-
tunately, the model is not identified. Applying Rigdon’s
(1995) method, we can spot the problem right away:
There is a pair of endogenous variables, Y1 and Y2, in
a direct feedback loop, their disturbance covariance is
a free parameter, but exogenous variable X1 has direct
effects on both Y1 and Y2, so there is no instrument for
either endogenous variable. Thus, the parameters of the
causal loop in the figure—the 2 direct effects, 2 dis-
Pt4Kline5E.indd 336
turbance variances, and 1 disturbance covariance—are
underidentified. There is no problem with the single-
variable block that includes the third endogenous vari-
able, Y3, which is recursively related to all prior vari-
ables in the model.
What does the researcher do now? There are basi-
cally two options: The first is to add to Figure 19.4(a)
two new exogenous variables, X2 and X3, that serve as
instruments for Y1 and Y2, the two endogenous variables
in the causal loop. For example, specifying that X2 has a
direct effect on Y1 but not Y2 generates a model-implied
instrument for Y1, but there should be a substantive
rationale for this specification. Through similar logic,
variable X3 is a model-implied instrument for Y2, if X3
has a direct effect on Y2 but no direct effect on Y1. If
justified by theory, the three exogenous variables in
a modified version of the figure could be assumed to
covary. All the respecifications just described preserve
the original direct effects in Figure 19.4(a), including
the hypothesis that variable X1 is a common cause of
both Y1 and Y2.
If the data are already collected, it may be too late
to add exogenous variables to Figure 19.4(a). If so, then
the only remaining option is to impose constraints on
the original model so that the respecified model is iden-
tified. For example, constraining both the disturbance
covariance between Y1 and Y2 and a single direct effect
of X1 to equal zero in the figure generates an identified
model. This is because (1) a direct feedback loop with
independent disturbances requires a single instrument
(Figure 19.3(b)). Also, (2) fixing just a single direct
effect of X1 to zero generates a model-implied instru-
ment for the remaining endogenous variable. For exam-
ple, the specification
X1 → Y2 = 0
in a modified version of Figure 19.4(a) with no distur-
bance covariance defines X1 as an instrument for Y1.
The respecified model just described is identified, but
the original hypotheses in the figure that X1 is a com-
mon cause of both Y1 and Y2 and that the pair of endog-
enous variables just mentioned share at least one com-
mon omitted cause are both lost.
Another way to simplify a model with a direct feed-
back loop is to constrain the coefficients for the two
direct effects to equality, which reduces the number of
free parameters by 1 because only a single estimate is
required for the 2 direct effects. Recall that equality
constraints generally apply in the unstandardized solu-
3/22/2023 2:05:54 PM
 Nonrecursive Models with Causal Loops
(a) Not identified
Y1
X1
Y2
X2
(b) Identified
X Y1
FIGURE 19.4. Nonrecursive models that are not identified (a) or identified (b).
tion only. This means that the two corresponding stan-
dardized coefficients could still be unequal. Any equal-
ity constraint should be justified by theory, not because
it happens to generate a converged, admissible solution.
Constraining reciprocal effects to equality assumes
that the raw score metrics of the two endogenous vari-
ables are the same; otherwise, an equality constraint is
harder to justify.
ORDER CONDITION
AND RANK CONDITION
Rigdon’s (1995) block classification method is straight-
forward to apply in smaller models such as Figures 19.3
and 19.4(a). In larger models, though, it can be diffi-
cult to locate instruments through visual inspection.
Two other identification heuristics for nonrecursive
models, the order condition and the rank condition, do
not require the researcher to find model-implied instru-
Pt4Kline5E.indd 337
337
Y3
Y2
ments. Instead, they assume nonrecursive models either
with all possible disturbance covariances for the whole
model, such as Figures 19.3(a) and 19.3(b), or with all
possible disturbances within each causal loop of block
recursive models, such as Figure 19.3(c).
Order Condition
The order condition is a necessary but insufficient
requirement. This means that if the order condition
is failed, the model is not identified. But passing the
order condition does not guarantee that the model is
actually identified (Berry, 1984; Paxton et al., 2011). It
is a counting rule applied to each endogenous variable
involved in a causal loop. The order condition is evalu-
ated by tallying the number of variables (except dis-
turbances) that have direct effects on the target endog-
enous variable versus the number that do not. Let’s call
the latter excluded variables. The order condition is
stated next:
3/22/2023 2:05:54 PM
 338 Advanced Techniques
RULE 19.1 The order condition requires that the
number of excluded variables for each endogenous
variable equals or exceeds the total number of
endogenous variables minus 1
For nonrecursive models with all possible disturbance
correlations, the total number of endogenous variables
equals that for the whole model. For example, there
are three endogenous variables in Figure 19.3(b). This
means that at least 3 – 1 = 2 variables must be excluded
from the equation of each endogenous variable, which
is true here: A total of 3 variables, X2, X3, and Y2, are
excluded from the equation for endogenous variable Y1
(the included variables are X1 and Y3), which exceeds
the minimum number for this model (2). Because the
equations for endogenous variables Y2 and Y3 also meet
the order condition—Exercise 1 asks you to verify this
claim—the whole model passes the order condition.
For block recursive models, the total number of
endogenous variables is counted separately for each
block when the order condition is evaluated. In Figure
19.3(c), for instance, there are two blocks of endoge-
nous variables in causal loops. Each block has 2 vari-
ables, so to satisfy the order condition, at least 2 – 1 =
1 variable must be excluded from the equation of each
endogenous variable in both blocks, which is true here:
1 variable is excluded from each equation for Y1 and
Y2 in the first block (e.g., X2 for Y1), and 3 variables are
excluded from each equation in the second block (e.g.,
X1, X2, and Y2 for Y3). Thus, the whole block recursive
model in the figure passes the order condition.
Rank Condition
The rank condition is defined in matrix algebra terms
(Bollen, 1989, pp. 101–103; Paxton et al., 2011, chap. 3).
It is the requirement that the determinant for the matrix
of coefficients for variables excluded from the equation
of each endogenous variable does not equal zero; other-
wise, the matrix cannot be inverted, which means there
is no unique solution for the coefficients (i.e., the equa-
tion for the target endogenous variable is underidenti-
fied). In order for this determinant to be nonzero, the
rank of the coefficient matrix should equal or exceed
the number of endogenous variables minus 1. The rank
is the number of rows (equations) in the coefficient
matrix that are linearly independent, which means that
no equation is a simple weighted combination of the
rest. Two linearly dependent equations have no unique
solution; that is, they are underidentified (e.g., Equa-
Pt4Kline5E.indd 338
tion 3.2). Thus, the rank condition requires a minimum
number of independent rows in the coefficient matrix
for each endogenous variable in a nonrecursive model.
Unlike the order condition, the rank condition is both
necessary and sufficient:
RULE 19.2 The rank condition requires that the
rank of the coefficient matrix for each endogenous
variable equals or exceeds the total number of
endogenous variables minus 1; nonrecursive models
that pass this condition are identified
In models with all possible disturbance covariances,
the total number of endogenous variables equals that
for the whole model; otherwise, it is number of endoge-
nous variables in each block of a block recursive model.
Berry (1984) devised a method for checking the
rank condition that does require detailed knowledge of
matrix algebra (see also Paxton et al., 2011, chap. 3).
It is described in Appendix 19.A for Figure 19.3(a).
Exercise 2 asks you to use Berry’s (1984) method to
verify that Figure 19.4(a) is not identified. (This same
model failed Rigdon’s (1995) graphical block classifi-
cation method.) Exercise 3 asks you to show that that
Figure 19.4(b) with no disturbance covariance is identi-
fied using the block classification method. For the same
model, Exercise 4 asks you to prove that both the order
condition and the rank condition are failed. This exer-
cise demonstrates that the order condition is no lon-
ger necessary and that the rank condition is no longer
sufficient for models without all possible disturbance
covariances. Exercise 5 asks you how to respecify Fig-
ure 19.4(b) to test the hypothesis that the disturbance
covariance is zero.
DETAILED EXAMPLE FOR
A NONRECURSIVE PARTIAL SR MODEL
Robbins (2012) collected data on N = 64 countries to
test the hypothesis that generalized trust (i.e., the dis-
position to trust strangers) and institutional quality
(i.e., the perception that the state is incorruptible, offers
effective legal rights, and protects civil liberties) recip-
rocally affect each other. In other words, the view that
the state is basically fair and universalistic encourages
generalized trust among citizenry, which in turn boosts
the sense of institutional quality. Higher levels of both
generalized trust and institutional quality are associ-
ated with greater voter turnout, more civic engagement
3/22/2023 2:05:54 PM
 Nonrecursive Models with Causal Loops
by citizens, better economic performance, and less
violence (Robbins 2012; Perry, 2021). The hypotheses
just summarized correspond to a virtuous cycle, where
desirable events reinforce each other in an ongoing pat-
tern (Fan et al., 2016). In contrast, undesirable events
compound each other in a vicious cycle, which lead
to escalating detrimental outcomes unless the cycle
is interrupted (e.g., melting glaciers reflect less light,
which further warms the atmosphere). In a neutral
cycle, the outcome of feedback is nether beneficial nor
harmful.
The rate of respondents in 64 countries who endorsed
the statement “most people can be trusted” in the World
Values Survey is the single indicator for generalized
trust.1 Robbins (2012) used three measures of institu-
tional quality, legal property rights, rule of law, and
corruption, where higher scores indicate, respectively,
stronger property rights, greater civil liberties protec-
tion, and lower risks of corruption. The property rights
indicator is from the Economic Freedom of the World
project of the Fraser Institute,2 and the rule of law and
corruption indicators are from the Governance Matters
III data set of the World Bank Group.3
The instrument for generalized trust is monarchical
status, which is represented as a dichotomy coded as
“1” for a constitutional or absolute monarchy and coded
as “0” for otherwise. The rationale is that monarchies
can facilitate generalized trust by projecting a sense of
national identity, collective unity, or social stability. The
instrument for institutional quality is information tech-
nology, which is measured by two World Bank Group
indicators: internet bandwidth per person and the num-
ber of internet users per 100 people both measured in
natural log units.4 Robbins (2012) hypothesized that
information technology as an exogenous force can bol-
ster institutional quality by making states better able to
secure the exchange of commodities or enforce laws on
a wider scale (assuming such developments are not put
to malignant uses). Robbins (2012) hypothesized that
(1) a monarchy affects institutional quality only indi-
rectly through its impact on trust, and (2) information
technology affects trust only by first directly affecting
institutional quality. Results of instrument falsification
1 https://www.worldvaluessurvey.org/wvs.jsp
2 https://www.fraserinstitute.org/studies/economic-freedom
3 https://openknowledge.worldbank.org/handle/10986/17136
4 https://data.worldbank.org/indicator
Pt4Kline5E.indd 339
339
tests conducted by Robbins (2012, pp. 253–254) are
consistent with these hypotheses.
Summarized in Table 19.1 are the input data for
indicators of trust, institutional quality, monarchy, and
information technology for N = 64 countries. Because
the legal property rights and rule of law variables are
extremely collinear (r = .933), I excluded the rule of
law indicator from this analysis. Listed in Table 19.2 as
analysis 1 is the lavaan syntax file that fits the nonre-
cursive model in Figure 19.5 to the data in Table 19.1.
The model has a direct feedback loop between a mea-
sured variable, trust, and a common factor, institutional
quality. Their disturbances are assumed to covary. The
instrument for trust, monarchy, is a measured variable,
but the instrument for institutional quality, information
technology, is a common factor. The structural part of
Figure 19.5 corresponds to the Figure 19.2(c) in Rig-
don’s (1995) block classification method, so it is identi-
fied. You should verify that the structural component of
Figure 19.5 also passes both the order condition and the
rank condition. The measurement part of the model is
also identified (Rule 14.1). Exercise 6 asks you to verify
that df M = 5.
The analysis in lavaan with default ML converged
to an admissible solution. Values of selected global fit
statistics are listed next:
chiML(5) = 5.896, p = .316
CRMR = .024, exact-fit test p = .500
RMSEA = .053, 90% CI [0, .188]
CFI = .996; SRMR = .020
The model passes the chi-square test, but its power for
N = 64 is < .10 in the MacCallum–RMSEA method.
The exact-fit test based on the correlation residuals with
the CRMR as the test statistic is also passed but, again,
power would be low. The upper bound of the RMSEA
is unfavorable (.188), but this result is not surprising in
a small sample (N = 64).
The computer was unable to calculate the whole
matrix of standardized residuals for the covariance
residuals in this analysis. The correlation residuals are
reported in the top part of Table 19.3, and their cor-
responding test statistics (normal deviates, z) are listed
in the bottom part of the table (Maydeu-Olivares et al.,
2018), where values in boldface are significant at the
.05 level. All absolute correlation residuals are < .10.
Two are significant at the .05 level—.074 (monarchy,
bandwidth) and –.045 (monarchy, internet)—but nei-
3/22/2023 2:05:54 PM
 340 Advanced Techniques

TABLE 19.1. Input Data (Correlations, Standard Deviations) for Analysis

of Nonrecursive Model of Institutional Quality and Generalized Trust as
a Function of Monarchical Status and Information Technology
Indicator 1 2 3 4 5 6 7
Institutional quality
1. Rule of law —
2. Legal property rights .933 —
3. Corruption .767 .738 —

Information technology
4. Bandwidth .760 .737 .614 —
5. Internet users .820 .760 .664 .867 —

Single indicators
6. Generalized trust .454 .466 .372 .368 .375 —
7. Monarchy status .469 .480 .380 .457 .351 .498 —

SD 1.008 1.931 1.424 2.585 1.569 .138 .394

Note. Input data are from Robbins (2012), N = 64 countries.

ther result suggests gross discrepancies between model
and data. Given all results about fit just summarized,
the model is retained.
Interpretation of standardized parameter estimates
is emphasized next. Estimates for the common factors
in Figure 19.5 are reported in Table 19.4. The average
proportions of explained variance (i.e., AVE) for indi-
cators of the information technology and institutional
quality factors are, respectively, .867 and .748, which
suggest reasonable convergent validity within each set
of indicators. Estimates for the structural model are
presented in Table 19.5. The level of information tech-
nology covaries positively with monarchical status (i.e.,
monarchy instead of other types of governments). For
every increase in monarchical status of a full standard
deviation, the level of generalized trust is expected to
increase by .35 standard deviations, controlling for
institutional quality.5 The perception of institutional
quality is predicted to increase by about .69 standard
deviations, given an increase in information technology
of a full standard deviation while controlling for trust.
Estimates of direct effects for the two variables in the
5 In the unstandardized solution, the coefficient for the direct
effect of monarchy on generalized trust is .123. Because monar-
chy is coded as 1 = absolute/constitutional monarchy versus 0 =
otherwise, the level of trust in countries with monarchies is .123
points higher in raw score units than in countries with other types
of government, controlling for institutional quality.

TABLE 19.2. Analyses, Script and Output Files, and Packages in R

for a Nonrecursive Model of Institutional Quality and Generalized Trust
as a Function of Information Technology and Monarchical Status
Analysis Script file R package
1. Partial structural regression model with a causal robbins-causal-loop.r lavaan
loop analyzed with data from N = 64 countries semTools

2. Computation of blocked-error R2’s for endogenous robbins-r-squared.r lavaan

variables (trust, quality) in a causal loop

Note. Output files have the same names except the extension is “.out.”

Pt4Kline5E.indd 340 3/22/2023 2:05:54 PM

 Nonrecursive Models with Causal Loops 341

Monarchy Trust

Information Institutional
Technology Quality

1 1

Property
Bandwidth Internet Corruption
Rights

FIGURE 19.5. Nonrecursive model of institutional quality and generalized trust as a function of information technology and
monarchial status estimated with data for N = 64 countries.

TABLE 19.3. Correlation Residuals and Test Statistics for a Nonrecursive

Model of Institutional Quality and Generalized Trust as a Function
of Information Technology and Monarchical Status
Variable 1 2 3 4 5 6
Correlation residuals
Legal property rights 0
Corruption 0 0
Bandwidth –.001 –.010 0
Internet users –.003 .018 0 0
Generalized trust .005 –.018 .003 –.002 0
Monarchy status .006 –.021 .074 –.045 0 0

Test statistics (z)

Legal property rights 0
Corruption 0 0
Bandwidth –.091 –.394 0
Internet user –.456 .775 0 0
Generalized trust .317 –.317 .099 –.099 0
Monarchy status .377 –.377 2.083 –2.083 0 0

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 342 Advanced Techniques

TABLE 19.4. Maximum Likelihood Estimates for Common Factors

in a Nonrecursive Model of Institutional Quality and Generalized
Trust as a Function of Information Technology and Monarchical Status
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Factor loadings
Information technology
Bandwidth 1.000 — .915 .031
Internet users .628 .053 .947 .028

Institutional quality
Legal property rights 1.000 — .934 .038
Corruption .624 .078 .790 .055

Error variances
Bandwidth 1.065 .345 .162 .057
Internet users .250 .122 .103 .053
Legal property rights .469 .249 .128 .071
Corruption .750 .161 .376 .087

Note. Standardized estimates of error variances are proportions of unexplained variance.

TABLE 19.5. Maximum Likelihood Estimates for the Structural Part

of a Nonrecursive Model of Institutional Quality and Generalized
Trust as a Function of Information Technology and Monarchical Status
Unstandardized Standardized
Parameter Estimate SE Estimate SE
Direct effects
Monarchy → Trust .123 .045 .350 .124
Technology → Quality .523 .101 .687 .120
Trust → Quality 5.772 3.003 .442 .225
Quality → Trust .022 .012 .292 .148

Disturbance variances and covariance

Trust .013 .002 .675 .099
Quality .920 .459 .287 .013
Trust Quality –.068 .046 –.629 .288

Exogenous variances and covariance

Technology 5.513 1.183 1.000 —
Monarchy .153 .027 1.000 —
Technology Monarchy .384 .130 .419

Note. Standardized estimates of disturbance variances are proportions of unexplained variance.

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 Nonrecursive Models with Causal Loops 343

direct feedback loop of Figure 19.5 are shown in bold-
face in Table 19.5. For every increase in trust of 1 stan-
dard deviation, the perception of institutional quality is
expected to increase by about .44 standard deviations,
and the level of trust is expected to increase by about .29
standard deviations for every increase in quality of 1
standard deviation. As expected, the directions of both
effects are positive, and the relative impact of trust on
quality in standardized form is about 1.5 times stronger
than the effect in the other direction (.44/.29 = 1.52). The
disturbance correlation for trust and quality, or about
–.630 (see the table), says that omitted common causes
are expected to increase one variable while decreasing
the other, controlling for their reciprocal effects and
those of monarchy and technology. It is possible to cal-
culate R2 values for each of the endogenous variables in
the structural model, trust and quality, but this statistic
is not appropriate for nonrecursive models with causal
loops for reasons explained in the next section. Topic
Box 19.1 deals with effect decomposition in nonrecur-
sive models and the assumption of equilibrium.
At first glance, the representation in Figure 19.5 of

TOPIC BOX 19.1

Effect Decomposition in Nonrecursive Models

and the Equilibrium Assumption
Wright’s tracing rules (Chapter 9) do not apply to models with causal loops. Variables in feedback loops
have indirect effects—­and thus total effects—­on themselves, which is apparent in effect compositions
generated by SEM computer tools for nonrecursive models. Consider the direct feedback loop Y1  Y2.
Suppose that the standardized direct effect of Y1 on Y2 is .40 and that the effect in the other direction is
.20. An indirect effect of Y1 on itself corresponds to the sequence

Y1 → Y2 →Y1

which is estimated as .40(.20), or .08. There are additional indirect effects of Y1 on itself through Y2,
however, because cycles of mutual influence in feedback loops are theoretically infinite. The indirect effect

Y1 → Y2 →Y1 → Y2 →Y1

is one of these, and its estimate is .40(.20).40(.20), or .0064. Mathematically, these terms head pretty
quickly to zero, but the total effect of Y1 on itself estimates all possible cycles through Y2. Indirect and total
effects of Y2 on itself are similarly derived.
Calculation of direct, indirect, and total effects between variables in causal loops as just described
assumes equilibrium. Recall that there is no statistical test of whether the equilibrium assumption is tenable
when the data are cross sectional. In computer simulations, Kaplan et al. (2001) found that the stabil‑
ity index, which is printed in the output of some SEM computer tools such as Amos, did not accurately
measure the degree of bias due to lack of equilibrium. It is based on certain mathematical properties of the
matrix of coefficients for direct effects among all endogenous variables in a structural model, not just those
involved in feedback loops. These properties have to do with whether estimates of absolute direct effects
would become infinitely larger over time (i.e., with infinite cycles). If so, the system is said to “explode”
because it may never reach equilibrium, given the observed direct effects among the endogenous vari-
ables. The mathematics of the stability index are complex (Kaplan et al., 2001, pp. 317–322). A standard
interpretation of this index is that values < 1.0 are taken as evidence for equilibrium, but values > 1.0
suggest the lack of equilibrium. But this interpretation is not supported by Kaplan et al.’s (2001) simulation
results, which emphasizes the need to evaluate equilibrium on rational grounds.

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 344 Advanced Techniques
single indicators for monarchical status and generalized
trust without separate measurement error terms is not
ideal. But these variables concern countries, not cases
(i.e., people), and the data were taken from publicly
accessible sources based on historical and economic
records for multiple nations. For example, the monar-
chy variable in the model corresponds to the distinc-
tion between monarchies versus other forms of govern-
ment, which is arguably straightforward to distinguish.
In sensitivity analyses, Robbins (2012) reported that
specifying levels of measurement error in monarchy
and trust up to .02 (i.e., 2% of the total variance is due
to random error) did not appreciably change the results
compared with the original analyses with no separate
terms for measurement error in these variables.
BLOCKED‑ERROR R2
FOR NONRECURSIVE MODELS
For continuous endogenous variables in recursive mod-
els, the sample proportion of explained variance, or the
squared multiple correlation
2 Disturbance variance
R= 1.0 − (19.1)
Model-implied variance
effectively blocks the effect of the corresponding distur-
bance term by (1) removing its influence from the total
(model-implied) variance. It is also assumed that (2) the
disturbance variance is independent of all other causes
of the same outcome represented in the model. This
is the standard assumption in ordinary least squares
regression that all unmeasured predictors are uncor-
related with the predictors in the equation. Under this
assumption, residuals in regression analysis are com-
puted such that they are independent of the predictors.
But for continuous endogenous variables involved in
nonrecursive relations, such as causal loops, the R2 sta-
tistic is problematic. This is because the disturbances
of such variables are probably correlated with at least
one of their presumed causes, which violates the least
squares requirement that the residuals (disturbances)
are uncorrelated with all predictors (causal variables).
Hayduk (2006) described the blocked-error R2 (beR2)
for endogenous variables involved in nonrecursive rela-
tions. It is calculated by blocking the influence of the
disturbance (error) of just the endogenous variable in
question. An advantage of beR2 is that it equals the
value of R2 for endogenous variables in recursive mod-
Pt4Kline5E.indd 344
els or involved in recursive relations only in a model
that is otherwise nonrecursive, such as Y3 in Figure
19.4(a). The beR2 statistic is automatically computed by
LISREL for nonrecursive models, which is convenient.
Hayduk (2006) outlined the method summarized next
for calculating beR2 using any SEM computer tool that
prints the model-implied (predicted) covariance matrix
when all parameters are fixed to equal user-specified
values:
1. Estimate the full model as usual and specify that
the predicted covariance matrix for all variables,
including common factors, is printed in the output.
Record the values of the predicted variances for all
endogenous variables involved in nonrecursive rela-
tions.
2. Specify a blocked-error model such that values of
model parameters are fixed to equal their counter-
parts in the full model (i.e., at Step 1) except for the
focal endogenous variable’s disturbance variance
and disturbance covariance(s), which are all fixed to
equal zero. The specification just mentioned blocks
all effects of causal variables on the disturbance for
the focal endogenous variable. Because all parame-
ters are fixed to equal constants, no model fit statis-
tics may be printed in the output. Generate the pre-
dicted covariance matrix, and record the predicted
variance for the focal endogenous variable.
3. Calculate beR2 as
Model-implied variance Blocked error
beR 2 = (19.2)
Model-implied variance Full
which is the ratio of the model variance in the
blocked-error model (Step 2) over the correspond-
ing value for the same endogenous variable in the
full model (Step 1). Repeat Steps 2–3 for each
endogenous variable involved in nonrecursive rela-
tions in the full model.
The statistic beR2 is interpreted as the proportion of
variance in the focal endogenous variable explained
through the actions of causal variables in the model
except for the direct effect of the disturbance on that
focal variable (Hayduk, 2006). Depending on the
model and data, the value of beR2 can be either smaller
or larger than that of R2 for the same endogenous vari-
able.
Listed for analysis 2 in Table 19.2 are the script and
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 Nonrecursive Models with Causal Loops
output files for computing in lavaan values of beR2 for
each of the two variables, trust and institutional quality,
involved in the causal loop of Figure 19.5. The lavaan
program does not automatically calculate beR2, but it
does print predicted covariance matrices, which pro-
vide the necessary values (i.e., model-implied vari-
ances) to generate beR2. Reported in Table 19.6 are the
values of R2 and beR2 for each endogenous variable.
Also listed in the table are values of disturbance or pre-
dicted variances in the full model and in both blocked-
error models. For trust, beR2 = .320, which is somewhat
lower than R2 = .325 for the same outcome. But for
institutional quality, beR2 = .944 exceeds R2 = .713 for
this endogenous variable. Two other corrected propor-
tions of explained variance for endogenous variables in
nonrecursive relations are described in Topic Box 19.2.
SUMMARY
Causal loops within structural models represent
the hypothesis that sets of endogenous variables are
causes and outcomes of one another; that is, causation
is not simply unidirectional. Compared with recursive
models, nonrecursive models are more challenging to
analyze. One reason is identification: recursive mod-
els are always identified, but certain configurations
of paths in nonrecursive models can render some of
their parameters underidentified. Fortunately, there are
ways to evaluate definitively the identification status
of at least some kinds of nonrecursive models. Rig-
don’s (1995) graphical block classification method can
be applied to determine when endogenous variables in
nonrecursive relations, such as causal loops, require
instruments, and the order condition and rank condi-
tion can be applied to nonrecursive models with all
TABLE 19.6. Standard (Ordinal Least Squares)
and Blocked-Error Proportions of Explained Variance
for Endogenous Variables in a Causal Loop
Full model
Disturbance Model-implied
Outcome variance variance
Trust .013 .019
Quality .920 3.202
Note. Values for R2 and beR2 are from computer output. There is noticeable rounding error
in hand calculation at 3-decimal accuracy for the trust variable. beR2, blocked-error R2.
Pt4Kline5E.indd 345
345
possible disturbances or that are block recursive. The
order condition is only necessary, but the rank condi-
tion is sufficient, which means that meeting it guar-
antees that the model is identified. Analyses of non-
recursive models are susceptible to empirical underi-
dentification if values of coefficients for paths required
for identification are close to zero or one. There are
special measures of the proportion of explained vari-
ance, such as the Hayduk’s (2006) blocked-error R2,
that remove effects of causal variables from the distur-
bances of endogenous variables involved in nonrecur-
sive relations. In contrast, the ordinary least squares
statistic R2 is for recursive models.
LEARN MORE
Fan et al. (2016) describe the application of SEM in eco-
logical studies including the analysis of models with causal
loops. Hayduk (2006) describes alternative corrected R2
effect sizes for outcomes in nonrecursive models, and Paxton
et al. (2011) is a valuable resource for specifying and ana-
lyzing nonrecursive structural equation models.
Fan, Y., Chen, J., Shirkey, G., John, R., Wu, S. R., Park,
H., & Shao, C. (2016). Applications of structural equa-
tion modeling (SEM) in ecological studies: An updated
review. Ecological Processes, 5(1), Article 19.
Hayduk, L. A. (2006). Blocked-error-R2: A conceptually
improved definition of the proportion of explained vari-
ance in models containing loops or correlated residuals.
Quality & Quality, 40(4), 629–649.
Paxton, P., Hipp, J. R., & Marquart-Pyatt, S. (2011). Nonre-
cursive models: Endogeneity, reciprocal relationships,
and feedback loops. Sage.
Blocked-error models
Model-implied
R2 variance beR2
.325 .006 .320
.713 3.022 .944
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 346 Advanced Techniques

TOPIC BOX 19.2

Other Corrected Proportions of Explained Variance

for Nonrecursive Models
The Bentler– ­Raykov R2 (Bentler & Raykov, 2000) is a based on a respecification that partitions the
variance for target endogenous variables controlling for disturbances and causal variables. Their method
adds a phantom (artificial) variable with no indicators to the model in a way that partitions the variance
as just described, and the squared correlation between the target and phantom endogenous variables is
the corrected R2. Hayduk (2006) noted that the disturbance of the focal endogenous variable is actually
a common cause of both that outcome and the phantom variable in this method, so the Bentler–­Raykov R2
does not completely block the error. Values of the Bentler–­Raykov R2 are automatically printed in EQS for
endogenous variables in nonrecursive models.
Versions of LISREL since version 8.3 automatically print values of the reduced-­form R2 for each
endogenous variable. It counts as explained variance all direct or indirect effects of the exogenous vari-
ables on each focal endogenous variable, just as beR2 for the same outcome. Unlike beR2, though, the
reduced-­form R2 ignores the causal effects of all nonfocal endogenous variables except for indirect effects
of the exogenous variables through them on the focal endogenous variable. It does so by blocking the
effects of disturbances for all endogenous variables on any of their outcomes in the model, not just the dis-
turbances for endogenous variables involved in nonrecursive relations (Hayduk, 2006). In this way, the full
explanatory power of exogenous variables, the causes of which are unknown, is given full sway compared
with the explanatory power of endogenous variables, the causes of which are explicitly represented in the
model. A drawback is that if all direct causes for an endogenous variable are also endogenous, then few,
if any, of these effects may contribute to the value of the reduced-­form R2.

EXERCISES

1. Prove that Figure 19.3(b) satisfies the order condi-
tion.
2. Show that Figure 19.4(a) fails the rank condition.
3. Use Rigdon’s (1995) block classification method to
prove that Figure 19.4(b) is identified.
4. Demonstrate that Figure 19.4(b) with no distur-
bance covariance fails both the order condition and
the rank condition.
5. Respecify Figure 19.4(b) to test the hypothesis that
the disturbance covariance is zero.
6. Verify that df M = 5 for Figure 19.5.

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 Nonrecursive Models with Causal Loops 347

Appendix 19.A 1 0 (II)

0 1
1 1
Evaluation of
the Rank Condition The third row can be formed by adding the corre-
sponding elements of the first and second rows, so it
should be deleted. Therefore, the rank of this matrix
Begin by constructing a system matrix, where the is (II) is 2, not 3.
endogenous variables are represented in the rows and
3. Repeat Steps 1 and 2 for every endogenous variable.
all variables are represented in the columns. In each
row, a “0” or “1” appears in the column that corresponds If the rank condition is satisfied for every endog-
to that row. A “1” indicates that the variable represented enous variable, then the model is identified.
by the column has a direct effect on the endogenous
variable represented by that row. A “1” also appears in Steps 1 and 2 applied to the system matrix for Figure
the column that corresponds to the endogenous vari- 19.3(a) are outlined here (III). Note that we are begin-
able represented by that row. The remaining entries are ning with Y1:
0s, and they indicate excluded variables. The system
matrix for Figure 19.3(a) is (I): X1 X2 Y1 Y2 (III)
Y1 1 0 1 1
X1 X2 Y1 Y2 (I)
Y1 1 0 1 1 Y2 0 1 1 1 → 1 → Rank = 1

Y2 0 1 0 1
“Reading” this matrix for Y1 indicates three 1s in its
row, one in the column for Y1 itself, and the others in the
columns of variables that affect it, X1 and Y2. Because
X2 is excluded from Y1’s equation, the entry in this col-
umn is “0.” Entries in the row for Y2 are specified in a
similar way.
The rank condition is applied to the equation of
each endogenous variable by working with the system
matrix. The steps for models with all possible distur-
bance correlations are:
1. Begin with first row of the matrix. Cross out all
entries in that row. Also cross out any column in the
system matrix with a “1” in that row. Variable labels
are not needed in the reduced matrix.
2. Simplify the reduced matrix further by deleting any
rows with entries that are all zeros. Also, delete any
row that is an exact duplicate of another or can be
reproduced by adding other rows (i.e., it is linearly
dependent on other rows). The number of remaining
rows is the rank. For example, consider the follow-
ing reduced matrix (II):
For Step 1, all entries in the first row for Y1 are crossed
out. Also crossed out are the two columns with a “1” in
this row (i.e., those with column headings X1 and Y2, the
included variables in the equation for Y1.) The result-
ing reduced matrix has a single row, so this reduced
matrix cannot be further simplified. Thus, the rank of
the equation for Y1 is 1, which equals the minimum
value, or one less than the total number of endogenous
variables in Figure 19.3(a). The rank condition is satis-
fied for Y1.
The steps for the other endogenous variable in Figure
19.3(a) are summarized next. Evaluation for Y2 (IV):
X1 X2 Y1 Y2 (IV)
Y1 1 0 1 1
Y2 0 1 1 1 → 1 → Rank = 1
The rank of the equation for Y2 is 1, which exactly
equals the minimum required value. Because the rank
condition is satisfied for both endogenous variables in
Figure 19.3(a), we conclude that it is identified.

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 348 Advanced Techniques
For a block recursive model like Figure 19.3(c), the
rank condition is evaluated for each of the two blocks
of endogenous variables in direct feedback loops. For
example, the system matrix for the block that includes
Y1 and Y2 lists only those variables and the directly
prior variables X1 and X2. Endogenous variables in the
Pt4Kline5E.indd 348
second block, Y3 and Y4, are not included in the system
matrix for variables in the first block, Y1 and Y2. The
system matrix for the second block lists only Y3 and Y4
in its rows, but all variables in the whole model are rep-
resented in its columns. Next, apply the rank condition
to each system matrix of each block.
3/22/2023 2:05:57 PM
 20

Enhanced Mediation Analysis

This chapter extends the discussion presented in Topic Boxes 6.1, 7.1, and 8.1 about, respectively, the defi-
nition of mediation, the role of research design—that is, conceptual time-ordering of cause, mediator, and
outcome in cross-sectional designs versus temporal precedence in measurement among these variables in
longitudinal designs—and analysis steps. We begin with the mediation myth, or the false belief that
mediation is estimated in the typical mediation study (Kline, 2015; Pek & Hoyle, 2016), where

1. the design is cross-sectional;

2. there is little, if any, mention of the assumptions on which mediation is based, such as whether the
purported mediator is theoretically amendable to influence by the cause (e.g., the mediator is a
state, not a trait, variable);
3. finding statistically significant indirect effects is treated as proof of mediation;
4. the existence of equivalent models—some of which do not involve mediation at all—that explain the
data equally well is not acknowledged.

Thus, the typical mediation study offers a weak case for actual mediation (Trafimow, 2015), and this is true
despite the popularity of mediation analysis and the publication of thousands of SEM studies purportedly
about mediation (Nguyen et al., 2021).

The situation just described is unfortunate because
the promise of mediation analysis is both intrigu-
ing and scientifically relevant: It addresses the ques-
tion about how changes are transmitted from a causal
variable through one or more intervening variables,
or mediators, which in turn lead to changes in an out-
come (Little, 2013). Pearl (2014) described mediation
analysis as telling us how nature works in the form of
direct or indirect effects, given a causal model based
on theory. MacKinnon et al. (2007) noted that ques-
tions about chains of relations through causal path-
ways made up of three or more variables form the basis
of many research problems in psychology, education,
commerce, public health, medicine, pharmacology,
and other areas. In clinical trials or observational stud-
ies, mediation analysis can inform researchers about
mechanisms through which interventions or risk fac-
tors affect health outcomes (Lee et al., 2021).
But mediation analysis involves more—a lot more,
actually—than simply drawing one-way arrows
between symbols that represent variables in model
diagrams, collecting data, generating product estima-
tors for hypothesized indirect causal pathways, and
testing those estimators for statistical significance
with relatively little regard to proper design, analysis,
or interpretation. There are also increasing numbers of
researchers who caution against unprincipled media-
tion analysis in disciplines that include perinatal epi-

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 350 Advanced Techniques
demiology, environmental health, psychology, and psy-
chiatry (respectively, Ananth & Brandt, 2022; Blum et
al., 2020; Bullock & Green, 2021; Stuart et al., 2021).
The general state of practice in mediation analysis has
clearly lagged behind best practices, or even common
sense in some cases.
The body of literature devoted to mediation analysis
is relatively large and includes book-length presenta-
tions by Hayes (2022), Jose (2013), MacKinnon (2008),
and VanderWeele (2015), among other works. It is also
an area that has witnessed the development of new
analysis strategies or ways of thinking about media-
tion in specific contexts, such as in randomized clinical
trials and the analysis of models with multiple media-
tors when the causal structure among them is unknown
(Bullock & Green, 2022; Gonzalez et al., 2023; Loh
et al., 2022; Lynch et al., 2008). Other recent develop-
ments include the availability of standards for reporting
results from mediation analyses in randomized trials or
observational studies (Lee et al., 2021).
Given the scope of the topic, it is impossible to
describe all of enhanced mediation analysis in a single
chapter. Instead, the goal of this presentation is to warn
readers away from common pitfalls and suggest some
better, more modern, alternatives in term of research
design and analysis options. Note that diagrams and
examples in this chapter cover path models with sin-
gle indicators, but the ideas described next generally
extend to models with multiple indicators for causes,
mediators, or outcomes. This is fortunate because
results of computer simulation studies by Iacobucci et
al. (2007) suggested that multiple-indicator analyses of
mediation that control for measurement error generally
outperform single-indicator analyses that do not con-
trol for such error (i.e., standard regression analysis).
MEDIATION ANALYSIS
IN CROSS‑SECTIONAL DESIGNS
There are three great obstacles to estimating media-
tion in cross-sectional designs (Antonakis et al., 2010;
MacKinnon et al., 2007; O’Laughlin et al., 2018; Tate,
2015):
1. The absence of temporal precedence implies
that mediation cannot be estimated in a way that
respects its very definition as involving changes
among cause, mediator, and outcome variables.
Pt4Kline5E.indd 350
2. Without a strong conceptual time-ordering among
variables, it may be impossible to prefer any one
among equivalent models.
3. In observational studies, it is difficult to avoid biased
estimates due to omitted common causes without
including proxies for confounders or instrumental
variables in the model.
Presented in the upper left part of Figure 20.1(a)
is a basic model of mediation among three observed
variables, X, M, and Y. This recursive model is just-
identified (df M = 0), so it would perfectly fit the data.
The other five models in Figure 20.1(a) are also recur-
sive and arbitrarily switch the roles of cause, media-
tor, and outcome among the same three variables. They
all would also perfectly explain the same data, so they
are equivalent to the original version. The model in the
upper left part of Figure 20.1(b) is a nonrecursive model
of mediation with freely estimated reciprocal effects
between M and Y. The disturbance covariance is fixed
to equal zero, and the cause, X, is the instrument for
M, which identifies the model (Figure 19.2). The direct
effect of X enters the causal loop by first affecting M,
which is then transmitted back and forth between M
and Y, which are also mediators with respect to each
other. This nonrecursive model is just-identified (df M =
0), so it perfectly fits the data. The other five models
in Figure 20.1(b) indiscriminately switch the roles of
instrument and variables in the causal loop, and they
perfectly explain the data, too. Thus, all six models in
Figure 20.1(b) are equivalent.
There are still more equivalent versions. The three
mediation models in Figure 20.1(c) are also nonre-
cursive but now with equality-constrained directs in
the causal loops. With no disturbance covariance, no
instrument is needed to identify these models. Due to
the equality constraint, df M = 0 for all three models,
so they perfectly fit the data. The three models in Fig-
ure 20.1(d) are recursive, but they are not mediation
models. Instead, they feature a disturbance covariance
in bow-free pattern with no direct effect between the
endogenous variables. Because df M = 0 for the models
in Figure 20.1(d), they, too, perfectly the data. Thus, all
18 models in Figure 20.1 are equivalent versions that,
as a set, make opposing causal claims.
Let’s consider a more complex model. Figure 20.2(a)
is a parallel mediation model, where X is hypothe-
sized to affect Y both directly and indirectly through
two different mediators, M1 and M2. The mediators are
3/22/2023 2:05:57 PM
 (a) Recursive mediation

X M X Y Y M

Y M X

Y X M X M Y

M Y X

(b) Nonrecursive mediation, free reciprocal effects

X M X M Y M

Y Y X

Y M M X M X

X Y Y

(c) Nonrecursive mediation, equal reciprocal effects

X M M X Y X

Y Y M

(d) Recursive, no mediation

X M Y M M X

Y X Y

FIGURE 20.1. Equivalent models for three variables that represent recursive mediation (a), nonrecursive mediation with freely
estimated reciprocal effects (b), nonrecursive mediation with equality-constrained reciprocal effects (c), and recursive models
with bow-free pattern disturbance covariances but no mediation (d).

351

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 352 Advanced Techniques

not causally linked. Instead, their association is speci-
fied as spurious due to their common cause, variable
X. The same model assumes there is no unobserved
confounding of the mediators (i.e., their disturbances
are independent). You should verify that df M = 1 for
Figure 20.2(a). There is also no causal link between
the mediators in Figure 20.2(b), but they are assumed
to share at least one unmeasured cause (i.e., their dis-
turbances covary). Each of Figures 20.2(c) and 20.2(d)
is a sequential (serial) mediation model with causal
effects between the mediators but in opposite direc-
tions, respectively, M1 → M2 versus M2 → M1. Because
df M = 0 for Figures 20.2(b)–20.2(d), they all perfectly fit
the data. Thus, if the parallel mediation model in Fig-
ure 20.2(a) with a single degree of freedom is rejected,
there is no way to statistically distinguish among Fig-
ures 20.2(b)–20.2(d) with alternative causal structures
for the mediators.
Thoemmes (2015) demonstrated that it is illegitimate
to reverse arrows (direct effects) in mediation models
to check whether one equivalent version is superior to
another. The supposed evidence is the finding that the
coefficient for an indirect effect in one model, such as
X → M1 → M2 → Y
in Figure 20.2(c) is statistically significant, but the coef-
ficient for the path
X → M2 → M1 → Y
in the other model, such as Figure 20.2(d), is not sta-
tistically significant, or vice versa. This outcome is not
surprising because each indirect effect just listed has its
own standard error, and it could happen in a particular
sample that p values are < .05 for either, both, or nei-

No causal link
(a) Parallel mediation (b) Unmeasured confounder(s)

M1 M1

X Y X Y

M2 M2

Causally linked (sequential mediation)

(c) M1 → M2 (d) M2 → M1

M1 M1

X Y X Y

M2 M2

FIGURE 20.2. Parallel mediation model with no causal effects or disturbance covariances between mediators (a), model
with unobserved confounding of the mediators but no causal effect between them (b), and sequential mediation models where
M1 causes M 2 (c) and M 2 causes M1 (d).

Pt4Kline5E.indd 352 3/22/2023 2:05:57 PM


ther of these indirect effects. Remember that p values
for specific effects in structural equation models have
little, if anything, to do with whether the corresponding
specification is correct.
In an analytical study of alternative mediation
models all in the same equivalence class, Thoemmes
(2015) demonstrated that (1) incorrect models yielded
indirect effects that are generally comparable in size
with the true indirect. Also, (2) the true indirect effect
is not necessarily the largest among all possible indi-
rect effects. Specifically, true models yielded the largest
indirect effect only about 20% of the time over incor-
rect-but-equivalent versions. These results suggest that
an empirical specification search that selects the model
with the largest indirect effect would be wrong in
most cases. Thoemmes (2015) argued that researchers
should abandon the attempt to prefer one model over
equivalent versions based on statistical evidence alone.
In cross-sectional designs, only a solid rationale about
conceptual time-ordering should be based on substan-
tive theory or refer to the nature of the variables that
would make one directionality specification more plau-
sible than its opposite (Tate, 2015). To summarize, it is
not generally possible to “discover” mediation through
significance testing without strong a priori hypotheses
about effect directionality.
It is often difficult in cross-sectional studies to plau-
sibly assume there are no unmeasured confounders
for every pair of variables in a basic mediation model.
Covariate selection is an option to identify causal
effects in the presence of endogeneity, but it requires
knowledge of both the nature and number of possible
confounders. Instruments are another option, if con-
founders are unknown or if proxies for known con-
founders are unavailable. Ideally, there would be at
least one instrument for each causal variable including
the mediator(s). Recall that model-implied instruments
can be either exogenous or endogenous variables, and
potentially all exogenous variables could be “recruited”
as instruments (Antonakis et al., 2010).
Antonakis et al. (2014) described the use of instru-
ments to estimate causal effects of leadership–mem-
ber exchange (LMX)—the idea that effective leaders
develop different levels of relationships with their sub-
ordinates characterized by trust, mutual respect, and
positive affect—on employee turnover, or the inten-
tion to stay with or leave a company, where LMX is
an endogenous regressor that covaries with the distur-
bance for turnover. Instruments for LMX were exog-
enous variables such as leader extraversion, leader
Pt4Kline5E.indd 353
Enhanced Mediation Analysis 353
use of incentives, subordinate conscientiousness, and
company policies, and these instruments had no direct
effects on turnover or model-implied associations
with its disturbance. So specified, the LMX variable
is hypothesized to mediate effects of the instruments
on turnover and has its own direct effect on turnover.
In ordinary least squares (OLS) regression analysis,
the coefficient for the effect of LMX on turnover was
incorrect compared with estimates for the same effect
in in two-stage least squares (2SLS) analysis with
instruments for a mediation model. Other suggestions
for reducing bias in observational studies include the
use of measures with strong psychometric properties
and avoidance of common method effects by measur-
ing hypothesized mediators and outcomes with differ-
ent methods, such as observational versus archival, or
different informants, such as teenagers versus their par-
ents—see Antonakis et al. (2010) for more examples.
EFFECT SIZES FOR INDIRECT EFFECTS
Product estimators for indirect effects of continuous
variables in linear models, such as ab for the indirect
effect of X on Y through M in Figure 8.2(b), describe
the expected change in outcome Y while holding cause
X constant and changing mediator M to whatever value
it would reach under a change in X. In the unstandard-
ized solution, change in Y as just described is expressed
in its raw score (original) metric, given a change of 1
point in the original metric of X in its effect on M. In the
completely standardized solution, change is expressed
in standard deviation units for Y, given a change in X
of 1 standard deviation in how it affects M (Chapter
8). A drawback is that values of standardized indirect
effects—or standardized effect sizes in general—are
not directly comparable over samples with different
variances on the original (unstandardized) metrics of
the variables. Also, if cause X is a dichotomy coded
“1” for treatment and “0” for control, then the unstan-
dardized product estimator would be preferred. This
is because a 1-point change in X directly specifies the
contrast between treatment and control (or any two dif-
ferent groups or conditions).
Preacher and Kelley (2011) described over a dozen
other statistics for describing the magnitude of indirect
effects. The smaller number of effect sizes described
next are among the most widely reported in mediation
studies or have statistical properties that seem promis-
ing. I should caution you, though, that this is an active
3/22/2023 2:05:57 PM
 354 Advanced Techniques
research topic for which critiques of extant statistics or
descriptions of new effect sizes are regularly published,
so this summary could already be dated. Also, there is
no universal, comprehensive mediation effect size that
works in all situations; that is, basically all existing sta-
tistics have limitations. Finally, it is not always clear
how to extend effect sizes developed mainly for models
with single mediators to models with multiple media-
tors. With these caveats in mind, let’s begin our review.
Perhaps the most widely reported mediation effect
size is the mediation ratio, also called the relative
indirect effect. Referring to Figure 8.2(b), the media-
tion ratio is calculated as
ab
P̂M = (20.1)
ab + c′
which is the ratio of indirect effect of X on Y through
M, or ab, to the total effect of X on Y, or ab + c′. It is
intended to describe the proportion of the total effect
that is mediated, but there are problems with this inter-
pretation: The value of the mediation ratio can exceed
1.0 or can be negative, so it is not a simple proportion.
Its absolute value is unbounded in that it can approach
infinity when the total effect is close to zero, which
can happen in inconsistent mediation (Topic Box 8.1).
Another drawback is that the ratio of a very small indi-
rect effect over a total effect that is just a tiny bit larger
can be relatively high, such as .95, could be misinter-
preted as indicating a relatively important effect. Like-
wise, the ratio can appear to trivialize larger effects,
such as .50 for a meaningful indirect effect that cor-
responds to half of an even bigger total effect (Preacher
& Kelley, 2011)
A second mediation effect size is the ratio of the
indirect effect of X on Y through M to the direct effect
of X on Y, or
ab
R̂ M = (20.2)
c′
which is intended to compare the relative magnitudes
of the indirect versus direct effects of X. Like the
mediation ratio, the ratio of the indirect effect to the
total effect is not a proportion because its value can
also exceed 1.0 or be negative. It can also exagger-
ate smaller effects or trivialize larger effects. Both P̂M
and R̂ M have relatively large variances over random
samples, so they are not efficient estimators. Values of
P̂M can be unstable if N < 500, and R̂ M may require
N > 5,000 before its values are stable (Preacher &
Kelley, 2011). Although both P̂M and R̂ M are relatively
easy to calculate and their values (but not their vari-
Pt4Kline5E.indd 354
ances) are unaffected by sample size, the problems just
mentioned are serious.
Preacher and Kelley (2011) described kappa-
squared (κˆ 2), which is defined as the ratio of the
observed (sample) indirect effect, ab, over the maxi-
mum possible value of the indirect effect with the same
sign in a particular data set, or max (ab). That is, the
value of κˆ 2 describes the empirical indirect effect as the
proportion of the maximum attainable value of the indi-
rect effect, given the data. Values of κˆ 2 are unaffected
by sample size and are interpreted in a standardized
metric from 0 to 1.0. Wen and Fan (2015) criticized κˆ 2
for its lack of the property of rank preservation; that is,
the value of κˆ 2 can decrease while the indirect effect
on which it is based increases. They also demonstrated
that values of κˆ 2 can be contradictory for models with
multiple mediators and that its definition of the maxi-
mum possible indirect effect is mathematically prob-
lematic. These drawbacks limit the theoretical useful-
ness of κˆ 2 (Lachowicz et al., 2018).
Lachowicz et al. (2018) introduced upsilon (u), a
standardized effect size that in the population equals
the proportion of variance in the outcome explained
jointly by the cause and mediator and adjusted for spu-
rious associations induced by the causal ordering of the
variables (i.e., variables M and Y have a common cause,
X). For example, u = .10 indicates that 10% of the popu-
lation variance in Y is explained jointly by X and M
after correcting for spurious associations. When sup-
pression effects are not evident (e.g., mediation is not
inconsistent; Topic Box 8.1), values of u are bounded by
0 and 1.0; otherwise, it is a monotonic function of the
indirect effect in that u increases in value beyond 1.0 as
the size of the indirect effect increases.
The sample estimator, or û, is just the squared stan-
dardized indirect effect, or
2
=uˆ (a=
s bs ) as2bs2 (20.3)
where as and bs are the coefficients in the completely
standardized solution for, respectively, the direct effects
of X on M and of Y on M. Recall that standardized effect
sizes depend on values of the variances in a particular
sample, and û is no exception. Because û closely resem-
bles an R2-type size, it is a positively biased estimator of
the parameter u. Lachowicz et al. (2018) described an
adjusted estimator, u , based on the asymptotic covari-
ance matrices (sampling variances) for the unstandard-
ized regressions of M on X and of Y on both X and M; see
Lachowicz et al. (2018, p. 251) for the equation. In large
samples, bias in û is relatively slight, but there is a bigger
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 Enhanced Mediation Analysis 355

difference in smaller samples. The MBESS package for
R (Kelley, 2022) calculates all the effect sizes described
to this point and can optionally use nonparametric boot-
strapping from a raw data file to generate confidence
intervals for the parameters estimated by them.
Presented next is a covariance matrix in lower diago-
nal form for three variables, respectively, X, M, and Y,
based on data from Jessor and Jessor (1991) (cited in
Preacher & Kelley, 2011) in a sample of N = 432 high
school students:
2.268
.662 2.276
–.087 –.226 .092
Variable X is achievement values, where a higher score
indicates greater personal value for strong academic
achievement; the mediator M is deviance tolerance,
where a higher score means greater tolerance of behav-
ior that violates the rights of others; and the outcome
Y is level of self-reported deviant behavior. The model
has zero degrees of freedom because the cause has both
direct and indirect effects on the outcome.
Presented in Table 20.1 for analysis 1 are the syntax
and output files for fitting in MBESS a basic single-
mediator model to the covariance matrix just listed (I)
with the OLS estimator. The same model and data were
(I) analyzed in lavaan to obtain standardized estimates
and standard errors for the indirect and total effects.
Reported in the top part of Table 20.2 are the estimates
for all effects, and listed in the bottom part of the table

TABLE 20.1. Script and Output Files for Estimation of Effect Sizes
for the Indirect Effect in a Basic Mediation Model
Analysis Script file R packages
1. Coefficients and effect sizes for the indirect jessor-effect-size.r MBESS
effect in a basic mediation model lavaan

2. Interventional in(direct) effects in a van-ryzin-intervention.r lavaan

randomized study of a family-based program

Note. Output files have the same names except the extension is “.out.”

TABLE 20.2. Ordinary Least Squares Estimates for a Basic

Mediation Model and Effect Sizes for the Indirect Effect
Effect Coefficient(s) Estimate
Direct and indirect effects
X → M (AV → DT) a .292 (.046) .291a
M → Y (DT → DB) b –.096 (.009) –.479
X → Y (AV → DB) c′ –.010 (.009) –.051
X → M → Y (AV → DT → DB) ab –.028 (.005) –.140
Total effect of X on Y ab + c′ –.038 (.010) –.190

Effect sizes
P̂M ab/(ab + c′) .733
R̂ M ab/c′ 2.744
û (asbs)2 .019

Note. Effect sizes were calculated from values in computer output for this analysis (see
Table 20.1); otherwise, there is noticeable rounding error in hand calculation at 3-deci-
mal accuracy. AV, achievement values; DT, deviance tolerance; DB; deviant behavior.
aUnstandardized (standard error) standardized.

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 356 Advanced Techniques
are values of effect sizes for the indirect effect. The
effect size κˆ 2 is not reported in the table due to the prob-
lems described earlier, but it is printed in the output file
for this analysis. Exercise 1 asks you to interpret the
coefficients for the unstandardized and standardized
indirect effect of achievement values on deviance toler-
ance through deviance tolerance, and Exercise 2 asks
you to reproduce and interpret the values of the effect
sizes for the indirect effect in the table.
CROSS‑LAG PANEL DESIGNS
FOR MEDIATION
Effects from cause to mediator to outcome take time
to occur, but use of a cross-sectional design basically
assumes that such effects are instantaneous, which is
logically flawed (Selig & Preacher, 2009). Estimation of
indirect effects in cross-sectional designs also assumes
that (1) dynamic relations among cause, mediator, and
outcome—respectively, X, M, and Y—have stabilized
so that the coefficients for paths connecting any pair of
variables at adjacent time points remain the same over
time, or stationarity; and (2) the system has reached
equilibrium such that cross-sectional relations among
X, M, and Y are constant over time (Maxwell & Cole,
2007). But even when these ideal conditions hold, there
are reasons to suspect that estimates of indirect effects
in cross-sectional studies could be substantially biased
(Maxwell & Cole, 2007; Maxwell, Cole, & Mitchell,
2011; Selig & Preacher, 2009):
1. Coefficients for direct effects in such designs fail
to control for autoregressive effects of the mediator
and outcome variables. For example, the mediator
is regressed on the cause but not also on the media-
tor from an earlier point in time, or prior to the sole
measurement occasion in a cross-sectional design.
Thus, this coefficient may not correctly estimate the
impact of the cause on the mediator. For a similar
reason, the coefficient for the mediator–outcome
direct effect could be wrong, but now due to failure
to control for the prior state of the outcome.
2. Estimates of indirect effects in cross-sectional
designs can be substantially biased when the true
mediational process follows longitudinal random
effects models such as latent growth curve models,
which are described in the next chapter.
3. Both patterns of bias just described can occur when
Pt4Kline5E.indd 356
mediation is complete or partial; that is, when the
mediator wholly explains the association between
cause and outcome versus the mediator explains
some, but not all, of that association (Topic Box 8.1).
In a mediation model for a strictly longitudinal medi-
ation design, there are no direct effects between vari-
ables measured at the same occasion. Instead, covari-
ances are specified based on theory either between
exogenous variables at the first measurement occasion
or “downstream” in the model between disturbances for
concurrently measured endogenous variables. Direct
effects are either autoregressive for the same variable
or cross-lagged for different variables measured at dif-
ferent times (Cole & Maxwell, 2003).
Two examples of cross-lagged panel models for
estimating mediation are presented in Figure 20.3.
The model in Figure 20.3(a) corresponds to a half
longitudinal design (Cole & Maxwell, 2003). In this
model, the subscripts indicate the measurement occa-
sion for each of the cause, mediator, and outcome. In
such designs, the cause is measured only at time 1, but
the mediator and outcome are each measured at times
1 and 2 (see the figure). At time 2, the disturbances
for the mediator and outcome are allowed to covary.
Coefficient a in the figure estimates the cross-lagged
direct effect of the cause at time 1 on the mediator at
time 2, controlling for the mediator at time 1. Simi-
larly, coefficient b in the figure estimates the cross-
lagged direct effect of the mediator at time 1 on the
outcome at time 2, now controlling for the outcome at
time 1. Although there is no contiguous pathway from
X to M to Y in the figure, the indirect effect is never-
theless estimated for continuous variables assuming
no interaction as the product ab. This product estima-
tor controls for the autoregressive effects of both the
mediator and outcome. The figure has no direct effect
from X to Y, but adding one is an option, if justified
in theory. Exercise 3 asks you to verify that Figure
20.3(a) is identified and to tally df M, and Exercise 4
asks you to describe the relation between X and Y
specified in the figure.
In the analysis of a half longitudinal model where
the mediator, executive cognitive function, was repre-
sented as a common factor with three indicators, Brøn-
nick et al. (2017) found little evidence that executive
function mediated the association between physical
activity and scholastic performance among children
followed for 7 months. Physical activity at time 1 also
failed to appreciably predict achievement at time 2, a
3/22/2023 2:05:58 PM
 Enhanced Mediation Analysis 357

(a) Half longitudinal mediation

X1
a

M1 M2
b

Y1 Y2

(b) Full longitudinal mediation

e e′
X1 X2 X3
c c′
h h′

g g′
M1 M2 M3

d i d′ i′

Y1 Y2 Y3
f f′

FIGURE 20.3. A half longitudinal model of mediation (a). A full longitudinal model of mediation (b). Subscripts indicate
measurement occasions for the same variables.

finding that Brønnick et al. (2017) described as gener- and d′ correspond to the sole contiguous pathway in the
ally contradicting results from analyses of similar vari- model through which changes in the initial cause can
ables in cross-sectional studies. indirectly affect outcome, or
In a full longitudinal design (Cole & Maxwell,
2003), the cause, mediator, and outcome are each mea- X1 → M2 → Y3
sured on at least three different occasions. This design
is represented in Figure 20.3(b). Disturbances within The model for the full longitudinal design in Figure
each of the second and third measurement occasions 20.3(b) contains within it two replications of the half
are all pairwise correlated. Assuming continuous vari- longitudinal design. Specifically, (1) the product cd for
ables and no interactions, the indirect effect is estimated the paths
as the product of coefficients c and d′, or cd′. Coefficient
c estimates the direct effect of the cause at time 1 on the X1 → M2 and M1 → Y2
mediator at time 2, controlling for the previous level
of the mediator, and coefficient d′ estimates the direct is a proxy for the “real” estimator of mediation, or cd′.
effect of the mediator at time 2 on the outcome at time Likewise, (2) the product c′d ′ for the paths
3, controlling for the autoregressive effect of the out-
come at time 2. Little (2013) notes that coefficients c X2 → M3 and M2 → Y3

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 358 Advanced Techniques
estimates a different proxy. The values of the two proxy
estimators just mentioned (cd, c′d ′) and that of cd′ for
the sole contiguous indirect pathway should all be simi-
lar under the assumption of stationarity, which also pre-
dicts all the equivalences (within the limits of sampling
error) listed next for Figure 20.3(b):
c = c′ d = d′ e = e′ f = f′
g = g′ h = h′ i = i′
Within a sample of young adults surveyed annu-
ally over a 3-year period, Garn and Simonton (2022)
analyzed a full longitudinal model that represents the
hypothesis that emotions about physical activity—
whether it is experienced as enjoyable or boring—medi-
ated the relation between motivation and value beliefs
about physical activity and the degree of active versus
sedentary leisure time activities. Motivation beliefs
concern whether being physically active is part of
one’s self-concept, and value beliefs reflect the amount
of interest in physical activity. Three behavioral out-
come measures were analyzed, including the frequency
and duration of self-reported moderate-intensity and
vigorous-intensity leisure time physical activity versus
sedentary activities like socializing or studying. There
was little evidence that either enjoyment or boredom
mediated relations between motivation or value beliefs
and leisure time physical activities that are vigorous,
moderate, or sedentary. Instead, reciprocal effects
over time between motivation and value beliefs about
physical activity and engaging in at least moderately
intense leisure time physical activity were stronger.
That is, young adults who saw being physically active
as important spent more of their leisure time engaged
in physical activity, which lead to even higher levels of
motivation to remain active.
CONDITIONAL PROCESS ANALYSIS
Estimation of conditional indirect effects by simulta-
neously fitting the same structural model to data from
multiple samples, each drawn from a different popula-
tion, was described in Chapter 12. In this case, group
membership is treated as a categorical moderator vari-
able, and if magnitudes of direct or indirect effects vary
appreciably over groups, there is evidence for contin-
gent causation. If indirect effects are conditional and
the use of the term “mediation” is warranted by design
or rationale, then moderated mediation is indicated.
Pt4Kline5E.indd 358
The example just described is a special case of con-
ditional process analysis (CPA), where moderators
can be categorical or continuous variables. It works
by estimating both mediation and moderation in the
same analysis to test hypotheses about how causal
mechanisms depend on individual differences, con-
text, situation, or stimuli (Hayes & Rockwood, 2020).
Although the idea of integrating mediation and mod-
eration analysis is not new (Edwards & Lambert, 2007;
Fairchild & MacKinnon, 2009), the method of CPA as
developed by Hayes (2022) includes a suite of freely
available macros (scripts) for SPSS, SAS/STAT, and R
called PROCESS that automates much of the analysis
of conditional process models compared with specify-
ing the model in the syntax of an SEM computer tool.1
It applies OLS or logistic regression methods to ana-
lyze observed-variable path models that include inter-
action or indirect effects. Nonparametric bootstrapping
from raw data files is used to generate standard errors
and confidence intervals for specific effects. Causal
variables can optionally be analyzed in mean-deviated
form (i.e., centering), and there is no option for comput-
ing standardized coefficients (Hayes, 2022).
Models with single or multiple mediators or mod-
erators can be analyzed in CPA using the PROCESS
macros. Most examples of CPA in the literature involve
cross-sectional designs, but both the method and the
PROCESS macros can also be applied in longitudinal
designs when analyzing cross-lag panel models. Unlike
causal mediation analysis (discussed in the next sec-
tion), where direct and indirect effects are defined in
ways that allow for interactions between causes and
mediators, the technique of CPA generally assumes
no cause–mediator interactions in their effects on out-
comes (Hayes & Rockwood, 2020). Large samples
are generally required when estimating conditional
causal effects. As in standard regression analysis, the
PROCESS macros assume zero measurement error in
causal variables, so very precise scores are needed, too.
Another software option for CPA is the R package pro-
cessR by Moon (2019).2 There is also a Shiny App web
page for processR through which the researcher can
upload a data file and specify the analysis in a graphi-
cal user interface.3
Figure 20.4(a) is a skeletal diagram for a first-stage
1 http://www.processmacro.org/index.html
2 https://github.com/cardiomoon/processR
3 https://cardiomoon.shinyapps.io/processR/
3/22/2023 2:05:58 PM
 Enhanced Mediation Analysis 359

conditional process model, where variable W is
assumed to moderate the first stage of the indirect effect
X→M→Y
That is, causal variables W and X interact in their
effects on the mediator M, which implies that the direct
effect of X on M varies over the levels of W. Because
interaction is symmetrical, it is also true that the direct
effect of W on M depends on X. The perspective just
stated about symmetry is more obvious in Figure
20.4(b), which represents in regression style all effects
and variables, including the product term XW. (Recall
that product terms have no causal agency by themselves
because they represent joint causal effects of their con-
stituent variables; Appendix 7.A.) Figure 20.4(b) also
makes apparent that W indirectly affects Y through M,
too, although there is no direct effect of W on Y.
The regression equations shown next without inter-
cepts for the first-stage conditional process model in
Figure 20.4(b) are
M̂ =a1 X + a2W + a3 XW (20.4)
Ŷ bM + c′X
= (20.5)
For continuous variables, coefficient a1 in Equation
20.4 estimates the linear direct effect of X on M when
at the point W = 0 when the scores on both X and W are
not mean-centered or at the mean of W when the scores
are mean-centered—see Edwards (2009). Coefficient
a2 has a similar interpretation except now for causal

W moderates X → M
(a) Skeletal (b) Regression style

a3
XW M

W M a2

W b
a1
X Y
X Y
c′

W moderates X → M, X → Y
(c) Skeletal (d) Regression style

a3
XW M
W M a2
e b
W
d
X Y a1

X Y
c′

FIGURE 20.4. First-stage conditional process models, where variable W moderates just the first stage of the indirect effect
of X on Y through M represented in skeletal (a) and full regression style (b), and where W also moderates the direct effect of
X on Y represented in skeletal (c) and full regression style (d).

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 360 Advanced Techniques
variable W. Coefficient a3 estimates the linear × linear
interaction, or the amount by which the linear effect of
X on M varies in a progressive (linear) way over the
levels of W, and vice versa. If a3 ≠ 0, then the first stage
of indirect effect of X on Y through M is moderated by
W. Because interaction is symmetrical, it is just as true
that variable X moderates the first stage of the indirect
effect of W on Y through M—see Figure 20.4(b).
Given Equations 20.4 and 20.5 for Figure 20.4(b),
the product estimator for the conditional indirect effect
of X on Y through M is
(a1 + a3W ) b =
a1b + a3bW (20.6)
where the expression in parentheses is the conditional
direct effect of X on M that varies over the levels of
the moderator W, and coefficient b estimates the direct
effect of M on Y, which is not moderated by W. The
coefficient for moderator W in the equation, or a3b, is
the index of moderated mediation for a first-stage
conditional process model. If the direct effect of X on
M does not depend on W (i.e., there is no moderation),
then a3b = 0 and the indirect effect of X on Y is esti-
mated by the conventional product estimator a1b; oth-
erwise, larger values of the index suggest a greater con-
ditional indirect effect. If moderator W is dichotomous
and coded such that a 1-point difference represents
group membership (e.g., coded 0 or 1), then the index
of moderated mediation is the group difference for the
indirect effect (Hayes & Rockwood, 2020).
Hayes and Rockwood (2020) noted that Equation
20.5 for outcome Y in a first-stage conditional process
model can optionally include W and XW as additional
predictors. For example,
Ŷ = bM + c′X + dW + eXW (20.7)
specifies that the direct effect of X on Y is moderated by
W. But given Equation 20.4 for the mediator and Equa-
tion 20.7 for the outcome, variable W does not moderate
the direct effect of M on Y, or the second stage of the
indirect effect from X to Y through M. Figure 20.4(c)
is the skeletal form of the model just described, where
the dashed line represents the hypothesis that W mod-
erates a direct effect (i.e., of X on Y) that is not part of
an indirect causal pathway. The full regression version
of the model is represented in Figure 20.4(d) with coef-
ficients from Equations 20.4 and 20.7. The product esti-
mator for conditional indirect effect of X on Y through
M in Figure 20.4(d) is still (a1 + a3W)b (i.e., Equation
20.6), so the basic definition of a first-stage conditional
Pt4Kline5E.indd 360
process remains the same.4 See Topic Box 20.1 for a
numerical example.
Definitions of conditional indirect effects can be
expanded in many ways. For example, in a second-
stage conditional process model, at least one variable
moderates the direct effect of the mediator on the out-
come, or M → Y, but the direct effect of the cause on
the mediator, or X → M, is constant; that is, it is not
moderated. In a first- and-second-stage conditional
process model, both direct effects that make up the
indirect effect of X on Y through M are moderated by
at least one other variable. In the simplest model of
this kind, a single variable W moderates both stages
of the indirect effect just mentioned, but larger mod-
els can include moderators that are unique to either the
first stage or to the second stage. Models with multiple
mediators can also be analyzed. Hayes and Rockwood
(2020) described extensions to multilevel conditional
process analysis—see Hayes (2022) for more informa-
tion and examples.
CAUSAL MEDIATION ANALYSIS BASED
ON NONPARAMETRIC MODELS
AND COUNTERFACTUALS
Pearl (2014) defined mediation based on nonparametric
causal models that make no assumptions about distri-
butional characteristics for any variable (Chapter 6).
Such models generally assume that causes and media-
tors interact in their effects on outcomes; that is, the
effect of the cause on outcome changes over the levels
of the mediator, and vice versa. Thus, cause–media-
tor interaction effects are routinely estimated in this
approach. Mediation is also defined from a counter-
factual perspective that combines the potential out-
comes model with more traditional SEM (Chapter 1).
The two features just mentioned extend the definition
of mediation to include nonlinear models for categori-
cal outcomes or mediators while still including linear
models for continuous variables where no interaction
is assumed as a special case (i.e., the Baron–Kenny
method; Topic Box 8.1).
Natural Direct and Indirect Effects
Next, we assume a dichotomous cause X coded as (0,
1), where the levels correspond to, respectively, control
4 Hayes (2022) referred to Figures 20.4(a) and 20.4(c) as, respec-
tively, Model 7 and Model 8.
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 Enhanced Mediation Analysis 361

TOPIC BOX 20.1

Numerical Example of a First‑Stage Conditional Process Analysis

In a sample of N = 245 youth soccer players, Curran et al. (2013) administered measures of player behav-
ioral engagement (effort, persistence; Yenga), basic need satisfaction (willing participation, sense of com-
petence; M need), and perceived coaching support for structure (what is expected is made clear; Xstru) and
autonomy (players have choices; Wauto). In a basic mediation model that excludes autonomy, Curran et
al. (2013, p. 34) reported the unstandardized path coefficients listed next in equations without intercepts:

ˆ
M need = .330 X stru
Yˆenga .665Mneed + .063X stru
=

The estimator for the unconditional indirect effect of structure on engagement through need satisfaction
is .330(.665), or .219. Thus, for every 1-point increase in coaching structure, the expected increase in
engagement is .219 points through the mediator of need satisfaction when ignoring autonomy.
Curran et al. (2013) tested the hypothesis that coaching autonomy moderates the first stage of the
direct effect just described. Specifically, they predicted that the indirect effect of structure on engagement
through need satisfaction becomes increasingly positive as perceived autonomy increases. Their condi-
tional process model corresponds to Figure 20.4(d), where autonomy is also specified to moderate the
direct effect of structure on engagement, but not the direct effect of need satisfaction on engagement. The
equations with values of unstandardized coefficients reported by Curran et al. (2013, p. 35) are listed next:

ˆ
M −.677 X stru − .612 Wauto + .181X struWauto
need =
Yˆenga = .599 Mneed − .274X stru − .084Wauto + .054X struWauto

Given the results just listed and referring to the symbols in Figure 20.4(d), the coefficients for comput-
ing the conditional indirect effect of structure on engagement through needs satisfaction are

a1 = –.677   a3 = .181   b = .599

Thus, the product estimator that depends on autonomy is

(a1 + a3Wauto)b = a1b + a3bWauto = –.677(.599) + .181(.599) Wauto = –.406 + .108 Wauto

where the index of moderated mediation, or a3b = .108, does not equal zero (i.e., the indirect effect is
conditional). Given M = 4.84 and SD = 1.09 for autonomy (Curran et al., 2013, p. 34), we can calculate
the indirect effect at levels of the moderator that correspond to 3.75, 4.84, and 5.95, or values that are,
respectively, 1 SD below on the mean, the mean, and 1 SD above the mean:

Wauto = 3.75 Wauto = 4.84 Wauto = 5.95

Coefficient for
Xstru → M need → Yenga .001 .117 .237
(continued)

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 362 Advanced Techniques

In other words, the indirect effect of coaching structure on player engagement through player need satis-
faction becomes increasing positive as the level of coaching autonomy increases, which is consistent with
Curran et al.’s (2013) prediction.
Curran et al. (2013) applied the Johnson– ­Neyman technique for probing interactions to identify
regions of significance, or boundary values of the moderator (autonomy) for which the indirect effect
of structure on engagement through need satisfaction is statistically significant at the .05 level (Preacher et
al., 2007). They reported that the indirect effect was positive and significant for values of Wauto > 4.71. At
this boundary point for the moderator, the coefficient for the indirect effect is .103 (you should verify this
result), so coefficients that exceed .103 are significant at the .05 level. But for Wauto < 2.43, the indirect
effect is statistically significant but is now negative: At this lower boundary point, the coefficient for the
indirect effect is –.144, so any coefficient less than this value is significant. Given both results, the indirect
effect of structure on engagement through need satisfaction is not significant at the .05 level when the level
of the autonomy moderator lies within the interval [2.43, 4.71].
Presented in Figure 20.5 is a plot of the indirect effect of coaching structure on soccer player engage-
ment through player need satisfaction as a function of coaching autonomy structures. The solid line repre-
sents how the indirect effect changes from negative at lower levels of autonomy to positive at higher levels.
The dashed lines represent the lower and upper limits of bootstrapped confidence intervals reported by
Curran et al. (2013). The shaded areas in the figure designate the regions of significance for the indirect
effect as a function of the level for the moderator. Curran et al. (2013) described the conditional indirect
effect just estimated as antagonist because it is positive when coaching autonomy is higher (right side of
Figure 20.5) but is negative when autonomy is lower (left side of the figure).

.50
.40
.30
.20
Indirect effect

.10
0
−.10
−.20
−.30
−.40
−.50

2.00 3.00 4.00 5.00 6.00 7.00

Autonomy

FIGURE 20.5. Plot of the indirect effect of coaching structure on soccer player behavioral engagement through play-
ers’ satisfaction as a function of coaching autonomy. Dashed lines represent 95% bootstrapped confidence intervals for
the indirect effect. Shaded areas correspond to Johnson–Neyman regions of significance for the .05 level. Adapted,
with permission, from “A Conditional Process Model of Children’s Behavioral Engagement and Behavioral Disaffection
in Sport Based on Self-Determination Theory,” by T. Curran, A. P. Hill, and C. P. Niemiec (2013), Journal of Sport &
Exercise Psychology, 35 (1), p. 36. doi: 10.1123/jsep.35.1.30. Copyright © 2013 by Human Kinetics Publishers.

Pt4Kline5E.indd 362 3/22/2023 2:05:59 PM


versus treatment in a randomized trial, but the same
basic ideas apply to a binary cause like exposure to a
risk factor (i.e., no vs. yes) in an observational study.
Definitions stated next involve counterfactuals. For a
mediator M and outcome Y, the controlled direct effect
(CDE) is defined as the difference in outcome between
the treated and untreated cases, if the mediator were
controlled (fixed) at the same level for all cases in the
population. Expressed as an expected (typical) value in
a basic mediation model with no covariates,
=
CDE E (Y1,m − Y0,m ) (20.8)
which is the magnitude of the treatment effect, if the
mediator were fixed to a particular value, or M = m,
for all cases.5 Controlled direct effects may be of inter-
est in situations where it is possible to intervene at a
population level by fixing a mediator to the same value
for everyone, such as interest rates or levels of air pollu-
tion, while also implementing an intervention. In such
prescriptive contexts, there is no natural variation in
the mediator because it is set to equal a constant for all
cases (Pearl, 2009).
The natural direct effect (NDE) is the difference
in outcome due to varying the cause from control to
treatment (i.e., from X = 0 to X = 1) while keeping the
mediator for each case fixed at the value it would have
reached under no treatment (i.e., X = 0, the control con-
dition). Unlike for the CDE, the level of the mediator is
not fixed to the same constant for all cases. Defined as
an expected value,
=
NDE E (Y1, M 0 − Y0, M 0 ) (20.9)
which is the size of the treatment effect with the media-
tor assuming whatever value it would be in the control
condition, or M0, for each case. Thus, the context for
the NDE is descriptive, not prescriptive, because the
mediator varies over cases but only to the extent that it
does in the control condition only (Pearl, 2009).
If the cause and mediator do not interact, then the
controlled and natural direct effects are equal, or
CDE = NDE. This is because when the direct effect
of treatment is constant across all levels of the media-
5 The meaning of a “controlled indirect effect” is not straight-
forward. For example, Pearl (2009) argued that such effects are
not defined while Kaufman et al. (2004) noted that a controlled
indirect effect may be defined in cases where there is no interac-
tion between cause and mediator.
Pt4Kline5E.indd 363
Enhanced Mediation Analysis 363
tor (no interaction), then setting the mediator to a fixed
value (CDE) or considering the value of the mediator
that would have been observed in the control condi-
tion (NDE) generates the same result (Richiardi et al.,
2013). But when cause and mediator interact, there is
no single value for the CDE. Indeed, if the mediator is
continuous, there are infinite controlled direct effects.
In this case, the NDE corresponds to a weighted aver-
age of the CDE over all levels of the mediator.
The natural indirect effect (NIE) is the amount of
change in outcome among treated cases as the media-
tor changes from values that would be observed in the
control group to the levels it would attain in the treat-
ment group for each case. Thus, the NIE addresses the
question, “If everyone received the treatment but with
the mediator changed from the level it would be with
no treatment, or M0, to the level it would be with treat-
ment, or M1, how much would the outcome change?”
Defined as an expected value,
=
NIE E (Y1, M1 − Y1, M 0 ) (20.10)
The sum of NDE and NIE is the total effect (TE) of the
cause on the outcome, and this is true whether the cause
and mediator interact or do not interact in their effects
on outcome. Expressed as an expectation,
TE = NDE + NIE = E (Y1 − Y0 ) (20.11)
which for a continuous outcome is the average differ-
ence between the treatment and control conditions.
Nguyen et al. (2021) described TE as the effect of shift-
ing the cause from control to treatment (i.e., from X =
0 to X = 1) without intervening on the mediator. The
numerical example in Topic Box 20.2 may help to clar-
ify the definitions just considered.
Identification of controlled direct effects requires the
assumptions that (1) the treatment and outcome are not
confounded and (2) the mediator and the outcome are
not confounded, given covariates that are all unaffected
by the cause. There are also positivity assumptions
that values of the mediator and all covariates exist with
positive (> 0) probabilities under both the treatment and
control conditions (Torres, 2020). Natural (in)direct
effects require additional assumptions. A strong ver-
sion is the requirement for sequential ignorability that
there is no confounding between any pair of variables
among cause, mediator, and outcome under covariate
adjustment (Pearl, 2014). The term “sequential” means
that the mediator is considered to be randomly assigned
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 364 Advanced Techniques

TOPIC BOX 20.2

Numerical Example of Natural Direct and Indirect Effects

For a dichotomous cause X and a continuous mediator M and outcome Y, the linear mediation model that
allows for interaction between X and M is

M̂
= a 0 + a1X (20.12)
Yˆ =b0 + b1X + b2M + b3XM

where a 0 and b 0 are intercepts in their respective equations and XM is a product term that represents
the interactive effect between the cause and mediator. The CDE, NDE, and NIE are defined as follows
(VanderWeele, 2015):

cDE = b1 + b3 m (20.13)
nDE= b1 + b3 a 0
niE
= (b2 + b3 )a1

In other words, the CDE is how much outcome Y would change on average, if the mediator is controlled at
the same level for all cases, or M = m, but the cause changes from X = 0 to X = 1. The NDE is how much
Y would change on average if the cause were changed from X = 0 to X = 1, but the mediator M is kept to
the level that it would have taken when X = 0, which equals the intercept a 0 when predicting M from X. The
NIE is the mean change in Y when X = 1 as M changes from the level that would be observed for X = 0 to
the level it would attain under X = 1. If there is no interaction, then b3 = 0 in Equation 20.12. In this case,
(1) both the CDE and NDE equal the unconditional direct of X, or b1; and (2) the NIE equals the classical
product estimator of the indirect effect, or a1b2.
Suppose that X = 1 is an antiretroviral therapy for human immunodeficiency virus (HIV) and X = 0
is control; the mediator M is viral load, or the blood level of HIV; and the outcome Y is the level of CD4
T-cells, or helper white blood cells (Petersen et al. 2006). Values for regression coefficients and intercepts
estimated in a hypothetical sample are

= ˆ 1.70 − .20X
M
Yˆ = 450.00 + 50.00X − 20.00M − 10.00XM

That is, the predicted viral load in the control group is 1.70, but treatment reduces this count by .20. For
control patients with no viral load, the predicted level of CD4 T-cells is 450. Treatment increases this
amount by 50.00 for patients with no viral load, and for every 1-point increase in viral load for control
patients, the level of CD4 T-cells drops by 20.00. For treated patients, the slope of the regression line for
predicting the level of CD4 T-cells decreases by 10.00 compared with control cases.
These results just summarized imply that

a 0 = 1.70 and a1 = –.20

b 0 = 450.00, b1 = 50.00, b2 = –20.00, and b3 = –10.00
(continued)

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 Enhanced Mediation Analysis 365

Thus, the direct effect of treatment versus control at a given level of viral load M = m is

CDE = 50.00 – 10.00 m

The researcher can select a particular value of m and then estimate the CDE by substituting this value in
the formula just listed. Another option is to estimate the direct effect at the weighted average of M for
the whole sample. The direct effect of treatment estimated at the level of viral load that would have been
observed in the control condition is

NDE = 50.00 – 10.00 (1.70) = 33.00

where 1.70 is the predicted value of viral load in the control condition (X = 0). The natural indirect effect of
treatment allowing viral load to change as it would from the control to treatment is estimated as

NIE = (–20.00 – 10.00)(–.20) = 6.00

where –.20 is the difference in viral load between the treatment and control conditions. The total effect of
treatment is the sum of the natural direct and indirect effects, or

TE = 33.00 + 6.00 = 39.00

Thus, antiretroviral therapy increases the level of CD4 T-cells by 39.00 though both its natural direct effect
(33.00) and its natural indirect effect through viral load (6.00). Cheng et al. (2021) described estimators
of natural indirect effects for models with binary or continuous mediators or outcomes.

(i.e., an experimentally manipulated variable), given a
randomized cause and the covariates, although media-
tors in most studies are measured, not manipulated,
variables.
Pearl (2014, pp. 465–467) described somewhat less
demanding requirements for identifying natural (in)
direct effects that allow for methods other than covari-
ate adjustment to control confounding or methods that
apply mainly in observational studies, but they all gen-
erally assume no posttreatment (treatment-depen-
dent) confounders, or variables caused by treatment
that are, in turn, common causes of the mediator and
outcome, when the cause and mediator are assumed to
interact.6 This is a cross-world independence assump-
tion that knowing the value of the mediator when there
6 Incontrast, baseline confounders are common causes of the
mediator and outcome, but they are not affected by treatment.
Analysis of baseline confounders as covariates in covariate
adjustment is relatively straightforward.
is no treatment (X = 0), or M0, provides no information
about the effects on the outcome that would be observed
by setting both the mediator and cause to other values
(e.g., X = 1 for the cause), given the covariates. This
requirement is “cross-world” because the mediator and
outcome values are assumed to be unrelated even in
counterfactual causal worlds where assignment to treat-
ment or control differs for the mediator and outcome.
It can be challenging, if not impossible, to empiri-
cally evaluate the cross-world independence assump-
tion or even to justify it based on substantive knowl-
edge (Andrews & Didelez, 2021). It is also true that
some posttreatment confounders, such as treatment
adherence or compliance, are measured among treated
cases only (i.e., it is unobserved in the control group).
These challenges emphasize the potential value of esti-
mating controlled direct effects, which do not assume
cross-world independence (Naimi et al., 2014). Pearl
(2014), Richiardi et al. (2013), and Gonzalez et al.
(2023) described options to cope with posttreatment

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 366 Advanced Techniques
confounders when estimating natural direct effects for
parametric or nonparametric models, and Acharya et
al. (2016) described sensitivity analysis when estimat-
ing controlled direct effects.
Interventional Direct
and Indirect Effects
Interventional direct and indirect effects are not defined
in terms of cross-world counterfactuals, so they are
identified under weaker assumptions that allow for
posttreatment confounders (Vansteelandt & Daniel,
2017). In a basic mediation model with a dichotomous
cause X (0 = control, 1 = treatment) and a single media-
tor M, the interventional direct effect (IDE) is the dif-
ference between treatment and control conditions while
keeping the mediator for each case equal to the value
of a random draw from a distribution for the media-
tor under the control condition. Defined as an expected
value,
=
IDE E (Y1,G0 − Y0,G0 ) (20.14)
where G 0 represents a random draw from the distribu-
tion of the mediator in the absence of treatment.
The interventional indirect effect (IIE) is the
change in outcome in the treatment condition as the
mediator changes for each case from the value of a
random draw from the distribution of the mediator in
the control condition to the value of a random draw
from the distribution for the treatment condition. As an
expected value,
=
IIE E (Y1,G1 − Y1,G0 ) (20.15)
where G1 and G 0 are distributions for the mediator
under, respectively, treatment and control. For IIE ≠ 0,
the cause must shift the distribution of the mediator
from what it would be with no treatment to what it oth-
erwise would be with treatment. In a basic mediation
model with no posttreatment confounding, natural (in)
direct effects can also be interpreted as interventional
(in)direct effects, and their sum equals the total effect
defined in Equation 20.12 (Vansteelandt & Daniel,
2017). But natural (in)direct effects are not identified
when the assumption of no posttreatment confounders
is violated, but interventional (in)direct effects are still
defined in this situation.
In models with multiple mediators, interventional
(in)direct effects can be estimated without knowledge
Pt4Kline5E.indd 366
of the causal structure for the mediators. This includes
situations when the direction of causal effects between
mediators is unknown or when it is unknown whether
mediators have unmeasured common causes (Loh et
al., 2022). In contrast, path-specific indirect effects
require specification of a particular causal order among
multiple mediators, such as
X → M1 → M2 → Y
in Figure 20.2(c). As more mediators are added to the
model, the challenge of specifying a correct causal
structure among them also increases. This is espe-
cially true when analyzing high-dimension data, that
is, the kind collected in disciplines such as genomics
or environmental epigenetics, where the number of
potential mediators can exceed the sample size in mod-
els of complex biological systems (Blum et al., 2020).
Specification of the precise causal structure among,
say, hundreds of intervening variables in a model of
high-dimension mediation requires strong a priori
knowledge that is not always available, and empirical
searches based on significance testing for path-specific
indirect effects do not solve the problem (Thoemmes,
2015).
Interventional (in)direct effects are identified
under the assumption of no unmeasured confounding
between (1) the cause and the outcome, (2) the cause
and the mediators, and (3) all mediators and the out-
come after controlling for the cause. If covariates are
included in the model, it is assumed they are sufficient
to control for confounding between the sets of vari-
ables just mentioned (Vansteelandt & Daniel, 2017).
Unlike natural (in)direct effects, which are generally
not identified when there are posttreatment confound-
ers, all such confounders are considered as possible
competing mediators when estimating interventional
indirect effects (Loh et al., 2022). Suppose that variable
X in Figure 20.2 represents the contrast of treatment
and control. In Figure 20.2(c) with the direct effect
M1 → M2, mediator M1 is a posttreatment confounder
of the relation between M2 and Y. In Figure 20.2(d) with
the opposite direct effect, or M2 → M1, it is mediator
M2 that is a posttreatment confounder for the relation
between M1 and Y. Both patterns just mentioned are
treated simply as competing possibilities in an unspeci-
fied causal structure for the mediators when estimating
interventional indirect effects (Loh et al., 2022).
Suppose that X is a dichotomous cause (0 = control,
1 = treatment), there are three mediators, M1–M3, and
3/22/2023 2:05:59 PM

Y is the outcome. The model is linear without interac-
tion terms. Interventional indirect effects are estimated
over two different models. In the marginal model,
each mediator is separately regressed on the cause.7
Expressed as expected values with no intercept terms,
the marginal model for this example is
E (M1 | X) = a1 X (20.16)
E (M2 | X) = a2 X
E (M3 | X) = a3 X
where the coefficient for each indicator, ai, is inter-
preted as the total effect of X. For example, coefficient
a1 in the equation is interpreted as the total effect of
X on M1 that includes the direct effect and all four of
the possible indirect causal pathways between X and M1
that involve the other mediators listed next:
X → M2 → M1     X → M3 → M1
X → M2 → M3 → M1  X → M3 → M2 → M1
Thus, although the researcher specifies no causal
dependence among the mediators, all possible indirect
effects between X and M1 that involve any combina-
tion or causal order between the other two mediators
plus the direct effect are estimated by coefficient a1
in Equation 20.16. The drawback is that path-specific
indirect effects are not estimated. Coefficients a2 and a3
for, respectively, mediators M2 and M3 have analogous
interpretations.
In the outcome model, variable Y is regressed on
the cause and all mediators, which expressed as an
expected value with no intercepts for this example is
E(Y | X, M1–M3) = b1M1 + b2 M3 + b2 M3 + c′X (20.17)
Coefficients for the mediators, b1–b3, represent the
direct, not total, effects of the mediators M1–M3 on the
outcome Y. For example, coefficient b1 estimates the
direct effect of M1 on Y while controlling for the other
two mediators and X; coefficients b2 and b3 for, respec-
tively, M2 and M3 have similar meanings. Coefficient
c′ in the equation estimates the interventional direct
effect of X on Y that avoids all three mediators. Spe-
cifically, the treatment effect is estimated by controlling
the mediators for each case at random draws from the
7 Loh et al. (2022) used the term “marginal mean model” for
equations with intercepts.
Pt4Kline5E.indd 367
Enhanced Mediation Analysis 367
joint distribution for M1–M3 under the control condition
(Vansteelandt & Daniel, 2017).
Interventional indirect effects are computed as prod-
ucts of the coefficients ai for the total effect of X on each
mediator in the marginal model (Equation 20.16) with
the corresponding coefficients bi for the direct effect of
each mediator on Y in the outcome model (Equation
20.17). These product estimators in this example are
listed next for, respectively, mediators M1–M3:
IIE1 = a1b1 (20.18)
IIE2 = a2 b2
IIE3 = a3b3
For example, the product a1b1 estimates for treated
cases the effect of shifting the distribution for mediator
M1 from its counterfactual distribution under control to
its distribution under treatment while fixing the distri-
butions for M2 and M3 to those under the control condi-
tion. It corresponds to the combination of the five path-
specific indirect effects in this example listed next:
X → M1 → Y
X → M2 → M1 → Y
X → M3 → M1 → Y
X → M2 → M3 → M1 → Y
X → M3 → M2 → M1 → Y
Thus, the product a1b1 in Equation 20.18 represents all
effects of X on Y that are mediated by M1, but not by any
causal descendent of M1, and this interpretation holds
regardless of the true causal structure for the mediators
(Vansteelandt & Daniel, 2017). Exercise 5 asks you to
list all the path-specific indirect effects represented by
the product a2 b2 for mediator M2.
The joint interventional indirect effect (IIEjo) is
the sum of all interventional indirect effects. For this
example,
IIEjo = IIE1 + IIE2 = IIE3 (20.19)
The total interventional effect (TIE) is the sum of the
direct effect of the cause that avoids all mediators and
the joint interventional indirect effect. For this example,
TIE = c′ + IIEjo (20.20)
If no mediators are posttreatment confounders, the value
3/22/2023 2:06:00 PM
 368 Advanced Techniques
of TIE will equal that of the total effect (TE) defined
in Equation 20.11; otherwise, the TIE is described by
Nguyen et al. (2021) and others as the overall effect of
shifting the cause from control to treatment (from X = 0
to X = 1) while also shifting the mediator distributions
from their state under control to their state under treat-
ment. See Topic Box 20.3 for a numerical example of
computing interventional (in)direct effects.
Loh et al. (2022) described estimation of interven-
tional (in)direct effects for more complex models with
cause–mediator, mediator–mediator, or cause–media-
tor–mediator interactions. The decomposition of total
effects is more complicated for such models compared
with the example just considered for which no interac-
tion was assumed, but knowledge of the causal structure
for the mediators is still not required. Results of simula-
tion studies by Loh et al. (2022) indicated that estimates
of interventional (in)direct effects can be very biased
when the true model has mediator–mediator interac-
tions but such effects are omitted from the researcher’s
model. In general, allowing for all interactions between
mediators in the outcome model yielded unbiased esti-
mates, but larger samples would be needed. The R pack-
age medoutcon estimates natural and interventional
(in)direct effects (Hejazi, Diaz, et al., 2022).8
There are still other relatively new approaches to
mediation analysis, but it is beyond the scope of this
chapter to describe them in detail. For example, Bull-
ock and Green (2021) explained the application of
methods from experimental designs and the use of
instruments to estimate features of treatments that are
added or subtracted in ways that indicate the involve-
ment of some mediators but not others, or implicit
mediation analysis. Hejazi, Rudolph, et al. (2022)
described mediation analysis for stochastic interven-
tions, which are neither binary (full treatment ver-
sus none) nor static (level remains unchanged once
assigned) variables. Instead, intervention is viewed
as a random variable with multiple levels, such as
changes in drug doses or levels of financial assistance,
over ranges of many possible values that can change
over time. Effects of such treatments are estimated
under possible hypothetical interventions on mediators
where only a portion of their values are altered. These
and other recent developments outlined in this chapter
give hope to the idea that the overly long adolescence
of mediation analysis is finally ending—see Gonzalez
et al. (2023).
8 https://code.nimahejazi.org/medoutcon/
Pt4Kline5E.indd 368
REPORTING STANDARDS
FOR MEDIATION STUDIES
Vo et al. (2020) described characteristics and report-
ing practices for mediation analysis in a total of 98
randomized clinical trials published in MEDLINE
for 2017–2018. Although randomization guarantees
time precedence in measurement for the cause (i.e.,
intervention), mediators and outcomes were measured
simultaneously in just over half of the studies (53%).
Relatively few mediation analyses (4%) were based on
a counterfactual approach that includes estimation of
interaction effects. Controls for possible confounders
between multiple mediators or between mediators and
outcomes were analyzed in about 60% of the studies,
although the number of covariates was generally small
(e.g., 2–5). Assumptions of mediation analysis or good-
ness of model fit were explicitly addressed in only about
30% of studies. Overall, the conduct and reporting of
mediation analyses were very heterogeneous, and Vo
et al. (2020) called for consensus-based guidelines for
mediation studies.
Lee et al. (2021) developed such guidelines for
reporting results from mediation analyses in random-
ized trials or observational studies based on a sys-
tematic review of the literature and a Delphi survey
of statisticians, researchers, journal editors, and rep-
resentatives of the EQUATOR (Enhancing the Qual-
ity and Transparency of Health Research) Network.9
Consensus meetings of team members were followed
by an external review that included potential users and
resulted in the 25-item AGReMA (A Guideline for
Reporting Mediation Analyses) Long-Form Check-
list for studies in which mediation analysis is a pri-
mary focus, and the nine-item AGReMA Short-Form
Checklist for studies where mediation analysis is a
secondary aim. The points from both checklists that
specifically address reporting about mediation analyses
are summarized here:
1. Describe how the sample size was determined for
mediation analysis (e.g., power analysis, accuracy
in parameter estimation).
2. Include a graphical representation of the entire
model, such as directed acyclic graph (DAG),
including causes, mediators, outcomes, and con-
founders (covariates). State the assumptions of the
model.
9 https://www.equator-network.org/
3/22/2023 2:06:00 PM
 Enhanced Mediation Analysis 369

TOPIC BOX 20.3

Numerical Example of Interventional Direct and Indirect Effects

Summarized in Table 20.3 are data from Van Ryzin et al. (2013), who analyzed a larger model of direct
and indirect effects for a family-­based randomized intervention for grade 6 students developed to address
communication, parenting skills, and management of adolescent behavioral problems. The two mediators
in the table, including eating attitudes, where higher scores indicate higher levels of unhealthy eating (e.g.,
binge eating or purging), and levels of depression, were measured 5 years later when study participants
were 17 years old.
The outcome variable in Table 20.3 is the body-mass index (BMI) at age 22 years, or when the par-
ticipants were young adults. Van Ryzin et al. (2013) classified participants as obese for BMI ≥ 30 versus not
obese for BMI < 30. A total of about 22% of the participants were classified as obese under the threshold
just mentioned. They reported point-­biserial correlations (rpb) between obesity as a dichotomy and the
other variables in Table 20.3. For this example, I converted these rpb values to biserial correlations, which
estimate the Pearson correlation between a true continuous variable that was dichotomized and another
continuous variable (MacCallum et al., 2002, p. 24). Thus, the original continuous outcome, or BMI, is
approximately recovered by these conversions, and the mean and standard deviation for the BMI reported
in the table are based on norms for 19-year-old men and women in the United States (Ogden et al., 2004).
The marginal and outcome models for this example are represented next by regression equations
without intercepts. We assume no cause–­mediator or mediator–­mediator interactions. The marginal model
where the mediators (eating attitudes, depression) are regressed on the cause (intervention) is

M̂1(eat) = a1X   and  M̂2 (dep) = a 2X

(continued)

TABLE 20.3. Input Data (Correlations, Means, Standard Deviations) for Estimation
of Interventional Direct and Indirect Effects of a Family-Based Intervention on Body
Mass Index with Eating Attitude and Depression as Mediators
Indicator Age (years) 1 2 3 4
Cause
1. Intervention condition 12 —

Mediators
2. Eating attitudes 17 .04 —
3. Depression 17 –.03 .30 —

Outcome
4. BMI 22 0 .20 .03 —

M — .50 .30 58.20 25.17

SD — .50 .25 4.63 6.31

Note. Input data are from Van Ryzin et al. (2013), N = 792. BMI, body mass index. Results for the BMI are biserial correla-
tions.

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 370 Advanced Techniques

and the outcome model where BMI is regressed on the mediators and cause is

Yˆbmi =b1M1(eat) + b2M2 (dep) + c′X

Given the marginal and outcome models just defined, the analytical model corresponds to Figure
20.2(a), which is a parallel mediation model with two mediators where (1) each mediator is regressed on
the cause, and (2) the outcome is regressed on the all the other variables. Figure 20.2(a) represents the
combined marginal and outcome models for this example. But Figure 20.2(a) is not the causal model for
this analysis because it assumes the mediators are independent except for their spurious association due to
a common cause. In contrast, interventional indirect effects allow for any pattern of causation between the
mediators (e.g., Figures 20.2(c) or 20.2(d)). Thus, product estimators for interventional indirect effects have
a different interpretation compared with path-­specific product estimators in parallel mediation models (Loh
et al., 2022).
Listed in Table 20.1 for analysis 2 are the syntax and output files for fitting a parallel mediation model
as just described to the data in Table 20.3 in lavaan. Note that neither the standard fit statistics nor
the residuals normally printed by lavaan are relevant in this analysis where the causal structure for the
mediators is both unknown and saturated (it has all possible paths). Thus, this output was suppressed in the
analysis. Values of key unstandardized path coefficients from lavaan output are listed next:

a1 = .020   a2 = –.278
b1 = 5.310   b2 = –.046   c′ = –.119

Given the coefficients just listed, values of interventional (in)direct effects for this example are listed next:

IDE = –.119
IIE1(eat) = .020(5.310) = .016  IIE2(dep) = –.278(–.046) = .013
IIEjo = .016 + .013 = .029
TIE = –.119 + .029 = –.090

We can say that the overall effect of intervention (TIE) is to decrease BMI by .090, but the pattern
of effects is complex: Intervention decreases BMI by –.119 when both mediators are avoided (IDE), or
when the mediators are controlled for each case by random draws from distributions assuming no treat-
ment. But mediated effects of intervention increase BMI by .029 altogether (IIEjo). Specifically, intervention
(1) increases BMI by .016 by improving eating attitudes (IIE1(eat)) and (2) also increases BMI by .013 by
reducing depression, which elevates BMI (IIE2(dep)). These effects are relatively small, given the standard
deviation for BMI, or 6.31 (Table 20.3), but a decade separates cause and outcome in this example.

3. Describe how causes, mediators, outcomes, and
other variables were measured, their psychomet-
rics, and how blinding was used to reduce potential
bias.
4. Specify the statistical methods used to estimate
mediation or other special model building (or trim-
ming) procedures to modify the initial model.
5. Describe results for any sensitivity analyses on the
effects of violated assumptions that concern miss-
ing data, unmeasured confounders, or distributional
properties of the data.
6. Report effects sizes for effects of interest and, if
possible, estimates of their uncertainty, such as con-
fidence intervals.

Pt4Kline5E.indd 370 3/22/2023 2:06:00 PM


SUMMARY
Iacobucci et al. (2007) offered some great advice about
testing for mediation:
First, step away from the computer. A mediation analysis
is not always necessary. Many processes should be infer-
able from their resultant outcomes. If you must conduct
a mediation analysis, be sure it has a strong theoretical
basis, clearly integrated and implied by the focal concep-
tualization, not an afterthought. Further, be prepared to
argue against, and empirically test, alternative models of
explanation. (p. 151, emphasis added)
Part of planning for mediation analysis includes the
use of an appropriate research design. Cross-sectional
designs, which have no temporal precedence in mea-
surement, are generally inadequate without ironclad
rationales about causal order; otherwise, the presence
of equivalent models, some of which may involve no
indirect effects at all, are a serious validity threat. There
are relatively new methods for estimating mediation in
randomized trials that allow for interaction between
causes and putative mediators or that do not require
the specification of path-specific indirect effects, which
needs knowledge of the causal structure for multiple
mediators. The point just mentioned refers to the focus
on interventional indirect effects, which Vansteelandt
and Daniel (2017) described as “less ambitious” com-
pared with estimating path-specific indirect effects,
EXERCISES
1. Interpret the coefficients for the indirect effect in
the top part of Table 20.2.
2. Calculate and interpret the effect sizes in the bot-
tom part of Table 20.2 from the information in the
top part of the table.
3. Calculate df M for the model in Figure 20.3(a) and
show that it is identified.
Pt4Kline5E.indd 371
Enhanced Mediation Analysis 371
but it is probably more realistic because the method is
agnostic to what might be an unknown causal struc-
ture for multiple mediators. A latent growth modeling
approach to mediation analysis is described in the next
chapter.
LEARN MORE
Bullock and Green (2021) demonstrate the application of
principles and techniques from experimental designs to the
estimation of mediated effects and articulate their assump-
tions, Loh et al. (2022) introduce interventional (in)direct
effects to psychology researchers, and Nguyen et al. (2021)
offer an accessible explanation of causal mediation analysis
to the same audience.
Bullock, J. G., & Green, D. P. (2021). The failings of conven-
tional mediation analysis and a design-based alterna-
tive. Advances in Methods and Practices in Psychologi-
cal Science, 4(4), 1–18.
Loh, W. W., Moerkerke, B., Loeys, T., & Vansteelandt, S.
(2022). Disentangling indirect effects through multiple
mediators without assuming any causal structure among
the mediators. Psychological Methods, 27(6), 982–999.
Nguyen, T. Q., Schmid, I., & Stuart, E. A. (2021). Clarifying
causal mediation analysis for the applied researcher:
Defining effects based on what we want to learn. Psy-
chological Methods, 26(2), 255–271.
4. Describe the relation between X and Y represented
in Figure 20.3(a).
5. Describe the path-specific indirect effects of X on Y
through M2 represented by the coefficient a2 b2 for
the interventional indirect effect in Equation 20.18.
3/22/2023 2:06:00 PM
 21

Latent Growth Curve Models

Analysis of latent growth models—also called latent growth curve models—in SEM and other sta-
tistical techniques, such as multilevel modeling, focuses on the estimation of growth trajectories, or changes
over time on ≥ 1 repeated measures variables, based on statistical models of the hypothesized underlying
growth process at the group and individual levels. Antecedents of change, or covariates that predict indi-
vidual differences in growth trajectories, can optionally be included in the model. Growth curve analysis has
wide application in many research areas, and such models are seen so often in the literature that conflating
the terms longitudinal model and growth curve model is understandable, albeit partly incorrect (Little, 2013).
The description of models from the SEM perspective where repeated measures are specified as indicators of
latent variables that represent starting points or rates of change owes much to Meredith and Tisak (1990),
McArdle and Epstein (1987), Muthén (1991), and Willet and Sayer (1994), among others. There is also a
large body of work about the analysis of growth models in other statistical methods, especially multilevel
modeling (Bryk & Raudenbush, 1987).
It is not feasible to give a comprehensive account of latent growth modeling in a single chapter, so the
more practical goal is to extend what you have learned so far about measurement and structural models in
traditional SEM to the analysis of longitudinal data. Considered first are basic change models with latent
growth factors that represent initial levels or slopes for subsequent change. Next, models with variables
expected to predict growth trajectories are considered, and there are analysis examples with real data
for both types of models just mentioned. Finally, more advanced types of latent growth curve analyses are
described. If you have no prior background in analyzing longitudinal data from a growth curve perspec-
tive, I think this presentation should get you off to a good start. For more advanced works in this area, see
Duncan et al. (2006), Grimm and McArdle (2023), Grimm et al. (2017), Little (2013, chap. 8), or Newsom
(2015, chaps. 6–7).

BASIC LATENT GROWTH MODELS
Basic latent growth models have the features listed next
(Byrne & Crombie, 2003; Curran et al., 2010; Duncan
& Duncan, 2009; Stoel et al., 2004):
1. A single continuous dependent variable is mea-
sured on at least three different occasions in the same
sample, and scores have the same units over time that
can be said to measure the same construct at each
assessment. The scores are not standardized, so cor-
relations, standard deviations, and means are analyzed
for continuous variables in their original metrics. There
are no missing data, that is, each case is measured on
every occasion. Distributions for all outcome variables
are normal in shape. Under all the conditions just men-
tioned, the input data can be either a raw data file or a
matrix of summary statistics, and the estimator can be
default ML.
2. The data are time structured, which means that
all cases are tested at the same intervals that need not

372

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be equal. For example, a sample of children may be
observed at 3, 6, 12, and 24 months of age. If other
children are tested at, say, 4, 10, 15, and 30 months,
their data cannot be analyzed together with those tested
at other intervals.
3. The model is specified as a type of structural
regression (SR) model with a mean structure for latent
growth factors that represent fixed and random effects
in individual trajectories over time. Fixed effects cor-
respond to single values in the population, such as the
average starting point (initial level) or mean slope (rate
of change), that are presumed to underlie the empiri-
cal growth records, or the temporally sequenced out-
comes for individual cases observed in samples.
4. Random effects in latent growth models represent
probability distributions around fixed effects, and they
are generally estimated as variances at the case level
around mean initial levels or slopes. If these variances
are zero, then a single growth trajectory is shared by
all cases; otherwise, increasingly larger individual dif-
ferences at the first observation or in slopes for change
over time are indicated as random effects increase in
magnitude.
5. Indicators of latent growth factors are the
repeated measures on the dependent variable. Each
indicator has an error term, so perfectly reliable scores
are not assumed. In the analysis, error variances can be
constrained to equality over all measurement occasions
or freely estimated with no constraints, among other
possibilities, but the choice should be based on substan-
tive considerations. Within the limits of model identi-
fication, such as available degrees of freedom (df M),
error covariances can also be specified and estimated.
For example, the hypothesis of correlated errors may be
less plausible for assessments that are conducted annu-
ally compared with measurement over shorter intervals,
such as weekly or daily. The possibility to test hypothe-
ses about the error covariance structure for longitudinal
data affords much flexibility in the analysis.
6. A basic latent growth model can optionally
include time-invariant covariates, or observed vari-
ables measured for all cases just once and at the same
time, such as the first measurement occasion. Time-
invariant covariates in a latent growth model are often
individual difference variables, such as family back-
ground or medical history, that (a) do not change in
value over time and (b) are expected to predict growth
trajectories. The goal is to determine what variables
Pt4Kline5E.indd 373
Latent Growth Curve Models 373
explain differences in initial levels or rates of change
among individuals.
7. A growth predictor model is probably the most
common type of latent growth model with time-invari-
ant covariates: The latent growth factors are regressed
on the covariates, and the corresponding path coeffi-
cients estimate the potential of the covariates to predict
initial status or change. It is also possible to estimate
the total proportion of variance in the latent growth fac-
tors explained by all covariates (i.e., R2). For reasons
outlined later, a growth predictor model assumes full
(complete) mediation in that covariates are specified to
affect the repeated measures only indirectly through
the latent growth factors.
8. Basic latent growth models in SEM as just
described can also be analyzed as multilevel (two-level)
models in the technique of hierarchical linear model-
ing (HLM)—also referred to as linear mixed model-
ing, multilevel modeling, or mixed effects modeling—
where scores are treated as nested or clustered within
individuals (level 1), and random coefficients for initial
level or slope are regressed on covariates (level 2). The
parameterization of a basic growth model in HLM is
different. For example, repeated measures are specified
as a single variable indexed by time, and time is treated
as an explicit predictor in the model in HLM. But in
SEM, repeated measures are treated as separate vari-
ables, and there is no requirement to explicitly include
time as a variable in the model (McNeish, 2020). But
HLM and SEM often generate the same parameter esti-
mates for the same model and data. This is a point of
convergence between the two techniques—see Curran
(2003) for examples.
The requirements or assumptions of basic latent
growth models as just described are restrictive, but
there are options in SEM for relaxing or setting many
aside. For example, multiple imputation or full infor-
mation maximum likelihood (FIML) can be applied
to incomplete longitudinal data assuming a miss-
ing at random (MAR) data loss pattern, which may
be unlikely in studies where, for example, substance
abusers have the highest risk for attrition even after
controlling for auxiliary variables. Enders (2011)
described options for handling data missing not a
random (MNAR) in latent growth modeling; see also
Enders (2023). Special estimators in SEM are available
for continuous outcomes with nonnormal distributions
or for categorical outcomes (Chapters 9, 18); see also
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 374 Advanced Techniques

Zheng et al. (2022) for recommendations specific to TABLE 21.1. Input Data (Correlations, Standard
latent growth modeling. Deviations, Means) for Analyses of Latent
Time-varying covariates, which can change in Growth Models for Change in Neural Risk
value over time and are thus treated as repeated mea- Processing in Adolescents
sures variables, can also be analyzed with no special Variable 1 2 3 4
problem. A relatively unique feature of SEM is that pre-
1. R1 —
dictors of growth trajectories can also be analyzed as
2. R2 .35 —
conceptual variables modeled as common factors with
3. R3 .28 .35 —
multiple indicators, and structural models for predic-
tors can include indirect causal effects among them 4. R4 .29 .40 .45 —
(e.g., mediation). It is also possible to analyze in SEM M .04 .61 .57 .83
longitudinal data that are not time structured, or when
measurement intervals vary over cases. These and SD .05 .77 .76 1.15
other options for analyzing more complex latent growth
models are outlined later in this chapter. Note. These data are from Kim-Spoon et al. (2021), N = 150.

DATA SET FOR ANALYZING
BASIC GROWTH MODELS
WITH NO COVARIATES
Kim-Spoon et al. (2021) analyzed longitudinal func-
tional magnetic resonance imaging (fMRI) data in a
sample of adolescents measured annually over 4 years
(ages 14–17 years). The sample size is small, N = 150,
but the data are quite novel. At each assessment, partic-
ipants engaged in a simulated lottery choice task while
their blood-oxygen-dependent responses were mea-
sured in brain structures, such as the insula and dorsal
anterior cingulate cortex (dACC), associated with risk
processing in adults. A neural risk processing compos-
ite was computed for each adolescent, where higher
risk-taking behavior and neural processing of decision-
making about risk (Kim-Spoon et al., 2021).
Alternative latent growth models with no covariates
for the data just described are presented in Figure 21.2.
Full RAM graphical symbolism is used to represent
the latent growth factors, including the special delta-1
symbol for the constant in a mean structure. Remember
that representing mean structures in model diagrams
is optional, but I do so here for pedagogical complete-
2.00
1.50
Neural risk processing

scores indicate greater activation in the brain regions

just mentioned at choice points in the lottery task with
the potential for monetary loss (i.e., risk). 1.00
Presented in Table 21.1 are the summary statistics
for neural risk processing, and the means and standard
deviations at each yearly assessment are depicted in .50
Figure 21.1. In general, both the levels and ranges of
individual differences increase with age, although those 0
changes are not strictly linear. For example, although
there is slight decline over ages 15–16 years, neural risk
processing generally increases on average over ages −.50
14, 15–16, and 17 years. At age 14 years, the standard
deviation is relatively small compared with that at age 14 15 16 17
17 years with more intermediate values observed for Age in years
ages 15–16 years, but adolescents generally become
more variable in neural risk processing with matura- FIGURE 21.1. Neural risk processing composite means
tion. These patterns are consistent with the expectation and standard deviations for adolescents measured annually
that adolescence is characterized by increases in both over a 4-year period.

Pt4Kline5E.indd 374 3/22/2023 2:06:00 PM

 Latent Growth Curve Models 375

(a) Random intercept-only (b) Latent basis growth

No growth Change R1 to R4

1 1
μI μI μS
2 2 2
σI σI σS

Intercept Intercept Shape

1 1 0
1 1 1 1 1 1
1 λ2
λ3

R1 R2 R3 R4 R1 R2 R3 R4

(c) Latent basis growth (d) Linear growth

Change R1 to R2

1 1
μI μS μI μL
2 2 2 2
σI σS σI σL

Intercept Shape Intercept Linear

1 0 1 0
1 1 1 1 λ4 1 1 1 1 2 3
λ3

R1 R2 R3 R4 R1 R2 R3 R4

FIGURE 21.2. Basic latent growth models for change in neural risk processing (R) measured annually over 4 years (ages
14–17 years).

ness. More compact graphical symbolism (i.e., ) is Random Intercept‑Only Models

used to represent the error terms for annual neural risk
processing designated as R1–R4 in the figure. Note that
intercepts for the repeated measures are fixed to zero,
which is indicated by the absence of direct tracings
from delta-1 to these variables. But there are indirect
tracings from delta-1 through the latent growth factors,
and the coefficient for the total of all such tracings for
each indicator represents a predicted mean (Chapter 9).
Whether a latent growth model can closely predict the
observed means is often of keen interest in the analysis
(i.e., mean residuals should be closely inspected).
Figure 21.2(a) is a random intercept-only model that
predicts no growth, or where there is a stable level over
the repeated measures. Loadings for all indicators on
the intercept factor are fixed to equal 1.0. The unstan-
dardized coefficient for the direct tracing of delta-1 to
Intercept represents the factor mean, mI, which is also
the predicted average neural risk processing over all
ages, or 14–17 years. Expressed as an equation,
m R i =m Ι (21.1)

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 376 Advanced Techniques
where the subscript i = 1–4 indexes the repeated mea-
sures over ages 14, 15, 16, and 17 years, respectively.
The factor variance, s 2I, is the amount of random varia-
tion around the overall level (i.e., mI). It may seem coun-
terintuitive to describe Figure 21.2(a) as a “growth”
model, but it is consistent with the expectation that the
growth trajectory is flat (Curran et al., 2010). For exam-
ple, in their analysis of a latent growth model, Costa et
al. (2013) found that empathy for patients among medi-
cal students did not appreciably decrease over 3 years;
that is, a random intercept-only model was consistent
with the data.
Basis Growth Models
Figure 21.2(b) is a latent basis growth model—also
called a latent basis curve model or a level and shape
model—with two growth factors, Intercept (i.e., level)
and Shape. Loadings of all repeated measures on the
intercept factor are fixed to equal 1.0, just as in the
random intercept-only model (Figure 21.2(a)). A basis
model predicts growth trajectories that are not flat, but
growth is not specified as strictly linear. Instead, a basis
model allows for linear or curvilinear change in any pat-
tern that will be “captured” in the data and represented
by the shape factor. This approach to growth model-
ing is called nonlinear curve fitting, and it represents
a simpler, more flexible alterative to the specification
of models with a separate latent growth factor for each
change trend or polynomial, such as linear, quadratic,
cubic, and so on. In the data for this example, average
neural risk processing is higher at age 17 years com-
pared with age 14 years, but growth over intermediate
ages is not strictly linear—see Figure 21.1. The method
for explaining how a basis growth model is specified
without prior hypotheses about the specific functional
form of change is covered next.
Unstandardized loadings for the shape factor in Fig-
ure 21.2(b) are called basis coefficients. Two such coef-
ficients are fixed to equal constants: The specification
l1 = 0 for R1 defines the intercept factor mean, mI, as the
average level of neural risk processing at the first mea-
surement occasion, or at 14 years of age, but as a latent,
not observed, variable. It also defines s 2I as the random
variation around the initial level. The specification
l4 = 1.0 for R4 in the figure scales the shape factor as
defined momentarily. The other two basis coefficients—
l2 and l3 for, respectively, ages 15 and 16 years—are
free parameters. The whole set of basis coefficients, or
Pt4Kline5E.indd 376
(0, l2, l3, 1.0) (21.2)
defines mS, the shape factor mean, as the average
change in neural risk processing between 14 and 17
years of age. The same weights in the equation also
define sS2, the shape factor variance, as the random
variation around the mean overall change.
Equation 21.2 scales the growth factor Shape in
Figure 21.2(b) so that a 1-unit change in time refers to
the whole period of observation, or ages 14–17 years
inclusive. So defined, loadings l2 and l3 are interpreted
as proportions of the total overall change that has
occurred up to and including the corresponding mea-
surement (McNeish, 2020). For example, l3 = .70 for
R3 in the figure would mean that .70, or 70% of the
total increase in neural risk processing over ages 14–17
years has occurred by age 16 years. Given the observed
means for R1–R4 in Table 21.1 or, respectively,
.04, .61, .57, .83
it is expected that l3 < l2 because the mean declines
from ages 15 to 16 years, or from .61 to .57, before it
increases again to its final level, or .83. In this way, the
“dip” in mean neural risk processing from ages 15–16
years will be reflected in the relative values of basis
coefficients.
There are two indirect tracings from delta-1 in the
mean structure for Figure 21.2(b) to each repeated
measure, one through Intercept and the other through
Shape. The coefficient for the sum of both tracings just
mentioned is the predicted mean at each age, or
m Ri = m I + l i mS (21.3)
In other words, the predicted average neural risk pro-
cessing is the sum of the initial mean at age 14 years
plus the proportion of total change over ages 14–17
years that has occurred up to and including the point
of measurement indicated by the subscript i = 1–4.
Given l3 = .70, for instance, the predicted mean at age
16 years is
m R 3 =m I + .70 m S
or the average at age 14 years plus 70% of the overall
amount of change that has occurred by age 17 years.
The covariance in Figure 21.2(b) represents the
association between Intercept and Shape. A positive
3/22/2023 2:06:01 PM

covariance indicates that higher initial levels of neural
risk processing at age 14 years predict a higher rate of
subsequent change between 14–17 years. That is, cases
who start at higher levels change the most over time. A
negative covariance indicates the opposite: Higher ini-
tial standing predicts less change over 4 years. Finally, a
factor covariance of zero indicates that initial level has
nothing to do with the rate of subsequent change. The
question of whether change is predictable by initial level
is often of substantive interest in growth modeling.
You should know that there are alternative ways to
scale the shape factor through specification of its basis
coefficients. Although how Shape is scaled does not
affect model fit, the interpretation of certain parameters
depends on the scaling method. For example, the shape
factor in Figure 21.2(c) is scaled by the alternative set
of basis coefficients
(0, 1.0, l3, l4) (21.4)
where the loadings for neural risk processing at ages 14
and 15 years (R1, R2) are fixed to equal, respectively, 0
and 1.0, but the loadings for ages 16 and 17 years (R3,
R4) are free parameters. So defined, the factor mean mS
in Figure 21.2(c) is the average change between ages
14–15 years, and the factor variance, sS2, is random
variation in change over this 1-year period. In contrast,
the mean and variance for Shape in Figure 21.2(b) are
both defined based on change or variation in change
over the entire age range, or 14–17 years (i.e., a 4-year
period; compare Equations 21.2 and 21.4).
Although indicator means for Figure 21.2(c) are also
generated using Equation 21.3, the two freely estimated
basis coefficients, or l3 and l4 in Equation 21.4, have
different interpretations. For example, l3 for R3 at age
16 years is the proportion of the average change in neu-
ral risk processing from ages 14 to 15 years (R1, R2)
that must be added to the initial mean at age 14 years
(i.e., mI) in order to generate the mean at age 16 years.
If l3 = 1.25, for example, then the predicted mean at
age 16 is
m R 3 =m I + 1.25 m S
which is the initial mean at age 14 years plus 1.25 times
the amount of change expected to occur on average
between ages 14 and 15 years. The coefficient l4 has a
similar interpretation except that it is the proportion of
change over ages 14–15 years that must be added to the
Pt4Kline5E.indd 377
Latent Growth Curve Models 377
initial level to generate the final mean at age 17 years.
Because the observed means decline from ages 15 to 16
years, we expect that l3 < 1.0 and l3 < l4 when Figure
21.2(c) is fitted to the data in Table 21.1.
How the shape factor is scaled also affects its cova-
riance with the intercept factor. This is because the
interpretation of sS2 is determined by the set of basis
coefficients specified by the researcher (e.g., Equation
21.2 vs. 21.4), and the variance of Shape contributes to
its covariance with Intercept. However, the correlation
between Shape and Intercept in the standardized solu-
tion is not affected by scaling. It is also true that indica-
tor error variances and covariances are unaffected by
the scaling method (e.g., Little, 2013, pp. 249–256). In
written reports, always describe how latent growth fac-
tors are scaled.
Proportionality Assumption
Latent basis growth models afford much flexibility in
that the researcher is not required to specify any detail
about the nature of curvilinear change, or even if curvi-
linear change is expected. This feature supports more
exploratory analyses of change, including situations
where departure from linear change is not of theoreti-
cal interest. Also, basis growth models keep things rela-
tively simple because they always have just two growth
factors, Intercept and Shape, regardless of the pattern
of linear or curvilinear growth in the data. But there is
a potential cost, as explained next.
Basis growth models require the proportionality
assumption that the percentage of growth observed
at each measurement occasion is equal for all cases.
For example, if l3 = .70 in Figure 21.2(b), then it is
assumed that 70% of the total growth has occurred for
all cases by the third measurement occasion, or age 16
years in the ongoing example. Random variation in ini-
tial standing or total change over ages 14–17 years, or
s 2I > 0 and sS2 > 0, are allowed, but the requirement that
all cases reach the same proportions of their final status
at each follow-up is restrictive. If true growth trajecto-
ries are mainly linear, the proportionality assumption
may present little difficulty. But if true change is qua-
dratic, the proportionality assumption will be violated
unless (1) the linear slope is basically zero and (2) there
is almost no between-person variation in linear or qua-
dratic slopes (McNeish, 2020).
Based on computer simulations by Wu and Lang
(2016), violation of the proportionality assumption can
3/22/2023 2:06:01 PM
 378 Advanced Techniques
result in substantially biased parameter estimates when
analyzing basis change models. However, misspecifi-
cation due to violation of the proportionality assump-
tion was not generally detected by global fit statistics,
including the model chi-square, RMSEA, and SRMR.
Based on these results, Wu and Lang (2016) warned
against uncritical enthusiasm for basis growth models,
especially if there is nontrivial variation in curvilinear
change over time. They also suggested that researchers
consider alternative models, including those described
in the next two sections, that do not assume propor-
tionality. McNeish (2020) described the analysis of
basis growth models respecified to relax the propor-
tionality assumption using Bayesian methods. In this
approach, each basis coefficient is modeled as a latent
variable that itself varies over cases; that is, loadings on
the shape factor are not constants for the whole sample.
The method requires working knowledge of Bayesian
estimation and the analysis of raw data files, not sum-
mary statistics.
Linear Growth Models
Linear growth models assume that change is strictly
linear; thus, they are constrained versions of basis
growth models for the same variables. They differ in
that (1) there is no proportionality assumption for linear
growth models, and (2) the coefficients in linear models
are all fixed to equal constants that correspond to times
of measurement (i.e., no coefficients are free param-
eters). For example, the coefficients for the linear factor
in Figure 21.2(d) are
(0, 1.0, 2.0, 3.0) (21.5)
which defines the intercept as corresponding to the first
measurement at age 14 years (i.e., l1 = 0). Equation 21.5
also specifies equally spaced intervals for the next three
annual follow-ups over ages 15–17 years. The coeffi-
cients in Equation 21.5 increase in value, which reflects
the hypothesis that neural risk processing uniformly
increases with age.
Because the linear model in Figure 21.2(d) is just
a constrained version of the basis growth model in
Figure 21.2(c), the relative fit to the same data can be
directly compared with the chi-square difference test.
A model of strict linear change is not consistent with
the observed means for this example (Table 21.1, Fig-
ure 21.1), so its fit to the data may be problematic. The
Pt4Kline5E.indd 378
random intercept-only model in Figure 21.2(a) is nested
under all other models in the figure, so the chi-square
difference test applies to the no-growth model, too.
Exercise 1 asks you to calculate df M for Figures 21.2(a),
21.2(b), and 21.2(d).
Linear and Quadratic (Polynomial)
Growth Models
Presented in Figure 21.3 is a polynomial model with
both linear and quadratic growth factors. The coef-
ficients for the quadratic factor are fixed to equal the
constants
(0, 1.0, 4.0, 9.0) (21.6)
which for each measurement occasion is just the square
of the corresponding coefficient for the linear factor
(see the figure). The model allows for both linear and
quadratic trends in growth, but any higher-order poly-
nomial or trend, such as cubic growth, is assumed to
be zero. The mean for the intercept factor is the aver-
age neural risk processing at age 14 years, and its vari-
ance is the random variation around this mean initial
level. The linear factor mean, mL, is the average amount
of yearly increase in neural risk processing, which is
assumed to be the same between all pairs of adjacent
years, and s 2L is the random variation around the annual
change. The quadratic factor mean, mQ, is the average
curvature or departure from linear growth, and its vari-
ance s 2Q is random variation in quadratic growth curves
over cases.
In Figure 21.3, delta-1 in the mean structure has
indirect tracings for each indicator through each of the
three growth factors, Intercept, Linear, and Quadratic.
Thus, the equation that generates indicator means is
m Ri = m I + l Li m L + l Q i m Q (21.7)
where l Li and lQ i are, respectively, coefficients for the
linear and quadratic factors. For example, at age 16
years (R3), lL3 = 2.0, lQ3 = 4.0, and
m R 3 =m I + 2.0m L + 4.0m Q
Thus, the mean neural risk processing at age 16 years
is the average at age 14 years plus 2 times the aver-
age annual change plus 4 times the average quadratic
curvature.
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μI μL
2 2
σI Intercept σL Linear
1 0
1 1
1 1
R1 R2
FIGURE 21.3. Polynomial growth model for linear and quadratic change in neural risk processing (R) over 4 years (ages
14–17 years).
All three latent growth factors are assumed to covary
in Figure 21.3, so each of linear change and quadratic
change can be related to the initial level, and the two
functional forms of change just mentioned can covary.
A potential advantage is that a polynomial change
model can be tested hierarchically, such as first with
just Intercept (i.e., a no-growth model), then next with
just Intercept and Linear (i.e., strictly linear change),
and finally with all the growth factors (linear and qua-
dratic trends are estimated)—see Llabre et al. (2004),
who compared linear-only, and linear-and-quadratic,
and other growth models of cardiovascular recovery
from stress for an example. In a computer simulation
study, Kim et al. (2018) reported that model trimming,
or starting with the most complex growth model, was
more likely to detect the true growth trajectory than
model building, which begins with the simplest model
(e.g., random intercept-only).
It is possible, especially in smaller samples, that
extreme collinearity can cause the analysis of polyno-
mial growth models to fail. Polynomial growth factors,
such as Linear and Quadratic in Figure 21.3, can be
very highly correlated, and data in small samples may
not be sufficiently precise to distinguish between them.
Another challenge is that the variance of a polynomial
factor can be relatively small, which can restrict the
statistical power of tests for linear or curvilinear trajec-
tories. Exercise 2 asks you to compute df M for Figure
21.3.
Pt4Kline5E.indd 379
Latent Growth Curve Models 379
μQ
2
Quadratic σQ
3 0
2 9
1 4
R3 R4
All examples for specifying coefficients for linear or
quadratic factors up to this point have assumed (1) equal
measurement intervals for (2) repeated measures that
generally increase over time where (3) the intercept fac-
tor is defined as the level at the first measurement occa-
sion. How to deal with exceptions to these conditions is
considered in Appendix 21.A.
EXAMPLE ANALYSES OF BASIC
GROWTH MODELS
Listed in Table 21.2 for analysis 1 are the syntax and
output files for fitting in lavaan a random intercept-
only model, basis growth model, and linear growth
model—Figures 21.2(a), 21.2(b), and 21.2(d), respec-
tively—to the data in Table 21.1. All files can be down-
loaded from this book’s website. In their analyses of the
same data, Kim-Spoon et al. (2021) fixed the error vari-
ance for neural risk processing at age 14 years, or R1 in
Figure 21.2, to zero; otherwise, the estimate is slightly
negative (i.e., a Heywood case), which is consistent
with a real error variance of zero. Given the narrow
range of individual differences at this age—see Figure
21.1—this result for the error variance is not surprising.
Therefore, the same zero constraint is imposed in the
analyses described next.
Reported in Table 21.3 are the values of global fit
statistics and the results of the chi-square difference
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 380 Advanced Techniques

TABLE 21.2. Script and Output Files for Analyses of Basic Latent Growth
Models for Change in Neural Risk Processing Among Adolescents
Analysis Script file R packages
1. Basic growth models for change in neural kim-spoon-growth.r lavaan
risk processing over ages 14–17 years semTools

2. Growth model for predicting change in duncan-predict-growth.r lavaan

alcohol use over ages 13–16 years semTools

Note. Output files have the same names except the extension is “.out.”

test for the three models tested. The fit of the random
intercept-only is very poor, so the hypothesis of no
growth is not supported. In contrast, the basis growth
model passes the chi-square test, but the power of this
test at the .05 level, or .14 in the MacCallum–RMSEA
method, is low. A much larger sample size of N = 1,542
would be needed for power ≥ .90. Values of approxi-
mate fit indexes are not problematic except for the
upper bound of the 90% CI based on the RMSEA, or
.105, but this result is not surprising in a small sample.
The residuals, described later, do not suggest a gross
problem with local fit. The linear growth model fails
the chi-square test and has significantly worse fit to
the data than the basis growth model. Values for the
RMSEA and SRMR for the linear growth model are
also unfavorable. Inspection of the residuals for the lin-
ear model indicates poor local fit—see the output file
for analysis 1 (Table 21.2). Given all the results summa-
rized to this point, the basis growth model is retained.
Reported in Table 21.4 are the default ML estimates
for the factor means, variances, and covariance in the
basis growth model. The intercept factor mean is .040,
which equals the observed mean neural risk process-
ing at age 14 years at 3-decimal accuracy (Table 21.1).
The shape factor mean is .817, which is close in value
to the observed mean increase of .83 – .04, or .79, over
ages 14–17 years, but Shape is a latent, not observed,
variable. The factor covariance is positive, or .014, so
higher levels of neural risk processing at age 14 years
predicted greater overall increases by age 17 years. The
factor correlation in the standardized solution is .410,
which gives a better sense of effect size than the factor
covariance.
Unstandardized parameter estimates for the neural
risk processing indicators are presented in Table 21.5.
Listed in the upper left part of the table are the basis
coefficients for the shape factor, which for ages 14–17
years are, respectively,
(0, .678, .646, 1.000)
As expected, the coefficient for age 16 years, or .646,
is somewhat lower than the coefficient for age 15 years,
or .678. This pattern mirrors the dip in observed neural
risk processing means between these two ages (Figure
21.1). The coefficient of .646 indiates that 64.6% of the
total increase in mean neural risk processing over ages
14–17 years has occurred up to and including age 16
years. Error variances are reported in the upper right
part of the table, including the fixed-to-zero variance

TABLE 21.3. Values of Selected Global Fit Statistics for Latent Growth Models of Change
in Neural Risk Processing in Adolescents
RMSEA
Model chiML dfM p chiD dfD p [90% CI] CFI SRMR
No growth 267.629 9 < .001 — — — .438 [.393, .484] 0 .452

Latent basis growth   2.811 4 .590 264.812 5 < .001 0 [0, .105] 1.000 .028

Linear growth 34.812 6 < .001 32.001 2 < .001 .179 [.124, .239] .670 .122

Note. All results were computed in lavaan.

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 Latent Growth Curve Models 381

TABLE 21.4. Maximum Likelihood Parameter Estimates for Latent Growth

Factors in a Basis Model of Change in Neural Risk Processing in Adolescents
Means Variances and covariance
Parameter Estimate SE Estimate SE
Intercept .040 .004 .002 < .001a
Shape .817 .086 .487 .108
Intercept Shape — — .014b .004
a.00029.

bFactor correlation is .410.

for the measurement at age 14 years, for which R2 must
be 1.0. Values of R2 for the remaining three measure-
ments over ages 15–17 years are all < .50, which is not
ideal. This is because the model fails to explain most
of the observed variation in continuous neural risk pro-
cessing at these ages.
Presented in the bottom part of Table 21.5 for each
indicator are the observed and predicted (model-
implied) means, mean residuals (differences between
observed and predicted means), and standardized
mean residuals, which are significance tests expressed
as normal deviates (z) for the corresponding mean
residuals. In general, the model closely predicts the
observed means, and none of the standardized mean
residuals is significant at the .05 level, but power for
these significance tests is probably low. For practice,
you should be able to generate the predicted means in
Table 21.5 from the parameter estimates in Tables 21.4
and 21.5 using Equation 21.3. Correlation residuals for
the covariance structure are all less than .10 in absolute
value—see the output file for analysis 1 in Table 21.2—
so the basis growth model in Figure 21.2(b) explains
their observed correlations relatively well. For Exercise
3, you are asked to rerun the analysis by fitting to the
data the basis growth model in Figure 21.2(c), where
the coefficients for Shape are defined by Equation 21.4
(i.e., 0, 1.0, l3, l4). Exercise 4 asks you to fit the linear
and quadratic growth model in Figure 21.3 to the same
data. This particular analysis fails, and you are asked to
describe the problem.

TABLE 21.5. Maximum Likelihood Parameter Estimates

and Predicted Means for Indicators in a Basis Model
of Change in Neural Risk Processing in Adolescents
Loadings (Shape) Error variancesa
Indicator Estimate SE Estimate SE
R1 0 — 0 —
R2 .678 .073 .359 .055
R3 .646 .071 .354 .053
R4 1.000 — .753 .117
Observed Predicted Mean Standardized
Indicator mean mean residual mean residual
R1 .040 .040 0 0
R2 .610 .594 .016 .794
R3 .570 .568 .002 .122
R4 .830 .857 –.027 –.979
aR2 values for R1–R4 are, respectively, 1.000, .407, .388, and .408.

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 382 Advanced Techniques

EXAMPLE FOR A GROWTH
PREDICTOR MODEL
WITH TIME‑INVARIANT COVARIATES
In unconditional growth models with no covariates,
latent growth factors are exogenous variables that are
free to vary and covary (e.g., Figure 21.2). In contrast,
growth predictor models with time-invariant covariates
are conditional growth models, where growth factors
are regressed on variables expected to predict growth
trajectories. Thus, growth factors in predictor models
are endogenous, not exogenous, variables with dis-
turbances that represent variation unexplained by the
covariates. Likewise, disturbance covariances repre-
sent associations between growth factors after control-
ling for the covariates. An example follows.
Duncan and Duncan (1996) surveyed a total of 321
adolescents about their levels of alcohol use over a
4-year period, or annually over ages 13–16 years. The
data are summarized in Table 21.6, where the means
for gender and family status at the first assessment are
proportions of adolescents who are female (.573) or
who live with just one parent (.446). The year-to-year
increases in mean levels of alcohol use are generally
consistent, which suggests linear growth.
The data just described are fitted to the conditional
linear growth model presented in Figure 21.4 with the
optional delta-1 symbol for the mean structure. Because
the intercept and linear factors are endogenous, coeffi-
cients for the direct tracings from delta-1 are not means;
instead, they are intercepts for the regression of the
latent growth factors on the covariates. For example,
the term aL in the figure designates the predicted value
on the linear factor when both gender and family sta-
tus equal zero (i.e., young adolescent males from two-
parent families—see Table 21.6). The predicted mean
for the linear factor is the sum of the coefficients for
the direct tracing from delta-1 just mentioned and both
indirect tracings through the covariates, or
m L = a L + β LGm G + β LFm F (21.8)
That is, the mean of the linear factor is determined by
the intercept and coefficients for its regression on gen-
der and family status and the means of those predictors
(Rule 9.5). Exercise 5 asks you to derive the expres-
sion for the predicted mean of the intercept factor in
­Figure 21.4.1
Predicted indicator means in Figure 21.4 are gener-
ated as the sum of the coefficients for all indirect trac-
ings from the constant delta-1. You should verify that
there is a total of six such tracings for each indicator.
Altogether they represent indicator means as functions
of their regressions on the latent growth factors and
the regressions of the growth factors on the covari-
1 Yes,the intercept factor in a predictor growth model itself has
an intercept for its regression on the covariates.

TABLE 21.6. Input Data (Correlations, Standard Deviations, Means)

for Analysis of a Growth Prediction Model for Alcohol Use by Adolescents
Variable 1 2 3 4 5 6
Alcohol use
1. A1 —
2. A2 .640 —
3. A3 .586 .670 —
4. A4 .454 .566 .621 —

Covariates
5. Gender .001 .038 .118 .091 —
6. Family Status .214 .149 .135 .163 .025 —

M 2.271 2.560 2.694 2.965 .573 .446

SD 1.002 .960 .912 .920 .504 .498

Note. These data are from Duncan and Duncan (1996); N = 321. Gender is coded 0 = male, 1 = female, family
status is coded 0 = two parents, 1 = single parent.

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 Latent Growth Curve Models 383

ate effects of the covariates on the variables included in

the growth model, or A1–A4 in Figure 21.4.
With a total of 6 observed variables, there are 6(9)/2
= 27 observations available to estimate the 18 param-
μG μF eters of Figure 21.4. These include
Gender 1 Family
1. 8 variances (of 2 covariates, 2 factor disturbances,
βIG αI αL βLF and 4 indicator errors);
βIF βLG 2. 2 covariances (1 between the covariates and 1
Intercept Linear between the factor disturbances);
3. 4 direct effects on the factors (2 from each covari-
1 0 ate);
1 1 1 1
2 3 4. 2 means of the covariates; and
5. 2 factor intercepts.

A1 A2 A3 A4 Thus, df M = 27 – 18 = 9. Listed for Analysis 2 in Table

FIGURE 21.4. Conditional linear growth model with time-
invariant covariates for predicting change in alcohol use (A)
measured annually over 4 years (ages 13–16 years).
ates. Exercise 6 asks you to write the equation for the
model-implied mean of A4, the alcohol use measure-
ment at age 16 years. This exercise may help you to
appreciate that many SEM computer tools can option-
ally print model-implied means for latent or observed
variables when growth models are analyzed. All rela-
tions between the covariates and the repeated measures
in the figure are represented as indirect; that is, the
latent growth factors are specified to completely medi-
21.2 are the syntax and output files for fitting the con-
ditional growth model in Figure 21.4 to the data in
Table 21.6. The analysis in lavaan with default ML
converged to an admissible solution. Values of selected
model fit model fit statistics are listed next:
chiML(9) = 13.823, p = .129
RMSEA = .041, 90% CI [0, .081]
CFI = .992; SRMR = .027
The model passes the chi-square test, the power of
which at the .05 level for N = 321 is only .408. For
power ≥ .90, a sample size of N = 883 would be needed.
Values of approximate fit indexes do not suggest gross
problems in global fit, and the residuals (described
later) seem satisfactory, too. Thus, the growth predictor
model in Figure 21.4 is retained.

TABLE 21.7. Maximum Likelihood Parameter

Estimates for Latent Growth Factors in a Prediction
Model for Alcohol Use by Adolescents
Disturbance variances
Intercepts and covariance
Parameter Estimate SE Estimate SE
Intercept 2.116a .092 .666c .074
Linear .203b .031 .037d .101
DI DL — — –.077e .022
aPredicted mean is 2.291. bPredicted mean is .221. cR2 = .050. dR2 = .039.
eDisturbance correlation is –.491.

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 384 Advanced Techniques

Reported in the left side of Table 21.7 are the esti-
mates for the intercepts of the latent growth factors
in their regressions on the covariates, including 2.116
for Intercept and .203 for Linear. These regression
intercepts contribute to their respective factor means,
which were computed by lavaan and are reported in
the table footnotes. Thus, the predicted average level
of alcohol use at age 13 years is 2.291, and the mean
annual increase is .221. The unstandardized distur-
bance variances and covariance for Intercept and
Linear are reported on the right side of the table. The
covariates explain .050, or 5.0% of the total variation
in the level of alcohol use at age 13 years (Intercept);
they also explain .039, or 3.9% of the total variation in
the annual increase (Linear) over the ages 13–16 years.
The disturbance covariance is negative, or –.077. The
standardized estimate (i.e., the factor correlation) is
–.491. Thus, adolescents with higher levels of alcohol
use at age 13 years had lower annual increases as they
matured, and vice versa, while controlling for gender
and family status.
Unstandardized regression coefficients for the covari-
ates are reported in Table 21.8. Because both predictors
are binary variables coded as 0/1, these coefficients are
directly group mean differences after controlling for
the other predictor. The only coefficient that is statisti-
cally significant at the .05 level is for family status as
a predictor of initial level of alcohol use, or Intercept.
The result .377 says that adolescents from single-parent
families (coded as 1) have on average higher levels of
alcohol at age 13 years than their age-peers from two-
parent families (coded as 0) by .377, while controlling
for gender. The coefficient for predicting Linear from
gender is nearly significant at the .05 level. This coeffi-
cient, or .065, indicates that young women (coded as 1)
have a higher mean annual increase in alcohol use over
ages 13–16 years by .065 than young men (coded as 0)
over the same age range, controlling for family status.
In their analysis of additional covariates, Duncan and
Duncan (1996) reported that parent–child conflict,
parent substance abuse, and peer encouragement of
substance use also predicted not only higher levels of
alcohol use, but also higher levels of cigarette and mari-
juana use over time.
Results for the alcohol use measures over ages 13–16
years are presented in Table 21.9. Their error variances
are listed in the left part of the table, and all their R2
values (see the table note) exceed .50, so the model
explains most of the variation in alcohol use at each
age. Observed, predicted, residual, and standardized

TABLE 21.8. Maximum Likelihood Parameter

Estimates for Covariates (Path Coefficients)
in a Growth Prediction Model for Alcohol Use
by Adolescents
Gender Family status
Outcome Estimate SE Estimate SE
Intercept .011 .105 .377 .106
Linear .065 .035 –.044 .036

TABLE 21.9. Maximum Likelihood Parameter Estimates and Predicted Means

for Indicators in a Growth Predictor Model for Alcohol Use by Adolescents
Error variances Means
Indicator Estimatea SE Observed Predicted Residual Standardized residual
A1 .333 .050 2.271 2.291 –.020 –1.418
A2 .310 .033 2.560 2.511 .049 1.737
A3 .273 .029 2.694 2.732 –.038 –1.490
A4 .312 .046 2.965 2.952 .013   .877
aR2 values for A1–A4 are, respectively, .678, .651, .661, and .643.

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residual means are listed in the right part of the table.
To summarize, observed and predicted means are quite
similar, and no mean residuals are statistically signifi-
cant at the .05 level. Absolute correlation residuals for
the alcohol use variables (see the output file for analysis
2 in Table 21.2) are all < .10, so the model seems to
adequately explain their intercorrelations, too.
PRACTICAL SUGGESTIONS
FOR LATENT GROWTH MODELING
Suggestions for analyzing latent growth models are
listed next:
1. Carefully screen and inspect the data (means, vari-
ances, correlation, distributions) and pick an appro-
priate method to deal with missing data (Chapter 4).
2. Inspect the empirical growth records, such as for
sets of randomly selected cases in a large data set,
to get a sense of trajectories in the data. The freely
available JASP program has capabilities for plotting
individual growth records (Chapter 5).
3. Also consult theory or results from prior empirical
studies when specifying the type of growth curve
model, such as a basis model versus a polynomial
model when growth is curvilinear.
4. Fit an unconditional growth model without covari-
ates, especially if the structural model for covariates
has common factors each with multiple indicators
or the prediction model has positive degrees of free-
dom (it is not saturated). If change over time is con-
sistent with the unconditional growth model, then
next add the covariates and analyze a conditional
growth model. This strategy is similar to two-step
modeling for SR models, where the whole model is
broken down into its two components, in this case
growth versus prediction. It is easier to detect mis-
specification in a conditional growth model after
it is known that the corresponding unconditional
growth model has satisfactory fit to the data.
5. If analyzing a parallel growth process model
(defined in the next section), estimate separate mod-
els for each process before combining the two mod-
els. This tactic makes it easier to detect misspecifi-
cation in the growth model for a particular domain.
6. Do not neglect to describe the residuals—especially
mean residuals for indicators of latent growth fac-
Pt4Kline5E.indd 385
Latent Growth Curve Models 385
tors—when reporting on model fit. A written sum-
mary for the analysis of a latent growth model—or
any other type of model in SEM—is deficient with-
out information about local fit.
EXTENSIONS OF LATENT
GROWTH MODELS
There are many ways to extend the basic concepts of
latent growth modeling considered to this point. Basi-
cally, any kind of growth model can be simultaneously
fitted to data from multiple groups. The motivation for
doing so is the same, too: to determine whether model
parameters vary appreciably over samples from differ-
ent populations (Chapter 12), among other possibili-
ties. For example, Comeau and Boyle (2018) analyzed
growth trajectories for internalizing and externaliz-
ing behavior from birth to age 14 years for children
exposed to three different patterns of family poverty,
always poor, never poor, and intermittently poor, or ≥ 1
transition(s) in and out of poverty. Children in always
poor families had the highest levels of internalizing and
externalizing behavior over all times followed by chil-
dren who experienced change in poverty and then next
by children from never poor families. Low maternal
education compounded adverse effects of poverty for
both internalizing and externalizing.
It is possible to relax the requirement for time-struc-
tured data that all cases should be measured at the same
measurement intervals. One motivation is time bin-
ning, or the practice in longitudinal studies of treating
cases with varying measurement schedules as if they
were assessed at the exact same time. For example, data
from tested children who ranged in age from 3 years and
10 months through 4 years and 2 months may be treated
as though all cases were 4.0 years old at a particular
follow-up. Here, a time bin of 4 months classifies the
children as belonging to the same age group. A problem
is that the wider the time bin, the greater the variation
in sampling time and, thus, the greater the loss of tem-
poral information about measurement. In other kinds
of studies, individually varying time points may be
inevitable, such as when data are only recorded at medi-
cal appointments that are scheduled as needed or when
not all measures, such as fMRI scans, are collected at
every visit. Treating individually varying time scores as
though all cases were measured at the same occasions
can result in appreciably biased estimates of parameters
in latent growth models (Blozis & Cho, 2008).
3/22/2023 2:06:02 PM
 386 Advanced Techniques
In the statistical technique of HLM, the analysis of
longitudinal data collected at individually varying time
points is not a special problem because time is explic-
itly represented as a variable in the analysis. An option
in SEM is the definition variable approach, where
loadings for linear or nonlinear growth factors are
treated as fixed parameters that define the occasions of
measurement (i.e., time) on a case-by-case basis (Mehta
& Neale, 2005). Specifically, the parameter matrix for
coefficients varies according to measurement sched-
ules for individual cases. For example, the definition
variable could be specified to equal the exact ages of
children tested around the age of 4.0 years, such as
3 years and 8 months for one child versus 4 years and
1 month for a different child, and so on. In this method,
there is no single model-implied mean vector or covari-
ance matrix for the whole sample; instead, there are as
many of each kind of matrix just mentioned as there
are different measurement schedules over all cases.
A ­drawback is that the usual global fit statistics, includ-
ing the model chi-square, may be unavailable in this
method—see Sterba (2014) for examples.
The predictor growth model in Figure 21.4 features
two time-invariant predictors of growth, which are
assumed to have no direct effects on the repeated mea-
sures. A different role for a time-invariant covariate
X is depicted in Figure 21.5(a)—shown with no mean
structure nor disturbances to save space—where the
repeated measures are each directly regressed on the
covariate. Stoel et al. (2004) referred to the figure as
a direct effect growth curve model with ≥ 1 time-
invariant covariates with direct effects on the indica-
tors. Variable X is not part of the growth model per se;
instead, it serves as a control variable such that param-
eters of growth factors are estimated after adjustment
for direct effects of the covariate on the indicators.
Under conditions described by Stoel et al. (2004) that
involve model identification, it may be possible to test
hypotheses that time-invariant covariates also affect
the latent growth factors. Indeed, growth predictor
models, where time-invariant covariates have no direct
effects on the indicators, are constrained versions of
direct effect models—see Stoel et al. (2004) for more
information.
Represented in Figure 21.5(b) is a growth model
with a time-varying covariate, X, where the subscripts
indicate the measurement occasion, or X1–X3, that cor-
respond to the measurement schedule for the repeated
measures Y1–Y3. Although time-varying covariates are
repeated measures, they are not included in the latent
Pt4Kline5E.indd 386
growth structure. Instead, their role is to control for
effects on the indicators above and beyond those of the
latent growth factors. Thus, a repeated measure on any
occasion is jointly determined by the latent growth fac-
tors and by the direct effect of the corresponding time-
varying covariate (Curran et al., 2010). For example,
Panwar et al. (2022) analyzed latent growth models for
monthly rates of COVID-19 cases per million (CPM)
over the period August 2020 to July 2021 in a total of
126 countries. The models were more accurate when
average monthly outdoor temperature was included as a
time-varying covariate with direct effects on CPM. As
expected, temperature was inversely related to growth
in CPM; that is, higher environmental temperatures
predicted slower growth rates, and countries with lower
monthly temperatures had the highest rates of growth
in CPM. At lower temperatures, people spend more
time indoors, which increases the transmission rate of
COVID-19.
All models considered so far are univariate in that
they concern growth in a single domain. A multivari-
ate growth model represents change across two or more
domains. Other terms for this include parallel latent
growth curve model and parallel growth process
model, if the domains are measured at the same points
in time (Kaplan, 2009). The model in Figure 21.5(c) has
two sets of latent growth factors for different repeated
measures, indicators X1–X3 and Y1–Y3, each measured
at the same three occasions. The latent growth factors
are specified as correlated across the domains. For
example, the intercept factor for X1–X3 covaries with
the intercept factor for Y1–Y3, and so. These covariances
represent cross-domain change, or where the starting
point or slope of change in one domain is related to that
in another domain. For example, Brailean et al. (2017)
administered measures of depression and memory
function on five occasions in a longitudinal study of
older adults aged 65–89 years at the first measurement.
They analyzed a cross-domain latent growth model for
both sets of repeated measures, and they reported that
(1) poorer initial recall performance predicted steeper
increase in depressed mood over time, and (2) steeper
decline in processing speed predicted a faster increase
in somatic symptoms of depression over time. The
authors hypothesized that older adults may experience
greater levels of depression in reaction to poor memory
performance.
A curve-of-factors latent growth model—also
called a second-order growth curve model or a
latent variable longitudinal curve model (Newsom,
3/22/2023 2:06:02 PM
 Latent Growth Curve Models 387

(a) Direct effect (b) Time-varying (c) Parallel growth

model covariates process

X1 X2 X3

I S I S
IX SX

Y1 Y2 Y3 Y1 Y2 Y3
IY SY
X X1 X2 X3

Y1 Y2 Y3

(d) Curve of factors (e) Piecewise

(linear-linear)

I S
I S1 S2
0 2 0
1 2 2 2
A1 A2 A3 1

Y11 Y12 Y13 Y21 Y22 Y23 Y31 Y32 Y33 Y1 Y2 Y3 Y4 Y5

FIGURE 21.5. Latent growth models with a time-invariant covariate as a control variable (a); covariates measured at each
measurement occasion that are not included in the growth model (b); a multivariate model with correlated sets of latent growth
factors (c); a curve-of-factors growth model (d); a piecewise growth model for a linear–linear process (e). Models shown with
no mean structure or disturbances to save space. I, intercept; S, slope. All loadings on I are fixed to 1.0. The slope factor could
refer to a shape factor in basis growth model or to a polynomial trend, such as linear, in a polynomial growth model.

2015; Preacher et al., 2008)—is represented in Figure
21.5(d). The indicators for the latent growth factors in
the figure are not manifest variables; instead, they are
concepts modeled as common factors A1–A3 each with
multiple indicators that are measured at three different
occasions. We refer to A1–A3 as latent trait variables to
clearly distinguish them from their indicators, which
are observed variables such as Y11–Y13 for factor A1 at
the first measurement occasion, and so on. Specifica-
tion of coefficients for growth factors in second-order
models follows the same logic as for first-order growth
models with observed, not latent, variables as indica-
tors (i.e., all the models considered to this point). For
example, all loadings on the intercept factor in the fig-
ure are fixed to equal 1.0, and coefficients for the slope
factor are specified based on measurement time such as
(0, 1.0, 2.0), which defines growth as strictly linear and
defines the mean for the intercept as corresponding to
the first measurement occasion.
A key feature of a second-order growth model is
that estimates for latent growth factors are adjusted for
measurement error in repeated measures. For the model
in Figure 21.5(d), this property implies that departure
from the true growth pattern (temporal instability),

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 388 Advanced Techniques
which corresponds to the disturbance variances for the
latent trait variables, is estimated apart from unique
variation due to measurement error (unreliability),
which corresponds to the error terms for the observed
variables (Preacher et al., 2008). Another advantage is
the opportunity to test various hypotheses about longi-
tudinal measurement invariance. For example, Figure
21.5(d) assumes occasion-specific congenerity, or that
a single-factor model is the correct measurement model
for indicators of the latent trait factors at all three mea-
surement occasions. That is, the basic correspondence
between the observed variables and the latent trait fac-
tors does not change over time. Rejection of the con-
generity assumption means that what the observed
variables measure depends on the particular measure-
ment occasion, which presents a challenge in a longi-
tudinal study. Additional, even more stringent hypoth-
eses about measurement invariance that can be tested
in longitudinal or other types of designs are covered
in the next chapter. See Bishop et al. (2015) for more
information about latent growth models with multiple
indicators for latent trait factors.
In a piecewise latent growth model—also called
a multiphase model—there are at least two slope
factors that represent growth over different phases or
processes. Each phase is characterized by different
functional forms of change that can represent effects
of interventions, such as the beginning and endpoints
of a treatment or public policy, or shifts in development
that occur at different times throughout the lifespan. A
multiphase model has at least one knot or change point
that represents the transition from one growth phase to
the next. A knot can be known a priori or estimated in
the data, and it can be modeled as a fixed parameter,
random coefficient, or free model parameter (Preacher
et al., 2008).
When a change point is known, it loads on two least
different slope factors, one that models growth before
the knot and the other that specifies a different pattern
of growth after the knot. Consider Figure 21.5(e), which
represents a linear–linear growth process. The first
slope factor, S1, specifies a linear growth process over
Y1–Y3 that levels out starting at Y3, the change point.
Thus, the coefficients for S1 are
(0, 1.0, 2.0. 2.0, 2.0)
where linear growth is expected to taper off or reach an
asymptote at Y3. Accordingly, the coefficients for Y3 –Y5
Pt4Kline5E.indd 388
are all fixed to equal 2.0 (i.e., no change). The mean for
S1 represents the rate of linear growth from Y1 through
Y3, or the first growth phase. The second slope factor in
Figure 21.5(e), S2, represents additional linear change,
if any, that occurs after the Y3, the change point, due
to a second growth process. The coefficients for S2 are
(0, 0, 0, 1.0, 2.0)
which specifies the end of the first stage of growth as
the origin for the second stage of growth. The mean for
S2 is the rate of linear change over Y3 –Y5. A linear–lin-
ear process consistent with the model in Figure 21.5(e)
is presented in Figure 21.6, which depicts linear growth
that decelerates beginning at Y3, but change both before
and after the knot is strictly linear. A rationale for
specifying a particular change point is needed, such as
a reduction in the level of funding after Y3 in the fig-
ure, among other justifications for multiphase growth.
Harring et al. (2021) described piecewise models about
three-stage or inherently nonlinear growth processes.
Grimm and McArdle (2023) described additional types
of latent growth models for estimating curvilinearity in
development or application in accelerated longitudi-
nal designs, where multiple cohorts are intentionally
measured at points in the developmental process and
then followed for a period of time. Such a design allows
20.0
15.0
Mean
10.0
5.0
Y1 Y2 Y3 Y4 Y5
Measurement occasion
FIGURE 21.6. A two-phase (linear–linear) growth process.
3/22/2023 2:06:02 PM

the study of a target age range in a shorter period of
time than would be possible in single-cohort longitu-
dinal designs.
Bollen and Curran (2004) described a kind of hybrid
between a latent growth model and a panel model for
repeated measures of the kind analyzed in path analy-
sis. It is called an autoregressive latent trajectory
(ALT) model, and such models feature the specification
of autoregressive, or direct and indirect effects between
repeated indicators of latent growth factors. It is also
possible to specify cross-lagged causal effects when
data from multiple sets of repeated measures are ana-
lyzed (i.e., multivariate change is studied). In contrast,
indicators in the first- or second-order latent growth
models described in this chapter have no causal effects
on one another (e.g., Figure 21.5). A standard univari-
ate latent growth model can be described as a restricted
case of an ALT model where all autoregressive parame-
ters for direct effects between indicators are constrained
to zero, but simple panel models for observed variables
with autoregressive effects are not nested under ALT
models. A potential drawback is that integration of the
autoregressive and latent growth curve parts of an ALT
model rests on the strong assumption that neither part
is misspecified, but curvilinearity in the latent growth
component can violate this requirement (Voelkle,
2008). Ou et al. (2017) reviewed other criticisms of ALT
models, including how flexibility in their specification
can lead to contradictory predicted growth trajecto-
ries, and these authors suggested ways to test targeted
hypotheses about the functional forms of change based
on computer simulation studies with ALT models.
There are also many kinds of latent variable mod-
els for longitudinal data besides latent growth models.
To mention just a few, latent difference score mod-
els are extensions of simple difference score models.
They offer a flexible approach to the study of change
between specific points in time, and they can be
extended to the analysis of multiple outcomes each
measured at multiple occasions—see McArdle (2009)
for examples. There are latent state-trait models for
analyzing stable aspects of constructs over time. In
such models, the stable variance that does not change
over time, or trait variance, is estimated apart from
systematic variance that changes over time, or state
variance. Any nonsystematic variance is treated as
error variance. The idea is to distinguish fundamen-
tal trends or enduring patterns from more temporary
fluctuations (Newsom, 2015). There are also ways to
Pt4Kline5E.indd 389
Latent Growth Curve Models 389
model person-specific effects by using a particular
measurement method (i.e., common method variance)
to assess a target concept—see Steyer et al. (2023) for
more information.
There are even more kinds of statistical models for
longitudinal data than mentioned to this point, and this
superabundance of choices presents a challenge to the
researcher: Complex statistical models for longitudinal
data may fit a wide range of data just as a complex lon-
gitudinal data set can be consistent with a wide range
of models. Analysis is not the way to make a choice;
that is, attempting to find the “best” model by indis-
criminately fitting alternative models is folly. Wisdom
is the only meaningful alternative, a point made many
times in this book: Substantive knowledge of theory,
design, measures, and prior empirical results is the
only way forward. We have come as far in this book
as I can take readers in the analysis of longitudinal
data. After the chapter summary, I leave you in the
capable hands of the authors of the works listed in the
“Learn More” section.
SUMMARY
A latent growth model for longitudinal data is basically
an SR model with a mean structure. In a typical first-
order growth model, each repeated measures variable
is specified as an indicator of at least two latent growth
factors. One factor, Intercept, represents the origin or
initial level, and coefficients are fixed to equal 1.0 for
all repeated measures. In nonlinear curve fitting, the
other factor, Shape, estimates the shape of growth tra-
jectory whether linear or curvilinear. In a polynomial
model, there is a separate growth factor for each indi-
vidual trend in growth, beginning with a linear change
factor, followed next by a quadratic factor, and so on.
The intercept is defined by the location of the “0”
(zero) among the coefficients for a shape or slope fac-
tor. Latent growth factors are often assumed to covary,
which allows for the possibility that origin or starting
level is related to the rate of change. There are many
variations on latent growth models, and such models
can be analyzed in techniques other than SEM. But the
SEM approach to growth modeling offers advantages,
including the possibility of representing latent trait
variables as predictors of growth trajectories. The next
chapter deals with the topic of measurement invariance
in the SEM technique of CFA.
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 390 Advanced Techniques
LEARN MORE
Grimm et al. (2017) cover a wide range of latent growth
models from both SEM and multilevel modeling perspec-
tives. Little (2013) and Newsom (2015) describe latent
growth models and other kinds of structural equation models
for longitudinal data.
EXERCISES
1. Compute df M for Figures 21.2(a), 21.2(b), and
21.2(c).
2. Compute df M for Figure 21.3.
3. Fit Figure 21.2(c) to the data in Table 21.1. Compare
the results with those in Tables 21.3 and 21.4 for
Figure 21.2(b) fitted to the same data.
4. Fit Figure 21.3 to the data in Table 21.1. Explain
why the solution is inadmissible.
Pt4Kline5E.indd 390
Grimm, K. J., Ram, N., & Estabrook, R. (2017). Growth
modeling: Structural equation and multilevel modeling
approaches. Guilford Press.
Little, T. D. (2013). Longitudinal structural equation model-
ing. Guilford Press.
Newsom, J. (2015). Longitudinal structural equation model-
ing: A comprehensive introduction. Routledge.
5. Write an expression for the predicted mean of Inter-
cept in Figure 21.4.
6. Write an expression for the predicted mean of A4 in
Figure 21.4.
7. In Table 21.8, interpret the unstandardized coeffi-
cient for gender as a predictor of Intercept.
3/22/2023 2:06:08 PM

Appendix 21.A
Unequal Measurement
Intervals and Options
for Defining the Intercept
It is not particularly difficult to adjust the coefficients
for a linear growth factor to reflect unequal measure-
ment intervals. Suppose that that young children are
assessed at 3, 6, 12, and 24 months of age. Specifying
the coefficients of a linear factor as
(0, 1.0, 3.0, 7.0)
defines 1 unit of time, or the interval between the first
and second measurements, as 3 months. The two coef-
ficients for the third and fourth measurements, 3.0
and 7.0, respectively, preserve the relative differences
in ages over time while specifying that any change is
strictly linear. For example, the third assessment at age
12 months is taken 9 months after the initial measure-
ment, and 9/3 = 3.0, which is 3 time units; thus, the
coefficient for the third assessment is 3.0
Sometimes means are expected to decline, not
increase, over time. One option, while still defining
the intercept as corresponding to the first measurement
occasion, is to scale time in a negative direction. For
example, Murphy et al. (2002) measured levels of dis-
tress among parents at 4, 12, 24, and 60 months after
the violent death of a child. Because distress is expected
to decline over time, the growth trajectory should be
negative. In latent growth models analyzed by Murphy
et al. (2002), the coefficient for the linear factor at 4
months was fixed to equal zero, and the loading for the
12-months bereavement (conducted 8 months later) was
fixed to –1.0. Because the period of 8 months equals –1
in time units, the loading of the 24-months bereave-
ment—which took place 20 months after the initial
assessment—was fixed to –20/8, or –2.5. By the same
logic, the coefficient for the 60-month assessment was
fixed to –7.0 because it took place 56 months after the
initial measurement, and –56/8, or –7.0. The set of coef-
ficients for the linear factor analyzed by Murphy et al.
(2002, p. 431) is thus
(0, –1.0, –2.5, –7.0) (21.9)
Pt4Kline5E.indd 391
Latent Growth Curve Models 391
Given Equation 21.9, the linear factor mean will be pos-
itive, if the observed means actually decline. Its value
indicates the average rate of linear decline over the
assessments, which corresponds to the negative signs in
Equation 21.9. The actual linear factor mean estimated
by Murphy et al. (2002) is .041, which is the average
rate of decrease in distress. The estimated correlation
between the intercept and linear factors is also positive,
or .28, which says that higher initial distress predicts
greater decrease in distress over time.
You should know there is no requirement to nega-
tively scale time. For example, defining the linear fac-
tor in Murphy et al. (2002) with the coefficients listed
next
(0, 1.0, 2.5, 7.0) (21.10)
results in an equivalent model, but the signs of both
the linear factor mean and its correlation with the
intercept factor are reversed. That is, the linear factor
mean is –.041, and its correlation with the intercept fac-
tor is –.28, when Equation 21.9 scales the linear fac-
tor. Interpretation of the “new” linear factor mean is
pretty straightforward: The average rate of increase in
distress is –.041, which also says that the average rate of
decline in distress is .041.
Interpreting a negative correlation between intercept
and linear factors is trickier when the linear mean is
negative, given Equation 21.9 as scaling the linear fac-
tor. Here, the negative correlation of –.28 is interpreted
as the magnitude of a decreasing trend (Little, 2013).
This means that parents higher in initial distress will
decrease more rapidly over time, which can also be
described as increasing less rapidly in distress with
time (Newsom, 2015). See Little (2013, pp. 259–260)
and Newsom (2015, pp. 175–176) for tutorials about
interpreting positive versus negative correlations
between intercept and linear factors, given positive or
negative overall growth trajectories.
Little (2013) described how the use of items with
closed-ended Likert response scales as indicators in
latent growth models can generate negative correla-
tions between intercept and slope factors. This can
occur because selecting an extreme response category
on a particular occasion, such as “poor” on the 3-point
Likert scale “good,” “neutral,” or “poor” for a question
about spousal relationship quality, gives no possibil-
ity to change to an even more extreme level at the next
assessment. Also, the response format just described
allows no direct comparison with the level of relation-
3/22/2023 2:06:08 PM
 392 Advanced Techniques
ship quality at the previous assessments. Little (2013)
offered suggestions for developing time-sensitive
measures with questions about how much change has
occurred since the previous follow-up.
The intercept is defined as corresponding to the
first measurement in many, if not most, latent growth
models, but there is no requirement to do so. Indeed,
there are occasions when it makes sense to scale the
intercept in a different way. Here are some examples:
Take a quick glance look back at Figure 21.2(b), which
was fitted to the data in Table 21.1 for a sample of 150
adolescents tested by Kim-Spoon et al. (2021). Within
a subset of 126 of these adolescents, the same authors
administered at age 18 years (i.e., time 5) a retrospec-
tive measure of childhood neglect or abuse by care-
givers, including biological or adoptive parents. They
analyzed latent growth models where abuse and neglect
were specified as time-invariant predictors of change in
neural risk processing over ages 14–17 years. Because
the childhood abuse or neglect covariates were mea-
sured just after the last assessment of risk processing
at age 17 years, the shape factor was defined with the
basis coefficients
(–1.0, –l2, –l3, 0)
where l4 = 0 for neural risk processing at age 17 years
defines the intercept as the origin at this point. The
rationale is that the abuse and neglect covariates were
administered at the end of the study, not at the begin-
ning, or at 14 years of age.
There are also situations where it makes sense to
define the intercept factor as corresponding to a point
in time outside the range of actual measurement occa-
sions. For example, if data are collected at ages 6, 12,
18, and 24 months, then specifying the coefficients for
the linear factor as
Pt4Kline5E.indd 392
(6.0, 12.0, 18.0, 24.0)
implies that birth (i.e., 0 months) is the initial level,
which could be a plausible specification in a longitudi-
nal study of child development (Little, 2013).
Another example is when coefficients for linear,
quadratic, or higher-order polynomial growth fac-
tors are centered, which means that their coefficients
sum to zero for each trend. For example, when using
the ANOVA technique for repeated measures, poly-
nomial trends are specified as contrast codes that are
centered and where relative values of codes specify the
basic shape of a growth trajectory as deviations from
the grand mean, or the average score over all measure-
ments. Suppose for the polynomial model in Figure
21.3 that the coefficients for the linear and quadratic
factors were specified as, respectively,
(–3.0, –1.0, 1.0, 3.0)
(1.0, –1.0, 1.0, –1.0)
which are the standard ANOVA orthogonal polyno-
mial contrasts for four repeated measures. The set of
coefficients just listed define the intercept (origin) as
falling exactly halfway between the second and third
occasions, or at a point in time that corresponds to no
actual measurement. Thus, the linear and quadratic
trends are scaled as deviations from the grand mean.
Model fit is unaffected by the particular scaling for
polynomial growth factors, only parameter interpreta-
tion changes—see also Newsom (2015, pp. 223–228).
Little (2013) reminded us there are infinite equivalent
growth models because there are an infinite number of
sets of coefficients for scaling the growth factors, but
the choice in a particular study should reflect substan-
tive considerations.
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 22

Measurement Invariance

Measurement invariance (MI) involves determination of whether scores from indicators of theoretical vari-
ables have the same meaning or interpretation—that is, whether concepts are comparably measured—under
different conditions (Meade & Lautenschlager, 2004). Another description is that probabilities of observed
scores after controlling for factors presumed to underlie those scores do not vary over conditions (Mel-
lenbergh, 1989). A third description is that MI exists when relations between the observed variables and
proxies for theoretical variables are the same over conditions. The absence of this property means that real
differences between persons cannot be unambiguously isolated from differences owing to conditions under
which their scores were obtained.

The major conditions of interest in MI studies are listed
next:
1. Time of measurement, which involves longitudi-
nal measurement invariance, or whether repeatedly
measured variables represent the same concept in the
same metric over time. The absence of longitudinal
invariance means there is little, if any, meaningful
basis to compare the same group over different times
(Liu et al., 2017).
2. Group membership or other nominal variables,
such as ethnicity, race, gender, or geographic region,
which concerns whether concepts are measured the
same way over different populations. Measurement
invariance over groups is related to the concept of test
bias, which refers to overestimation or underestimation
of the target domain owing to systematic-but-concept-
irrelevant sources of variation as a function of group
membership. That is, people who are equal on the tar-
get construct obtain unequal scores due to their gen-
ders, ethnicities, cultures, and so on, which should be
irrelevant, given the concept’s definition. Construct
bias as a form of test bias is of particular interest in MI
studies. For example, if the same indicators measure
different things for men and women when gender dif-
ferences should be immaterial, then construct bias is
indicated (Reynolds & Suzuki, 2013).
Note that MI does not imply that groups are equal in
the amount (level) of a target concept; it means only that
persons who are equal on the concept should have the
same observed scores regardless of group membership.
Different groups may truly differ in their average stand-
ing on a theoretical variable, which Drasgow and Hulin
(1990) referred to as impact. Measurement invariance
and impact are different phenomena, and one does not
imply the presence or absence of the other; that is, there
can be any combination of impact and MI. So you can
think of MI in this context as the potential to estimate
true group differences on underlying variables of inter-
est without the confounding effects of measurement
artifacts (i.e., concept-irrelevant differences).
3. Cross-national or cross-cultural comparisons,
where groups are, respectively, defined more narrowly
by membership in a nation–state (i.e., country) versus
more broadly by shared values, norms, or expectations
that can transcend national boundaries, also require that

393

Pt4Kline5E.indd 393 3/22/2023 2:06:09 PM

 394 Advanced Techniques
concepts are measured the same way. This requirement
explains the increasing number of studies published
over the last 20 years or so about the cross-national
or cross-cultural comparability of scales presumed to
measure human values, generalized trust, or attitudes
toward democracy, among other concepts (Cieciuch et
al., 2019; Malhotra et al., 2018).
4. Translations of a test to a different language,
which can also be an aspect of cross-national or cross-
cultural research, if two countries or cultures do not
share a common language. Ideally, the original and
translated versions of a test should measure the same
things. A challenge is that a single translation of a test
is unlikely to have the same measurement properties
as the original version. One reason is that there can
be wide differences among translations from the same
source material over different translators. Another is
that translation focused solely on preserving linguis-
tic meaning over original and translated versions may
overlook cultural differences in the expressions of a
particular concept, including the relevance of a concept
in a particular culture (van Widenfelt et al., 2005).
5. Test administration methods, which concern
whether a measurement instrument functions the same
way over different modes of giving the test, such as
over the Internet with computers versus in person with
paper-and-pencil administration. There is evidence that
test interpretation can be affected by administration
mode, which is a kind of method effect (Chapter 14; see
also Whitaker & McKinney, 2007). Increasing num-
bers of researchers use online respondent pools, such
as Clickworker and Prolific, among others, to recruit
participants, a trend only accelerated by the COVID-19
pandemic. In addition to concerns about the honesty of
online survey respondents (Teitcher et al., 2015), estab-
lishing MI over administration methods is crucial.
The conditions just listed can be combined in a single
study, such as in investigations about whether repeated
measures assess the same thing over time for both men
and women (Tan et al., 2021). Although MI is usually
described across nominal (unordered) groups, such as
men and women or measurement occasions, in theory
it is also possible to evaluate invariance across ordinal
or continuous variables, such as age, that do not lend
themselves to easy categorization (Putnick & Born-
stein, 2016). There are special methods, such as mod-
erated nonlinear factor analysis, that can be applied
Pt4Kline5E.indd 394
in this context, but they are not yet widely used—see
Molenaar et al. (2010) for more information.
Lack of equivalence over conditions for a set of mea-
sures is called differential functioning. If the indica-
tors are items instead of scales (i.e., total scores over
sets of items), lack of equivalence is called differential
item functioning. The focus of this chapter is on the
evaluation of MI over groups from different popula-
tions tested on a single occasion with the technique
of multiple-group CFA. Invariance models tested in
multiple-group CFA have both mean and covariance
structures and, thus, are referred to as MACS (mean
and covariance structure) models. The basic logic of
analyzing a MACS model over groups, such as women
and men, generalizes to invariance testing over test
administration modes, nations, cultures, languages, or
other comparisons over independent samples. But there
are special considerations when testing MACS mod-
els for longitudinal MI. For example, if a single group
is measured at two or more occasions, the analysis is
not a multiple-group CFA because there is just a single
group. Instead, parameter estimates are compared over
time for the same group—see Little (2013, chap. 5)
and Newsom (2015, chap. 2) for more information and
examples.
You should know that the technique of exploratory
factor analysis (EFA) can also be used to address ques-
tions of MI. Unlike in multiple-group CFA, where the
same model is simultaneously fitted to data from ≥ 2
groups, the approach in EFA is to use a single-group
approach. This means that data from the same indica-
tors are analyzed separately in each sample. Next, sta-
tistical indices of factor solution similarity over groups
are computed. One is the Tuckercoefficient of congru-
ence, which measures the amount of shared variation
between factors defined by the same indicators in dif-
ferent groups. Values that exceed .90 or so indicate sim-
ilarity between the corresponding factors over groups
(Nimon & Reio, 2011). Another similarity measure
is the Pearson correlation of the factor loadings over
≥ 2 groups. There are no formal tests of MI when EFA
is applied in separate samples, but EFA is more flex-
ible than CFA when the theory about measurement is
not well developed (Chapter 14). Results of computer
simulations by Finch and French (2008) suggested that
invariant loadings were generally detected by compar-
ing EFA results over samples from two different pop-
ulations. Henseler et al. (2016) described methods to
evaluate MI in composite SEM.
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LEVELS OF INVARIANCE
Measurement invariance is not a binary property
of scores from a set of indicators. Instead, there are
degrees of MI that could be supported by the data
ranging from none to successively higher levels. It is
important to estimate the level of MI because interpre-
tation of the scores should be adjusted accordingly. In
this discussion, we assume continuous indicators, but
special considerations for invariance testing with cat-
egorical indicators, such as items with Likert response
scales, are addressed later in this chapter.
There are four essential levels of MI with additional
or optional levels that can also be evaluated, given
the researcher’s hypotheses. Unfortunately, differ-
ent authors do not always use the same labels to refer
to the same level or type of MI. To avoid confusion,
next I emphasize the simplest versions of these labels,
but alternative names are given, too. The basic levels
include (1) configural invariance, (2) weak invariance,
(3) strong invariance, and (4) strict invariance. These
types represent increasingly restrictive hypotheses
about MI, and each successive hypothesis requires
more supporting evidence than the preceding hypoth-
esis.
Invariance testing also requires complete and
transparent reporting of the evidence used to justify
retention of a particular invariance hypothesis, if
any. Unfortunately, there are serious problems in the
MI literature with reporting of the results. Some of
these deficiencies are common in the broader SEM
literature, including the failure to describe local fit
(i.e., the residuals) or deciding whether to retain or
reject hypotheses based solely on fixed thresholds for
approximate fit indexes while simultaneously ignoring
the results of the model chi-square test (Chapter 10;
see also Hayduk, 2016).
Configural Invariance
Configural invariance is the least restrictive level;
thus, it is the minimum hypothesis that must be retained
to establish MI.1 It is tested by specifying the same
1 Millsap (2011, pp. 102–103) described a prior step as the formal
comparison of the covariance and mean matrices over groups.
This test is not often seen in practice, and rejection of the equal-
ity null hypothesis is not informative about any particular source
of invariance.
Pt4Kline5E.indd 395
Measurement Invariance 395
CFA model in each group, such as men and women.
In this model, (1) both the number of common factors
and the correspondence between factors and indicators
are identical over groups, but (2) all model parameters
are freely estimated in each group. That is, no cross-
group equality constraints are imposed on any model
parameter, including loadings, intercepts, factor vari-
ances or covariances, factor means, and indicator error
variances or covariances.
If the configural invariance hypothesis is rejected,
then MI does not hold at any basic level.2 Another inter-
pretation is that the common factor model specified by
the researcher is untenable in at least one of the groups
(Millsap, 2011). Retaining the configural invariance
model says only that the correspondence between indi-
cators and factors—that is, the organization of concepts
as defined by the pattern of free versus fixed loadings—
is the same over groups (Putnick & Bornstein, 2016).
Because loadings, intercepts, and factor variances and
means are all free parameters, however, there is little
basis for directly comparing the groups at this stage.
Whether groups are similar on these parameters will be
determined at later analysis steps, but only if the con-
figural invariance model is retained.
Because retention of the configural invariance model
gives the green light to testing even more restrictive
hypotheses about MI, its fit to the data should be thor-
oughly described, including both global fit and local
fit. As mentioned, though, many—and perhaps most—
reports of MI analyses in the literature fail to provide
this level of detail. In my experience, it is relatively rare
to find any comment about the residuals in published
MI studies. Almost as infrequent is making the data
available to readers either in summary form—such
as correlations, standard deviations, and means—for
continuous variables or a raw data file for categorical
variables. Thus, too many authors of MI studies fail
to reassure readers that (1) retained invariance models
actually fit the data at the level of the residuals and (2)
the results can be reproduced by others when analyzing
the same data.
2 Dimensional invariance requires only that indicators depend
on the same number of factors across groups, but does not require
the same pattern of factor–indicator correspondence. The latter
aspect of dimensional invariance is incompatible with the con-
cept of configural invariance; specifically, dimensional invari-
ance does not provide evidence that quantitative group compari-
sons are tenable (Gregorich, 2006).
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 396 Advanced Techniques
Weak Invariance
The hypothesis of weak invariance—also called
metric invariance or pattern invariance—assumes
configural invariance. It also requires equality of the
unstandardized factor loadings. This hypothesis is
tested by (1) imposing an equality constraint over
groups on the unstandardized coefficient of each indi-
cator.3 In contrast, the intercepts and error variances
of the indicators are free parameters (i.e., they are
allowed to vary over groups). So specified, the weak
invariance model is nested under the configural invari-
ance model. Next, (2) compare the relative fit of the
configural invariance and weak invariance models. If
the fit of the weak invariance model is not apprecia-
bly worse than that of the configural invariance model,
the more restrictive weak invariance hypothesis might
be retained, if local fit is also adequate. This outcome
means that the unstandardized slopes from regressing
the indicators on their respective factors are similar
across groups. But if the intercepts are quite different
over groups, neither factor scores nor factor means will
provide a meaningful basis for directly comparing the
groups, given just equality in loadings.
Little et al. (2007) noted that unless variances for
each factor are equal over groups, equally constrained
loadings are only proportionally, not absolutely, equiv-
alent; that is, the loadings are weighted by group dif-
ferences in factor variances. Whether factor variances
or covariances are equal over groups can be tested at a
later—and optional—step in invariance testing, and no
cross-group equality constraints on these parameters
are required for weak invariance. Gregorich (2006)
noted that retaining the weak invariance hypothesis
justifies the formal comparison (i.e., with a significance
test) of estimated factor variances or covariances over
groups. This is because common variance from each
indicator is allocated to the corresponding factor in the
same way over groups. Any group differences in error
variances for the indicators cannot confound group dif-
ferences in common factor variation. But because the
indicators are affected both by factors and sources of
unique (residual) variation, weak invariance by itself
does not support the formal comparison over groups of
observed variances or covariances.
3 This statement assumes that each indicator depends on a single
factor. Indicators with loadings on multiple factors are allowed,
but only if the exact same patterns are part of the configural
invariance model for all groups.
Pt4Kline5E.indd 396
Gregorich (2006) offered two alternative explana-
tions for rejecting the weak invariance hypothesis. One
possibility is that the concepts—or at least the scores
from a subset of indicators that correspond to those fac-
tors—have different meanings over groups. For exam-
ple, Ryder et al. (2008) reported that the experience
of depression is not constant over Chinese and North
American samples. Specifically, physical symptoms
(e.g., sleep disturbance) are emphasized relatively more
by Chinese respondents while psychological symp-
toms (e.g., demoralization) are reported more often by
North American respondents. Cultural factors, such
as differences in perceived stigma for disclosing psy-
chological distress, demand characteristics of patient
roles in medical settings, or capabilities to identify and
describe one’s emotions might explain some of Ryder
et al.’s (2008) findings. If so, then depression is not a
universal phenomenon that exists apart from the influ-
ence of culture.
A second possibility for lack of metric invariance in
self-report measures is response styles, or systematic
individual differences in responding to questionnaire
items that have little to do with the item’s content and,
by extension, the target concept. The two response
styles described next can affect response variability, and
thus the statistical association between indicators and
their factors over groups that differ in these styles (Gre-
gorich, 2006). One is extreme response style (ERS),
where the most extreme options (e.g., never, always) are
favored. The ERS style may be found in populations or
cultures where decisiveness or firmness is encouraged.
Another is midpoint response style (MRS), which
is the tendency to avoid endorsing the most extreme
response categories in favor of middling options (e.g.,
sometimes). It may be found in populations that empha-
size modesty or humility instead of boldness.
Wetzel et al. (2016) described evidence that ERS,
MRS, and acquiescence response style—defined in the
next section—are substantially enduring characteris-
tics over an 8-year period within a longitudinal sample
tested every 2 years since high school. In computer
simulations, Liu et al. (2017) found that ERS and MRS
can have appreciably negative effects on both model fit
and parameter estimation when using multiple-group
CFA to evaluate MI. Specifically, lack of evidence
for MI can be caused by group differences in these
response styles, not true differences in measurement
models for target concepts. Liu et al. (2017) concluded
that response styles are a real threat in MI studies and
offered recommendations for detecting their effects.
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Strong Invariance
Strong invariance, also called scalar invariance,
assumes weak invariance. It also requires equal unstan-
dardized intercepts for each indicator over groups. The
intercept estimates the score on an indicator, given a
true score of zero on the corresponding factor. Equality
of intercepts says that different groups use the response
scale of that indicator in the same way; that is, a per-
son from one group and a person from a different group
with the same level on the factor should obtain the same
score on the indicator. The strong invariance hypothesis
is supported if the fit of the model with equality-con-
strained unstandardized loadings and intercepts is not
appreciably worse than that of the model with equality-
constrained loadings only (i.e., weak invariance).
Strong invariance guarantees that (1) group differ-
ences in estimated factor means will be unbiased. Also,
(2) group differences in indicator means or estimated
factor scores will be directly related to the factor means
and will not be confounded by a systematic-but-con-
cept-irrelevant source of individual differences. That is,
the factors have a common meaning over groups, and
(2) any constant effects on the indicators are canceled
out when observed means are compared over groups
(Gregorich, 2006). Thus, strong invariance is the mini-
mal level for meaningful interpretation of group mean
contrasts. Some significance tests for mean contrasts,
such as the standard t test, assume equal population
variances. This assumption can be directly tested in
CFA by imposing equality constraints on factor vari-
ances after retaining a strong invariance model. If
the model with equality-constrained factor variances
just described is retained, there is evidence that the
homoscedasticity assumption is tenable; otherwise,
rejection of that assumption would rule out the use of
the standard t test, but there are other versions of this
test that do not assume equal variances.
Rejection of strong invariance for self-report mea-
sures could suggest the presence of a differential
additive response bias, which systematically raises
or lowers observed scores in a particular group apart
from respondents’ true levels on the factor. Two exam-
ples are an acquiescence response style (ARS), or the
disposition to agree with all items, and a disacquies-
cence response style (DRS), or the tendency to dis-
agree with all items, in both cases regardless of item
content. Unlike ERS or MRS patterns of responding,
which affect variances, the ARS and DRS patterns
shift observed group means higher or lower, but these
Pt4Kline5E.indd 397
Measurement Invariance 397
changes are not due to true differences in target con-
cepts. Possible sources of differential additive response
bias include cultural values about agreement versus dis-
agreement per se or in acknowledging health or adjust-
ment problems.
Cohort effects in longitudinal studies or procedural
differences in data collection are other possible sources
of differential additive response bias. An example is
when patients are weighed in their street clothes in
one clinic but wearing examination gowns in a dif-
ferent clinic (Gregorich, 2006). In this case, the con-
stant added to true body weight depends on where the
patients were tested. Thus, observed mean differences
between clinics do not accurately reflect true differ-
ences in patient weight, and this bias is due to proce-
dural differences that result in differential additive bias.
Strict Invariance
The highest—and most demanding—level of MI is
strict invariance, also called residual invariance,
error variance homogeneity, or invariant unique-
ness. It assumes strong invariance, or equality in load-
ings and intercepts, plus equality in error variances and
covariances (if any) for the indicators over groups. The
strict invariance hypothesis implies that the indicators
measure the same factors in each group with the same
degree of precision. It is tested by (1) imposing cross-
group equality constraints on the error variances and
covariances for all indicators, and (2) comparing the
relative fit of the model so constrained to that of the
strong invariance model, where residual variances and
covariances are freely estimated in all groups.
Deshon (2004), Wu et al. (2007), and others have
argued that strict invariance is required in order to
claim that the theoretical variables are measured iden-
tically across groups. This is because unmodeled sys-
tematic effects on observed scores can be confounded
with differences in loadings or intercepts, which can
result in specification error. Little (2013) pointed out
that because unique indicator variance reflects both
random error and specific variance that is systematic,
the hypothesis of strict invariance means actually that
the sum of these two components is exactly equal for
each indicator over groups. But if these two sources
of unique indicator variance are only approximately
equal, then imposing equality constraints on the residu-
als can introduce bias. Specifically, unless specific indi-
cator variance is precisely equal across the groups, the
equality constraints will propagate random error across
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 398 Advanced Techniques
all model parameters. Although it may be reasonable to
assume that specific variation is invariant over groups,
the expectation that the random error component would
also be invariant may be less justifiable. Thus, forcing
these two sources of unique variance to be equal may
be implausible in perhaps most cases.
Recall that only strong invariance is required to
meaningfully compare factor means over groups, so
holding out for the even more demanding hypoth-
esis of strict invariance brings little to the table
regarding the comparability of the groups on prox-
ies for theoretical concepts. An exception is when the
researcher wishes to formally test group differences
in observed variances, such as for indicators or com-
posites based on the indicators. In this case, evidence
for strict invariance should be obtained (Gregorich,
2006). Also, I suspect that strict invariance would be
observed in relatively few applied studies. For these
reasons, not all authors of MI studies report on tests
of strict invariance.
ANALYSIS DECISIONS
Measurement invariance analyses are complex with
multiple steps and decision points about model iden-
tification (e.g., how to scale the common factors), the
sequence of model testing (e.g., trimming vs. building),
statistical criteria for deciding whether to retain or reject
models (e.g., the role of test statistics, approximate fit
indexes, and residuals), and whether to include covari-
ates in the model (Hayduk, 2016). In an ideal world,
decisions in the areas just mentioned would have little,
if any, bearing on the results—that is, the truth will
win out regardless of analysis strategy—but that hope
is pretty dim in the real world. This is because invari-
ance testing often involves the estimation of a series
of nested models, and decisions made about models
tested earlier can affect results found for models tested
later. Sometimes these decisions can have unintended
consequences. For example, what seems like a small
respecification in an earlier model can greatly affect the
choice of the final model at the end of the analysis. This
is the reason why Millsap and Olivera-Aguilar (2012)
noted that the effective use of computer tools for invari-
ance testing relies heavily on the experience and judg-
ment of the researcher. Preregistering an analysis plan
based on substantive considerations would address the
concern that decisions were aimed mainly at finding a
model that fits the data, or model hacking.
Pt4Kline5E.indd 398
Free versus Constrained Baselines
(Trimming vs. Building)
The hierarchy of MI hypotheses corresponds to a model
trimming strategy in which an initial unconstrained
model (configural invariance) is gradually restricted by
adding cross-group equality constraints in a sequence
that corresponds to weak invariance, strong invariance,
and then strict invariance (if tested). Stark et al. (2006)
referred to this strategy as the free baseline approach.
Failure to retain the invariance hypothesis at a particu-
lar step means that even more restricted models are not
considered.
It is also possible to test for MI through model build-
ing where constraints on an initially restricted model,
such as one represented by the strict invariance hypoth-
esis (equal loadings, intercepts, and errors), are gradu-
ally released (e.g., test strong invariance by allowing
error variances to be freely estimated in each group).
This method is the constrained baseline approach
(Stark et al., 2006). The problem with this method is
that it may not be clear which particular set of cross-
group equality constraints—those for loadings, inter-
cepts, or error variances—should be released, if the
fully constrained model is rejected. If theory is not spe-
cific, the choice may be arbitrary. Ideally, model trim-
ming versus model building for the same data would
each select the same model, but this is not guaranteed.
Statistical Decision Criteria
Researchers in early MI studies in SEM tended to rely
mainly on the chi-square difference test to determine
whether to retain or reject the more constrained between
two nested invariance models (Byrne et al., 1989). Spe-
cifically, a significant difference would signal rejection
of the more restricted model in favor of the less con-
strained model, assuming the fit of the less constrained
model to the data is satisfactory. Later developments
in testing practices for MI featured the shift to using
approximate fit indexes, such as RMSEA and CFI, to
supplement or even replace the chi-square test in model
selection, just as in the wider SEM literature (Chapter
10). This includes the development of fixed thresholds
for changes in values of approximate fit indexes that
supposedly demarcate the limits between trivial ver-
sus more substantial differences in fit between nested
invariance models. But it is doubtful whether such fixed
thresholds actually work, and overreliance on them can
lead to less than optimal decisions in the analysis.
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Cheung and Rensvold (2002) found in computer sim-
ulation studies assuming known population invariance
models with continuous indicators that values of the
CFI were relatively unaffected by model characteristics
such as the number of indicators per factor. They sug-
gested that changes in the CFI values less than or equal
to .01, or DCFI ≤ .01, indicate that the more restricted
invariance hypothesis should not be rejected. Meade et
al. (2008) recommended a different threshold for DCFI
in generated data with varying levels of MI including
different factor structures (no invariance), different
loadings, or different intercepts across two groups. In
very large samples, such as 6,000 cases per group, the
chi-square difference test indicated lack of invariance
most of the time when there were slight group differ-
ences in model parameters. In contrast, the CFI was
generally less affected by group size and by the number
of indicators per factor. Meade et al. (2008) suggested
that changes in CFI values less than or equal to .002, or
DCFI ≤ .002, may indicate deviations from MI that are
functionally trivial when groups sizes are very large.
Other approximate fit indexes, such as the RMSEA
and SRMR, have also been studied in computer simula-
tions of MI analyses, but no single gold standard thresh-
old that works across varying sample sizes, model
configurations, or indicator level of measurement (i.e.,
continuous or categorical) has been described for any
approximate fit index, including the CFI. Chen (2007)
recommended conditional thresholds for DCFI and
DRMSEA based on computer simulations where group
sizes were equal versus unequal or the pattern of invari-
ance was uniform versus mixed. A uniform invariance
pattern affects equally the loadings, intercepts, and
error variances, but a mixed pattern affects some, but
not all, of the types of parameters just mentioned. For
example, in cases where the group size is both small
(n < 300) and unequal and the invariance pattern is
uniform, Chen (2007) recommended the cutting points
DCFI ≤ .005 and DRMSEA ≤ .010 for retaining the null
hypothesis of invariance. But Chen (2007) suggested
more stringent criteria were needed when the group
size is larger (n > 300) and equal and the invariance
pattern is mixed instead of uniform: DCFI ≤ .010 and
DRMSEA ≤ .015.
Based on computer simulations with analyses of
data from larger numbers of groups, such as 10–20,
Rutkowski and Svetina (2014) recommend that the
thresholds DCFI ≤ .010 and DRMSEA ≤ .010 were
generally adequate when testing for scalar invariance,
but a different set of cutting points, or DCFI ≤ .020
Pt4Kline5E.indd 399
Measurement Invariance 399
and ­DRMSEA ≤ .030, worked better for tests of met-
ric invariance. Sass et al. (2014) cautioned that thresh-
olds based on changes in approximate fit indexes for
continuous data do not perform well with misspecified
models for ordinal data. Remember that Kenny et al.
(2015) cautioned that the RMSEA is not very accurate
for models with relatively few degrees of freedom,
especially when the sample size is not large.
More recently, Yuan and Chan (2016) described the
application of equivalence testing, which allows the
researcher to specify the maximum degree of mis-
specification allowable before going on to test even
more restricted models (Appendix 10.A), to MI test-
ing. The degree of misspecification can be expressed
either in the form of a model chi-square statistic or the
RMSEA. In computer simulations, they compared con-
ventional fixed thresholds for the RMSEA, such as .01,
.05, .08, and .10 for, respectively, excellent, close, fair,
and poor fit, to dynamic thresholds for the RMSEA for
specifying maximum degrees of misspecifications in
equivalence testing. The dynamic thresholds outper-
formed the fixed thresholds, but whether these dynamic
thresholds (Yuan & Chan, 2016, p. 420) generalize
beyond computer simulation conditions (e.g., normal
distributions) is unknown.
Given the results just summarized and others
reviewed by Putnick and Bornstein (2016), I believe
there is little hope of ever finding a set of decision rules
based on changes in approximate fit indexes that would
universally apply over all types of MI studies. Also, it
is poor practice in any type of SEM analysis to ignore
both the residuals and results of the chi-square test,
especially if group sizes are not large. In these ways,
I concur with Hayduk (2016) that there are entrenched
and widespread deficiencies in reporting results from
MI analyses. These problems also suggest that the
MI research literature could have many examples of
retained invariance models that do not actually fit data
when evaluated from the perspectives of both global fit
and local fit.
Scaling and Parameterization
Common factors in CFA models with mean structures
(i.e., MACS models) require scales for both their vari-
ances and means; otherwise, the model is not identified.
The same basic options for scaling factors in single-
group CFA analyses—the reference (marker) variable
method, variance standardization method, and effects
coding method (Chapter 13)—are available in multiple-
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 400 Advanced Techniques
group CFA analyses. Selection of one method versus
another makes no difference in global model fit, but
there are special considerations in multiple-group CFA
that are outlined next (Little et al., 2006, 2007):
1. In the reference variable method, the unstan-
dardized loading of one indicator per factor is fixed to
1.0, and its intercept is fixed to 0. The same indicator
should be selected as the reference variable in each
group. This method scales each factor in the metric of
the explained (common) variance of the corresponding
reference variable and identifies the mean structure.
Loadings and intercepts for all other indicators are
free parameters as are the variances, covariances, and
means of the factors in all groups. An advantage of this
method is that there is no need to explicitly free the fac-
tor means or variances in any group later in the analy-
sis when cross-group equality constraints are imposed.
Another advantage is that iterative estimation generally
converges with no need to specify starting values for
model parameters.
A drawback of the reference variable method is that
estimates of factor variances, covariances, and means
depend on the specific indicators selected as the refer-
ence variables. That choice is sometimes arbitrary, such
as when scores on multiple indicators for the same fac-
tor are equally reliable or no indicator is deemed espe-
cially representative of the corresponding theoretical
variable (Chapter 14).
A bigger concern is that the method requires an
invariance assumption: Because the loading and inter-
cept of the reference variable are fixed to 1.0 and 0,
respectively, it must be assumed that these coefficients
are invariant over groups. This is because fixed coef-
ficients are excluded from tests of MI, so it must be
known a priori that the unstandardized regression of
the reference variable on its factor is identical over all
groups. If the researcher inadvertently selects a refer-
ence variable that is not invariant over groups, the
results may be distorted. There are empirical methods
for selecting invariant reference variables described in
the next section, but they are data-driven—and thus
subject to capitalization on chance—and generally
require large, representative samples; see Thompson et
al. (2021) for more information.
2. The variance standardization method—also
called the reference group method in multiple-group
CFA—involves fixing the variances and means for
all factors to, respectively, 1.0 and 0 in just one of the
Pt4Kline5E.indd 400
groups, the reference group. In the analysis of a strong
invariance model, factor variances and means for all
subsequent groups are estimated and scaled relative to
the fixed mean (0) and variance (1.0) in the reference
group. (In longitudinal studies where a single group
is followed over time, the reference point would be
the first measurement occasion.) For example, factor
means in the subsequent groups are contrasts, or dif-
ferences from the factor means in the reference group.
Each contrast is the weighted average of the differences
between the indicators in the reference group and each
subsequent group (Little et al., 2007). Factor variances
in subsequent groups are each estimated relative to the
fixed variances of 1.0 in the reference group.
A complication of this method is that because the
factors are standardized in the reference group (i.e.,
their variances are 1.0), factor associations for this
group in the unstandardized solution are scaled in
a correlation metric. But factor associations for all
subsequent groups are scaled in a covariance metric,
which means that direct comparisons of cross-group
differences in factor associations are not possible in
the unstandardized solution. If the standardized solu-
tion in a multiple-sample CFA is derived by stan-
dardizing each separate within-group covariance
matrix, then estimated factor correlations are also not
directly comparable over groups (Chapter 12). Little
et al. (2006, 2007) described a method using phantom
variables with no indicators to obtain common-metric
standardized estimates of factor correlations that are
more directly comparable. Another advantage of the
phantom variable method is that differences in factor
associations over groups can be tested with the stan-
dard chi-square difference test.
3. The effects coding method is for situations where
all indicators of the same factor are measured on the
same scale (Chapter 13). The method does not require
(a possibly arbitrary) selection of a single indicator to
scale its factor. Instead, all indicators of a factor con-
tribute to its scale, and none of the groups is consid-
ered as a reference group. For each factor, the average
loading and intercept are fixed to equal, respectively,
1.0 and 0 in every group. So specified, factor variances
are estimated as the weighted average of the common
variances of their indicators, and factor means are esti-
mated as the weighted average of means on their indi-
cators. Factor covariances and means are freely esti-
mated in all groups. Just as in the reference variable
method, no other parameters need to be freed when
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imposing equality constraints on loadings or intercepts
in the effects coding method.
A drawback is that the effects coding method
requires the imposition of two linear constraints per
factor (loading, intercepts) in each group. This added
complexity can lead to failure of iterative estimation
or improper solutions when analyzing larger models.
Increasing the default number of iterations or relaxing
convergence criteria might solve the problem. Another
option is to first analyze the model using the reference
variable method, which should converge if there are no
syntax errors, and then use the parameter estimates as
starting values for a second analysis with effects coding
method—see Little et al. (2007) for additional tips.
Estimates of factor variances, covariances, and means
differ over the three scaling methods just described, and
within the reference variable method these results will
further vary depending on which indicator is specified
as the marker variable for its factor (e.g., Little et al.,
2006, p. 65). But all three methods generate identical
(within rounding error) estimates of effect size defined
as standardized mean differences, which are mean con-
trasts expressed as the proportion of a standard devia-
tion in the metric used to estimate the group means.
Expressed as the parameter d (lowercase Greek letter
delta) for a population standardized mean difference,
the effect size in multiple-group CFA is
m1 − m 2
d= (22.1)
(s12 − s 22 ) / 2
where m and s2 represent, respectively, the factor means
and variances in populations 1 and 2. A sample estima-
tor is
mˆ 1 − mˆ 2
d= (22.2)
(sˆ 12 − sˆ 22 ) / 2
where factor means and variances are estimated from
sample data. Equation 22.2 assumes equality of vari-
ances over populations and equal group sizes in sam-
ples.
PARTIAL MEASUREMENT INVARIANCE
Byrne et al. (1989) described partial measurement
invariance as an intermediate state of invariance. For
example, weak invariance assumes cross-group equal-
ity of each unstandardized factor loading. If some, but
not all, loadings are invariant, then only partial weak
Pt4Kline5E.indd 401
Measurement Invariance 401
invariance holds. In this case, testing for intercept
equality (strong invariance) could still be performed
because noninvariant loadings are freely estimated in
each group, which controls for these differences.
It is challenging that there are no clear-cut guidelines
for determining the degree of partial invariance in all
situations that would be acceptable for concluding that
the indicators measure roughly the same things over
groups. Suppose that a single loading out of a total of
20 is not invariant. There may be little harm in test-
ing for invariance of other kinds of parameters, such as
intercepts, given that 19/20, or 95%, of the loading are
equal across groups. But as more and more loadings
are found to be unequal over groups, such as > 10 (i.e.,
the majority out of 20), there should be less confidence
that indicators estimate the theoretical variables in the
same ways over groups (Vandenberg & Lance, 2000;
Steenkamp & Baumgartner, 1998).
In a Monte Carlo study, Steinmetz (2013) found
negligible effects if a minority of one or two indica-
tors out of, say, six in total with unequal loadings on
the accuracy of group differences in average factor
scores (composites) as estimators of true differences
in factor means. But inequality of even one intercept
can have a substantial impact on bias; specifically, an
unequal intercept can lead to spurious composite dif-
ferences between groups with equal true factor means.
The same inequality can also result in attenuated dif-
ferences on composites for groups with equal true fac-
tor means. These results suggest that full invariance of
the intercepts may be required for correct interpreta-
tion of group differences on observed variables; oth-
erwise, group mean differences on the indicators may
be confounded with differences in intercepts and factor
means.
Putnick and Bornstein (2016) reviewed a total of 126
articles in psychology journals published in 2013–2014
in which tests for at least one MI model were reported.
Support for configural and full metric (weak) invari-
ance were reported in about 60% of these analyses,
but partial invariance was indicated in just under one-
third of all tests, or 32%, so it was not a rare finding.
Larger sample size predicted a higher level of strict
(error variance) invariance, but level of invariance (i.e.,
full vs. partial) was generally unrelated to number of
groups and model size. Putnick and Bornstein (2016)
also noted haphazard reporting practices in reviewed
studies, including the failure to report model degrees of
freedom, group sizes, or the specific statistical criteria
used to evaluate model fit. These kinds of shortcom-
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 402 Advanced Techniques
ings in reporting are not unique to MI studies in SEM
(Chapter 3).
The best scenario for approaching the rejection
of a full invariance model is when the theory or the
researcher’s knowledge of indicator psychometrics
offers guidance about which cross-group equality
constraints to release, if the analysis continues to a
respecification phase. But without such guidance, an
empirical specification search where the researcher
looks to the data for hints about how to improve model
fit is about the only alternative. You already know that
caution is needed at the point where SEM analyses
become more purely exploratory, so please consider the
options described next while keeping in mind the spec-
tre of capitalization on chance and the need to replicate
data-driven analyses in a new sample. We assume that a
weak invariance model with equal loadings is rejected
but the configural invariance model is retained in a free
baseline approach:
1. In the backward MI method, start with the
rejected weak invariance model and sequentially
release cross-group equality constraints on loadings
based on the highest corresponding modification index
(MI) until a partial metric invariance model (if any) is
found that fits the data. If no such model is retained,
then sequentially remove indicators from the weak
invariance model in the same order and retest the con-
figural and full metric invariance models (Putnick &
Bornstein, 2016). A drawback of this approach is that
it can greatly inflate the rate of Type I error (Jung &
Yoon, 2016). Also examine the expected parameter
change (EPC) for each equality constraint: If the esti-
mated change in the coefficients in both groups is triv-
ial after releasing an equality constraint, there may be
little harm in retaining that constraint, even if the cor-
responding MI is significant.
2. A more formal option is the factor-ratio test
(Cheung & Rensvold, 1999), where each indicator
serves as the reference variable (its loading is 1.0 for
all groups) as one of the remaining indicators is tested
for invariance (i.e., its loading is constrained to equality
over groups) with the chi-square difference test. Given
p indicators for a factor, there are p(p – 1) tests for
every combination of a reference variable and another
indicator. Indicators flagged as invariant are dropped
from the model. A drawback is that the test is laborious
to use unless automated by the computer (Hammack-
Brown et al., 2022).
Pt4Kline5E.indd 402
3. Jung and Yoon (2016) described the forward CI
method, which tests models with a single invariant
parameter against the baseline configural invariance
model (i.e., tests forward) and implements the chi-square
difference test with confidence intervals for differences
between estimated loadings over groups. In computer
simulations, the method performed well against the
backward MI method and the factor-ratio test.
Use the methods just described with extreme cau-
tion: With enough testing and releasing of constrained
parameters, any model can be made to fit the data, but
this outcome per se has little or no scientific merit. Also
closely inspect the residuals at each step.
A detailed example of testing for MI is presented
next. It features the simultaneous analysis of a two-
factor model with continuous indicators over groups
from two different populations. Special issues in the
analysis, such as scaling and model fit assessment, are
emphasized. A limitation is that it is not possible in
these secondary analyses to specify a priori hypotheses
about which particular parameters may be invariant
or not invariant over the populations in these analyses.
Thus, there is an unavoidable exploratory bent to some
of the analyses described next, as models are respeci-
fied to better fit the data. In actual primary analyses,
the better practice is to respecify the model according
to the theoretical expectations or the results of prior
empirical studies.
Listed in Table 22.1 are the syntax and output files
for all analyses in lavaan using the default ML esti-
mator. All analyses converged to admissible solutions.
You can download these files from the book’s website,
and it would be helpful to carefully study the annotated
syntax files for both analyses. Note that decisions about
model retention in these examples are based mainly
on inspecting the residuals, or local model fit, in all
groups, not just on values of global fit statistics.
DETAILED EXAMPLE
FOR A TWO‑FACTOR MODEL
OF DIVERGENT THINKING
Guo et al. (2021) administered within Chinese (n = 316)
and American (n = 302) samples a total of five diver-
gent thinking tasks. Three indicators are line-meaning
tests, where participants were asked what different
geometric figures could symbolize, and two are real-
world problem-solving tasks, where participants were
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 Measurement Invariance 403

TABLE 22.1. Script and Output Files for Analyses of Confirmatory

Factor Analysis Measurement Models Over Multiple Groups
Analysis Script file
1. Two-factor model of divergent thinking analyzed in guo-single-group.r
separate Chinese and American samples

2. Two-factor model of divergent thinking analyzed guo-mi-models.r

simultaneously over Chinese and American samples

Note. The lavaan package was used for all analyses. Output files have the same names except
the extension is “.out.”

queried about possible solutions for social problems
in home or school settings. Higher scores on all tasks
indicate higher rated originality. The group sizes in
this example—about 300 cases—are not at all large. In
computer simulations, Meade and Bauer (2007) found
that power when analyzing invariance models was gen-
erally high when the group size is n = 400, but power
estimates for a smaller group size of n = 200 were quite
variable. This is because power in invariance testing
is affected not just by group size but also by model
characteristics, such as the magnitude of factor covari-
ances. Meade and Bauer (2007) found little support that
a simple rule about a ratio of group size to the number
of indicators could ensure adequate power to detect the
absence of MI when the group sizes are not large.
The data for this example are summarized in Table
22.2. On average, Chinese examinees outperformed
their American counterparts on the line-meaning tasks
while the opposite pattern is true for the real-world
problem tasks. The two-factor CFA model with a mean
structure fitted to these data is presented in Figure 22.1
using compact graphical symbolism with no scaling
constants. Because indicators for each factor have the
same metric, the effects coding method is used in this
example to scale the factor variances and means. Exer-
cise 1 asks you to verify in a single-sample analysis that
(1) the mean structure in the figure is just-identified, so
the model will perfectly reproduce the sample means;
and (2) df M = 4 for the whole model, if analyzed with no
equality constraints.

TABLE 22.2. Input Data (Correlations, Standard Deviations, Means) for Analyses
of a Two-Factor Model of Divergent Thinking Over Chinese and American Samples
Chinese
Variable 1 2 3 4 5 M SD
Line meaning
1. LM1 — .715 .631 .377 .452 1.24 1.532
2. LM2 .519 — .738 .408 .495 1.47 1.878
3. LM3 .543 .639 — .319 .391 1.88 2.012

Real-world problem
4. RW1 .280 .321 .317 — .445 .77 1.002
5. RW2 .242 .380 .300 .665 — .89 1.055

American
M .88 1.35 1.27 1.71 1.37
SD 1.094 1.350 1.494 2.257 1.541

Note. These data are from Guo et al. (2021) for originality scores. Chinese (above diagonal), n = 316; American (below
diagonal), n = 302.

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 404 Advanced Techniques

in the American sample. However, the largest absolute

Line
1 in the Chinese and American samples, so local model
Real
Meaning World
LM1 LM2 LM3 RW1 RW2
FIGURE 22.1. Two-factor model of divergent thinking with
a mean structure fitted to data from Chinese and American
samples presented in compact graphical symbolism with no
scaling constants.
Reported in the top part of Table 22.3 are values of
selected fit statistics for analyses of Figure 22.1 in each
of the separate samples, Chinese and American, with
the default ML estimator. All solutions are described
next are admissible. In both within-group analyses, the
model passes the chi-square test, and values of approx-
imate fit indexes are not grossly problematic, except
for the upper bound of the 90% RMSEA confidence
interval in the Chinese group, or .111. Inspection of the
residuals for each sample indicates no obvious local fit
problem (see the output file for analysis 1 in Table 22.1).
For example, no standardized residuals for the covari-
ance structure are significant at the .05 level in the Chi-
nese sample, and one such residual is significant at .05
correlation residuals are .037 and .049, respectively,
fit seems acceptable. Thus, the two-factor model is
retained in both single-group analyses. Exercise 2 asks
you to explain why factor means estimated in these
single-sample analyses are not yet directly comparable
over groups.
Reported in the lower part of Table 22.3 are the
results for invariance analyses (i.e., multiple-group
CFA) of the two-factor model. Note in the table that
(1) the model chi-square for the configural invariance
model with no cross-group equality constraints, or
11.522, is just the sum of the model chi-squares from
the two single-group analyses, or 4.377 + 7.175. Like-
wise, (2) the degrees of freedom for the configural
invariance model, or 8, is just the sum of the model
degrees of freedom from the single-sample analyses, or
4 + 4. You should verify that the within-group residuals
for the configural invariance model are identical to the
residuals for each respective sample in the single-group
analyses of Figure 22.1 (see the output files for analy-
ses 1–2, Table 22.1). Because the configural invariance
model has the same local fit in the Chinese and Ameri-
can samples as in the single-group analyses, this first
invariance model is retained.
The weak invariance model with equal loadings
across the groups fails both the overall chi-square test
(p = .008) and the chi-square difference test (p < .001) of
its fit relative to that of the configural invariance model—
see Table 22.3. Values of differences in approximate fit
indexes between the configural and weak invariance
models are mixed: DCFI = .009, which, based on some

TABLE 22.3. Values of Selected Global Fit Statistics for a Two-Factor Model of Divergent
Thinking Analyzed over Chinese and American Samples
Model RMSEA
Model chiML dfM p comparison chiD dfD p [90% CI] CFI SRMR
Single-group analyses
1. Chinese 4.377 4 .357 — — — — .017 [0, .088] .999 .015
2. American 7.175 4 .127 — — — — .051 [0, .111] .994 .016

Invariance (multiple-group) models

3. Configural 11.552 8 .172 — — — — .038 [0, .082] .997 .015
4. Weak 25.516 11 .008 4 vs. 3 13.964 3 < .001 .065 [.032, .099] .988 .043
5. Strong 60.549 14 < .001 5 vs. 1 35.033 3 < .001 .104 [.078, .131] .961 .058
6. Partial strong 25.809 12 .011 6 vs. 4   .293 1 .588 .061 [.028, .094] .988 .043

Note. In the partial strong invariance model, intercepts for LM2 and RW1 are not constrained to equality over groups.

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interpretative guidelines, indicates that the null hypoth-
esis of invariance should be retained, and DRMSEA =
.027, which exceeds the amount in some guidelines for
retaining the weak invariance hypothesis. Results at the
level of the within-group residuals are also mixed: On
one hand, a total of 11/15 standardized residuals in the
Chinese sample and 7/15 in the American sample are
significant at the .05 level—see the output file for analy-
sis 2 in Table 22.1. But, on the other hand, all absolute
correlation residuals in both groups are < .10, and the
largest absolute correlation residuals in the Chinese and
American samples are, respectively, .079 and .088. In
their analyses for the same model and data, Guo et al.
(2021) retained the weak invariance model. I have no
real objection to this decision, given the (admittedly
mixed) evidence for local fit just described, so the weak
invariance is retained in this present analysis, too.
The strong invariance model with equal loadings
and intercepts over groups fails both the chi-square
test and the chi-square difference test for its relative fit
to that of the weak invariance model with equal load-
ings only—see Table 22.3. The within-group residuals
are problematic, too: In the Chinese sample, there are
3 correlation residuals that equal or exceed .10, which
I believe is unfavorable in such a small model. When
the intercepts are restrained to equality over groups,
the mean structure in the strong invariance model is no
longer just-identified, so differences between observed
and predicted indicator means, or mean residuals, can
depart from zero. In both groups, all standardized mean
residuals are significant at the .01 level. The magnitudes
of the corresponding mean residuals are not strikingly
large—they are all < .10 standard deviations in absolute
value (see the output file for analysis 2, Table 22.1)—
but their pattern in both samples is disquieting. Given
all these results, I would not retain the strong invari-
ance model, which mirrors the decision taken by Guo
et al. (2021) for the same model and data.
Guo et al. (2021) analyzed two different partial
strong invariance models for their originality data: In
one model, all equality constraints on the intercepts for
all three line-meaning indicators were released, and in
the second model both equality constraints on the inter-
cepts for the two real-world problem-solving indicators
were both released (see Figure 22.1). Neither model had
satisfactory fit (Guo et al., 2021, p. 7). For pedagogical
reasons, I take a different strategy here: In the full strong
invariance model, the indicators LM2 and RW1 have
the two largest MI values for their equality-constrained
intercepts (see the output file for analysis 2, Table 21.1).
Pt4Kline5E.indd 405
Measurement Invariance 405
Both equality constraints just mentioned are released in
an alternative partial strong invariance model; that is,
only 3 out 5 intercepts are invariant in this model. This
specification is data-driven, but my intention is to dem-
onstrate the comparison of the Chinese and American
samples on the two factor means. Now, my decision as
a researcher would be to stop at the weak invariance
model for these data, but as textbook author I want to
teach a few things about factor mean contrasts, which
requires at minimum a partial strong invariance model.
Briefly, the global fit of the partial strong invariance
model just described is unsurprisingly very similar to
that of the weak invariance model—see Table 22.3—
and the within-group residuals are also nearly the same
over the two models, too. Reported in the top part of
Table 22.4 are equality-constrained parameter esti-
mates for the covariance part of the model. As expected,
(1) the unstandardized loading for each indicator is
identical over the Chinese and American samples, but
(2) the standardized estimates are different over the
two groups (Chapter 12). The error variances, reported
in the middle part of the table, are not constrained to
equality over groups. Exercise 3 asks you to analyze the
partial strong invariance model but with cross-group
equality constraints imposed on the error variances. I
can tell you that the fit of this model is poor, so we do
not consider further the hypothesis of equal error vari-
ances over groups. Estimates of factor variances and
covariances within each group are reported in the bot-
tom part of Table 22.4. We will revisit the factor vari-
ances later when we compare the groups on the factor
means, but the association between the divergent think-
ing factors is positive in both groups. The factor corre-
lations (.734, .451) are not directly comparable over the
two samples, buy they give a rough sense of effect size
for each group.
Listed in Table 22.5 for each group are the observed
and predicted means for all indicators plus mean resid-
uals and standardized mean residuals, none of which is
significant. Thus, the partial strong invariance model
closely predicts the observed means in both the Chi-
nese and American samples. Estimates for the mean
structure in Figure 22.1 are reported in Table 22.6.
Estimates for equality-constrained intercepts for three
indicators are reported in the top part of the table, and
results in the middle part of the table are for the two
indicators with freely estimated intercepts in each
group. Although slopes for regressing all five indica-
tors on their factors are identical over groups (Table
22.4), the Chinese and American have different relative
3/22/2023 2:06:10 PM
 406 Advanced Techniques

TABLE 22.4. Maximum Likelihood Parameter Estimates

for the Covariance Structure in a Two-Factor Model of Divergent
Thinking Analyzed over Chinese and American Samples
Chinese American
Parameter Unst. SE St. Unst. SE St.
Equality-constrained estimates
Loadings
LM1 .767 .026 .773 .767 .026 .682
LM2 1.128 .029 .915 1.128 .029 .825
LM3 1.105 .030 .814 1.105 .030 .756
RW1 1.002 .050 .667 1.002 .050 .675
RW2 .998 .050 .666 .998 .050 .955

Unconstrained estimates
Error variances
LM1 .907 .088 .402 .668 .066 .536
LM2 .567 .111 .162 .588 .086 .319
LM3 1.429 .153 .338 .903 .103 .428
RW1 .586 .069 .555 2.624 .314 .545
RW2 .586 .069 .557 .209 .229 .087

Factor variances and covariance

Line Meaning 2.296 .208 1.000 .986 .100 1.000
Real World .469 .065 1.000 2.186 .229 1.000
Line Real .761 .090 .734 .662 .109 .451

Note. These results are for model 6 (Table 22.3). Unst., unstandardized; St., standardized. Stan-
dardized estimates for error variances are proportions of unexplained variance.

standings on two indicators, LM2 and RW1, when the
score on the corresponding factor is zero. For exam-
ple, the Chinese sample has a lower relative standing
on both indicators just mentioned compared with the
American sample. However, the intercepts are only one
component of the predicted means on these variables.
For instance, the Chinese sample has a higher predicted
=d LM
mean on the LM2 indicator than the American sam-
ple—see Table 22.5. These patterns are also consistent
with effects coding in the Chinese sample, where some
intercepts must be negative so that the total for all indi-
cators of the same factor is zero (see the syntax file for
analysis 2, Table 22.1).
Estimates of the factor means are reported in the bot-
tom part of Table 22.6. For the line-meaning factor, the
estimate for the Chinese sample, or 1.523, is higher than
the mean for the same factor in the American sample, or
1.106. If we treat the within-group factor variances, or
2.296 for the Chinese sample and .986 for the American
sample (Table 22.4), as similar enough to pool (homo-
geneity is assumed), we can calculate a standardized
mean difference for Line Meaning (LM) as
1.523 − 1.106
= .33
(2.296 + .986) / 2
Thus, the mean of the Chinese sample on the line-
meaning factor is about one-third of a standard devi-
ation higher than the mean of the American sample.
The assumption of homoscedasticity can be directly
tested by (1) constraining the factor variances to equal-
ity and (2) comparing the relative fit of the model just
described against that of the baseline partial strong
invariance model for this example. For these data, the

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 Measurement Invariance 407

TABLE 22.5. Observed and Predicted Indicator Means in a Two-Factor Model

of Divergent Thinking Analyzed over Chinese and American Samples
Indicator Observed mean Predicted mean Mean residual Standardized mean residual
Chinese
LM1 1.240 1.256 –.016 –.709
LM2 1.470 1.470 0 0
LM3 1.860 1.842 .018 .790
RW1 .770 .770 0 0
RW2 .890 .890 0 0

American
LM1 .880 .867 .013 .866
LM2 1.350 1.350 0 0
LM3 1.270 1.282 –.012 –.866
RW1 1.710 1.710 0 0
RW2 1.370 1.370 0 0

Note. These results are for model 6 (Table 22.3).

TABLE 22.6. Maximum Likelihood Parameter Estimates

for the Mean Structure in a Two-Factor Model of Divergent
Thinking Analyzed over Chinese and American Samples
Chinese American
Parameter Estimate SE Estimate SE
Equality-constrained estimates
Intercepts
LM1 .089 .047 .089 .047
LM3 .159 .055 .159 .055
RW2 .061 .052 .061 .052

Unconstrained estimates
Intercepts
LM2 –.248 .061 .204 .070
RW1 –.061 .052 .397 .136

Factor means
Line Meaning 1.523 .091 1.016 .073
Real World .830 .049 1.311 .097

Note. These results are for model 6 (Table 22.3).

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 408 Advanced Techniques
model with equal factor variances over the Chinese and
American samples is very poor—Exercise 4 asks to you
verify this statement—so the homogeneity assumption
is problematic.
An alternative method for estimating effect size
when within-group variances are heteroscedastic is to
calculate two different d statistics, each based on the
standard deviation in just one group (Kline, 2013a,
chap. 5), as follows:
1.523 − 1.106
=
d LM (Chinese) = .28
2.296
1.523 − 1.106
=
d LM (American) = .42
.986
where the denominators are, respectively, the estimated
factor standard deviations in the Chinese and American
samples. Thus, the group contrast on the line meaning-
factor is approximately .30–.40 standard deviations
depending on the standardizer (i.e., the denominator),
which varies by group. Choi et al. (2009) described
additional two-group latent contrast effect size mea-
sures. Although less informative than an effect size,
a standard t test could be calculated, given the factor
means, standard deviations, and group when assuming
homoscedasticity. An alternative is the Welch–James
t test, which does not assume homogeneity of variance
and for which degrees of freedom are empirically esti-
mated (Kline, 2013a, chap. 3), but applied to the same
estimated factor means and standard deviations.
To summarize, the basic factor structure (i.e., a
two-factor model) of five divergent thinking tasks
administered by Guo et al. (2021) is invariant includ-
ing the strengths of the associations between factors
and indicators over Chinese and American samples
(weak invariance). But there is poor evidence for strong
invariance in that some, but not all, intercepts may be
equal over the two groups. This means that the Chinese
and American samples did not all have the same rela-
tive standing on some indicators, given the same posi-
tion on the underlying conceptual variables. Given the
nature of the indicators, for which originality scores
were assigned by raters (i.e., they are not self-report
measures), differential additive response bias would not
explain the differences in intercepts. Comparison of
observed means over these tasks may also be problem-
atic due to nonequivalence of the intercepts and factor
variances. Guo et al. (2021) described stronger evidence
Pt4Kline5E.indd 408
of partial strong invariance for fluency, not originality,
scores derived from the same divergent thinking tasks.
PRACTICAL SUGGESTIONS
FOR MEASUREMENT
INVARIANCE TESTING
Recommendations for managing the complexity of MI
analyses in multiple-groups CFA are listed next:
1. Consult theory or results from prior empirical stud-
ies when specifying MI hypotheses and planning
the order in which those hypotheses are to be tested
(e.g., free vs. constrained baseline approach).
2. In written reports, explain the rationale for model
specification at each point in the analysis.
3. Triple-check program code because it is easy to
make mistakes. Syntax files for invariance analy-
ses can be long and complex (e.g., Table 22.1; see
also Svetina et al., 2020). Also, thoroughly annotate
syntax that specifies different invariance hypoth-
eses, scales factor variances and means, or con-
trols the output. Annotated syntax is an invaluable
“researcher’s diary” of decisions made during the
analysis, and there are many decisions that should
be archived in MI analyses.
4. Know the defaults in your computer tool for mul-
tiple-group CFA. In Mplus, for example, loadings
and intercepts are assumed to be equal over groups,
but indicator error variances and factor variances
and covariances are freely estimated in all groups
by default. Factor means are fixed to zero in the
first group but are freely estimated in all subse-
quent groups (Muthén & Muthén, 1998–2017). In
lavaan, the default reference variable method for
scaling factor variances must be explicitly disabled,
if the effects coding method is used (Rosseel et al.,
2023). Program defaults can generally be modified
by the researcher if they do not correspond to the
target model or planned analysis.
5. Make a strong statement about transparency in a
complex analysis with multiple decision points by
preregistering the analysis plan and making the
data, syntax file(s), and output file(s) available to
others.
6. Do not rely solely on significance tests nor approxi-
3/22/2023 2:06:10 PM

mate fit indexes, including change-in-fit statistics,
when deciding whether or not to retain an invari-
ance model. Also inspect and describe the residuals
in each group.
MEASUREMENT INVARIANCE TESTING
IN CATEGORICAL CFA
This description of basic concepts for invariance test-
ing in multiple-group categorical CFA assumes an esti-
mator, such as robust WLS, that treats the data as ordi-
nal, not continuous. It is also necessarily brief for a few
reasons: There are many complexities when analyzing
categorical invariance models, which have covariance,
threshold, and mean structures. Some of these compli-
cations involve identification, and others concern test-
ing strategy. Debate about the proper sequence to use
for testing categorical invariance hypotheses is ongo-
ing (Svetina et al., 2020; Wu & Estabrook, 2016). Some
of these challenges can be sidestepped by analyzing
ordinal data with methods for continuous data, such as
robust ML. In this case, invariance testing proceeds as
described in the previous section. But this option is not
ideal for Likert-scale items with few response catego-
ries, such as ≤ 5 (Chapter 18). Thus, it is beyond the
scope of this introductory chapter to survey the details
of categorical invariance testing. My goal instead is
to prepare you to learn more about this topic through
selective review of key works.
Recall that indicators that are items with Likert
(ordered-categorical) response formats are treated in
categorical CFA as discretized versions of continuous
latent response variables that are assumed to be nor-
mally distributed. Each item is associated with a latent
response variable through a set of thresholds, which
represent points on the underlying continuum where
responses to the item cross over from one category
to the next, such as from agree to strongly agree. The
number of thresholds for each item equals the number
of its response categories minus one. In the measure-
ment part of the model, the latent response variables—
not the observed variables (items)—are the indicators
of common factors that approximate target concepts
(e.g., Figure 18.2).
Measurement invariance hypotheses in multiple-
group categorical CFA have different interpretations
compared with their counterparts for continuous indi-
cators in multiple-group CFA. For example, the con-
Pt4Kline5E.indd 409
Measurement Invariance 409
figural invariance hypothesis assumes the same num-
ber of common factors and the same correspondence
between factors and indicators, but indicators in cate-
gorical CFA are latent response variables, not observed
variables. A complication occurs when, depending on
the number of item response categories, a configural
invariance model as just described may not be identi-
fied without imposing cross-group equality constraints,
and these constraints are invariance assumptions. That
is, a pure configural invariance model with freely esti-
mated loadings, thresholds, and error variances in all
groups may not be the baseline model for invariance
testing in categorical CFA.
Suppose that all items are dichotomous with two
response options, such as agree versus disagree. Binary
items have a single threshold parameter that desig-
nates the cross-over point on the corresponding latent
response variable between the two item categories.
A method for identifying a categorical CFA model
for binary items where each latent response variable
depends on a single common factor by Millsap (2011,
pp. 129–130) requires (1) the exclusion of all latent
response variables from the model’s mean structure
(i.e., coefficients for direct tracings of the constant
are all fixed to zero, which is an untested invariance
assumption); (2) the specification that the means of the
common factors are fixed to zero in a reference group
but freely estimated in all other groups; and (3) the
specification of invariant item thresholds over groups.
Thus, the baseline model just described assumes
threshold invariance, which is required for identifica-
tion. The more restricted model tested next has equal
thresholds and loadings over groups. Thus, the hypoth-
esis of invariant loadings and intercepts is tested in a
single step. With equality-constrained loadings, it may
be possible to release the equality constraint for an item
threshold (e.g., Millsap, 2011, pp. 141–146), but load-
ings and thresholds cannot be independently tested for
invariance over groups. An alternative baseline model
in a free baseline approach for binary data has invariant
loadings and thresholds, and equality constraints are
released based on hypotheses, again within the limits
on model identification (Muthén & Asparouhov, 2002).
When items are polytomous with at least three
response categories (i.e., there are ≥ 2 thresholds per
item), requirements for model identification are more
flexible, especially if each latent response variable
loads on a single common factor. For example, the
threshold structure is identified, if (1) the same thresh-
3/22/2023 2:06:10 PM
 410 Advanced Techniques
old parameter is constrained to equality over groups,
and (2) for every latent response variable that is the ref-
erence (marker) variable for its common factor, a sec-
ond threshold parameter is constrained to equality over
groups. All latent response variables are excluded from
the mean structure, and common factor means are fixed
to zero in the reference group and freely estimated in
the other groups (Millsap, 2011, pp. 127–129). There
are additional identification requirements for models
where some latent response variables depend on mul-
tiple common factors for both dichotomous and polyto-
mous items (Millsap, 2011, pp. 130–131).
The less restrictive identification requirements for
models with polytomous items just described can give
the false impression that invariance testing could rou-
tinely proceed in the same basic sequence as when the
data are continuous. That is, fit as a baseline the con-
figural invariance model with freely estimated loadings
and thresholds; next test a weak invariance model with
equal loadings over groups but with freely estimated
thresholds, and so on. But Wu and Estrabrook (2016)
described a problem with this parallel: Imposing invari-
ance constraints on loadings in a configural invariance
model as just described can actually lead to statistically
nonequivalent models depending on how the baseline
model is identified. This means that different options
for scaling the common factors or for scaling either the
variances of the latent response variances or the vari-
ances of their error terms (i.e., delta vs. theta param-
eterization; Chapter 18) affect the fit of a model with
equality-constrained loadings, which can lead to differ-
ent conclusions (e.g., Wu & Estrabrook, 2016, p. 1022).
Wu and Estabrook (2016) described various
sequences for testing invariance hypotheses such that
the scaling method for the baseline model does not
change the model-implied probabilities of the observed
responses in more restricted invariance models tested
at later steps. This property is realized in their method
because models that represent more restricted levels of
invariance are not defined through simple respecifica-
tion of the baseline model, and thus are not affected
by how the baseline model is identified. Instead, more
restricted models are specified in their own right based
on principles of identification for such models, but
more restricted models are still properly nested under
the baseline model. In an extensive tutorial, Svetina
et al. (2020) demonstrated one of Wu and Estabrook’s
(2016) testing sequences for polytomous data in both
Mplus and the combination of lavaan and semTools
Pt4Kline5E.indd 410
(Jorgensen et al., 2022) in R. The semTools package has
an option for automatically identifying the variances of
the latent response variables based on guidelines by Wu
and Estabrook (2016).
After establishing configural invariance in the tuto-
rial by Svetina et al. (2020), threshold invariance was
tested next, followed by invariance testing for the
loadings. The order just stated differs from the typical
sequence for continuous data, where loading invari-
ance is tested before intercept invariance (e.g., Table
22.2), but Wu and Estabrook (2016) emphasized the
importance of establishing threshold invariance in
multiple-group categorical CFA before testing invari-
ance hypotheses for other measurement parameters,
if it is possible to do so given model identification
requirements. Indeed, they argued that loading invari-
ance cannot be correctly tested without first establish-
ing basic threshold invariance. For another example of
invariance testing based on Wu and Estabrook’s (2016)
guidelines, see Mastrotheodoros et al. (2021), who
evaluated longitudinal MI for a categorical CFA model
of ethnic, national, and personal identity in a sample of
immigrant youth tested over three occasions.
OTHER STATISTICAL
APPROACHES TO ESTIMATING
MEASUREMENT INVARIANCE
There are other statistical techniques and methods
besides multiple-group CFA for the evaluation of MI.
For example, Brown (2015) described multiple indi-
cators and multiple causes (MIMIC) modeling with
covariates. In this approach, a single model is fitted
to the data from all groups combined; that is, the total
sample is not partitioned into groups as in multiple-
group CFA. Instead, group membership is represented
in the model with coding variables, which are treated
in the analysis as covariates, or observed exogenous
variables. For instance, the coding variable in dummy
coding for just two groups is the binary variable (0,
1), two dummy codes represent membership in three
groups (e.g., Table 7.1), and so on. The data analyzed
are the variances and covariances of the indicators and
the coding variables but not observed means. Another
key difference is that invariance of loadings, error
variances and covariances, and factor variances and
covariances is assumed; that is, MIMIC modeling with
covariates tests only the equality of intercepts and fac-
3/22/2023 2:06:10 PM

tors means over groups. A potential advantage is that
smaller sample sizes are needed in MIMIC modeling
because a single model and the data matrix for the
whole sample regardless of the number of groups (e.g.,
2, 3, 10, etc.), which simplifies the analysis compared
with multiple-group CFA.
There are two basic steps in MIMIC modeling with
covariates (Brown, 2105): (1) Fit the CFA model to the
data matrix for the whole sample. This model should
have acceptable fit. If so, then next (2) add to the model
covariates that represent group membership as causes
of factors and indicators; that is, all measurement
model variables except error terms are regressed on the
covariates. For two groups, the unstandardized direct
effect of the single dummy variable for group member-
ship on a common factor is the estimated group mean
difference on that factor. If this difference is appre-
ciable, the populations from which the groups were
sampled may have different levels on the correspond-
ing theoretical variable. The unstandardized coefficient
for regressing a continuous indicator on the covariate is
the estimated group mean difference on that indicator,
while controlling for the factor. If the estimated differ-
ence is appreciable, then differential functioning in the
indicator is suggested that is analogous to the test for
equal intercepts in multiple-group CFA. Although the
model has no mean structure, it is the unstandardized
direct effects of the covariates that provide information
about group differences on the factors or indicators. See
Brown (2015, pp. 273–283) for an example.
Lúcio et al. (2017) compared results from multiple-
group CFA and MIMIC modeling with covariates
about whether scores from word recognition and spell-
ing tests are comparable over samples of children ages
6–15 years in control versus attention deficit hyperac-
tivity disorder (ADHD) samples. Two different MIMIC
models were analyzed: One treating ADHD status as a
dichotomous variable (control vs. ADHD groups) and
the other treating ADHD symptoms as a continuous
variable where cases were not partitioned into groups.
Other covariates included IQ scores and the presence of
symptoms for any mental disorder (including ADHD).
The hypothesis of strong invariance (equal loadings
and intercepts) was supported in multiple-group CFA
results. Regardless of whether ADHD status was mea-
sured as categorical or continuous, there was little evi-
dence in MIMIC modeling for differential functioning
over the word recognition and spelling tasks; that is,
ADHD status predicted the factors but not the indica-
Pt4Kline5E.indd 411
Measurement Invariance 411
tors controlling for the factors. Given all these results,
Lúcio et al. (2017) concluded that observed differ-
ences in task performance are due to true differences
in ADHD status and not to differential functioning of
the indicators.
Millsap (2011) described item response theory (IRT)
as a flexible and powerful framework for evaluating MI.
There is also a large body of literature about the role of
IRT-based analyses in the evaluation of DIF, including
extensions of the approach to mixture distributions, or
latent classes that represent unobserved heterogeneity
over subpopulations (Zumbo et al., 2015). In recent
special issues on MI in Frontiers in Psychology (van
de Schoot et al., 2015) and Sociological Methods &
Research (Davidov et al., 2018), two additional themes
about analysis options were addressed, including (1)
the concept of approximate MI and (2) new or extended
approaches to evaluate MI in complex data sets. Each
of these topics is briefly described next.
The idea behind approximate measurement invari-
ance is that cross-group equality constraints that spec-
ify exactly zero differences over groups or occasions
are replaced in Bayesian methods by approximate
zero constraints, or a priori distributions of param-
eter values around zero that represent slight departures
from perfect invariance. The researcher must specify
what constitutes a “slight” (i.e., trivial, negligible)
deviation from zero difference, which requires strong
psychometric knowledge about the measures. In com-
puter simulations by van de Shoot et al. (2013), a partial
MI approach was more likely to detect true measure-
ment models with many small differences in loadings
or intercepts over populations than conventional full or
partial invariance methods that assume zero differences
in some parameters. There are increasing numbers of
empirical studies in which the Bayesian approach to
assessing approximate MI is applied—see Lek et al.
(2018) for examples in survey research.
Analyzing models over large numbers of groups, such
as 100 or more, is challenging in multiple-group CFA
due to the often poor fit of weak invariance models with
many large values for modification indices. Muthén and
Asparouhov (2018) described two alternatives. One is
based on the alignment method, which estimates fac-
tor means and variances in each group while assuming
only approximate MI. The final aligned measurement
model has the same fit to the data as the configural
invariance model, which has no cross-group equality
constraints and is the best fitting model over all groups.
3/22/2023 2:06:10 PM
 412 Advanced Techniques
The computer uses Bayesian estimation to reweight the
estimates in the configural invariance model to mini-
mize the degree of noninvariance in the aligned model
for every pair of groups. The method assumes that most
loadings and intercepts are invariant in the true model.
Muthén and Asparouhov (2018) also described an IRT-
based method of two-level factor analysis that assumes
only that all parameters are approximately equal with
each parameter having random variation that make its
values slightly different over groups.
There are still more statistical options for MI analy-
ses beyond the ones just described—see Davidov et
al. (2018), Widaman et al. (2023), and van de Schoot
et al. (2015). Whatever analytical technique is used,
a challenge in MI studies is for researchers to explain
the practical or real-world implications of small devia-
tions from invariance, including the definition of what
a small (i.e., ignorable) deviation actually means (Put-
nick & Bornstein, 2016). The concern is that failure to
demonstrate invariance should not preclude subsequent
research about differences over populations, occa-
sions, modes of administrations, informants, or other
conditions of measurement. It could turn out that some
concepts are simply not comparable over conditions,
such as cultures in which certain constructs are seen
as irrelevant or experienced in very different ways, but
smaller differences in other domains may not preclude
meaningful comparisons, if there is a rationale about
how and why smaller departures from invariance are
inconsequential.
SUMMARY
The evaluation of measurement invariance is an active
research area with hundreds of published studies in
many disciplines such as psychology, education, and
cross-cultural studies, among others. The basic ques-
tion is whether scores from the same measures can be
interpreted the same way over populations, cultures,
nations, languages, times of measurement, or modes
of test administration, among other conditions. In tra-
ditional SEM, the technique of multiple-group CFA
applied to continuous or categorical data is the primary
statistical method in MI studies. It involves the imposi-
tion of cross-group equality constraints on unstandard-
ized measurement parameters that include loadings,
intercepts or thresholds, or error variances. If the fit
of the model with equality constraints is appreciably
worse than that of an unconstrained (baseline) model,
Pt4Kline5E.indd 412
the hypothesis of equality is rejected. The most basic
form for continuous data is configural invariance,
where the same CFA model is fitted to data from two
or more groups but with no constraints other than those
needed to identify the model. The next level is weak
invariance, which assumes the unstandardized load-
ing for each indicator is equal across the groups. The
hypothesis of strong invariance requires the additional
equality of intercepts. Strict invariance requires all the
equality constraints mentioned to this point plus error
variance and covariance homogeneity. Partial mea-
surement invariance is indicated when most, but not
all, measurement parameters are equal over groups at a
particular level of invariance analysis, such as for weak
invariance (i.e., some loadings are freely estimated in
each group). Evidence for at least partial strong invari-
ance is generally required to directly compare groups
on factor means. Other statistical techniques, such as
methods based on IRT or Bayesian estimation, are more
flexible than CFA in evaluating approximate invari-
ance. Specifically, these alternatives allow for nonzero
but small differences in measurement parameters over
groups, which is probably more realistic.
LEARN MORE
Putnick and Bornstein (2016) offer suggestions for improving
the state of practice and reporting in CFA-based MI studies,
Wu and Estabrook (2016) describe how to scale baseline
invariance models that do not lead to nonequivalent models
when equality constraints are imposed in later steps, and
Svetina et al. (2020) is a tutorial for implementing Wu and
Estabrook (2016) scaling for latent response variables and
common factors in models for ordinal data.
Putnick, D. L., & Bornstein, M. H. (2016). Measurement
invariance conventions and reporting: The state of the
art and future directions for psychological research.
Developmental Review, 41, 71–90.
Svetina, D., Rutkowski, L., & Rutkowski, D. (2020) Multiple-
group invariance with categorical outcomes using
updated guidelines: An illustration using Mplus and the
lavaan/semTools packages. Structural Equation Model-
ing, 27(1), 111–130.
Wu, H., & Estabrook, R. (2016). Identification of confirma-
tory factor analysis models of different levels of invari-
ance for ordered categorical outcomes. Psychometrika,
81(4), 1014–1045.
3/22/2023 2:06:10 PM

EXERCISES
1. Verify in a single-group analysis of Figure 22.1 that
(a) the mean structure is just-identified and (b) df M
= 4 for the whole model.
2. Why are the estimated factor means in the single-
sample analyses of Figure 22.1 (analysis 1, Table
22.1) not directly comparable over groups?
3. Fit the partial strong invariance model (no. 6 in
Table 22.3) but with cross-group equality con-
Pt4Kline5E.indd 413
Measurement Invariance 413
straints on indicator error variances to the data in
Table 22.2. Describe whether the assumption of
error variance homogeneity is plausible.
4. Fit the partial strong invariance model but with
cross-group equality constraints on the two factor
variances. Describe whether the assumption of fac-
tor variance homogeneity is reasonable.
3/22/2023 2:06:10 PM
 23

Best Practices in SEM

The techniques that comprise the whole of SEM—traditional (covariance-based), nonparametric, and com-
posite (variance-based)—provide researchers with an extensive set of tools for testing hypotheses with mul-
tivariate data. As with any complex set of statistical techniques, though, its use must be guided by reason.
Some of the issues mentioned next were raised in earlier chapters, but they are discussed together here in
the form of best practices. They are addressed under categories that include specification, identification,
measures, sample and data, analysis, respecification, and reporting. Other topics include tips to make your
work exceptional and the crux of SEM, or the most important things about it. These categories are not mutu-
ally exclusive, but they offer a useful way to focus this discussion. You are encouraged to use these points as
a checklist for your own analyses. By adopting best practices and avoiding common mistakes, you help to
improve the state of practice and the quality of the research literature. The psychologist William James (1917,
p. 348) wrote “there is no worse lie than a truth misunderstood by those who hear it,” which is a thoughtful
insight about this chapter’s aim and that of the whole book.

RESOURCES • The technique of SEM is about testing theories,

Listed in the top part of Table 23.1 are citations for
works about best practices and reporting guidelines.
These include reporting standards for traditional stud-
ies by the American Psychological Association (Appel-
baum et al., 2018; Chapter 3), Hair et al.’s (2019) sugges-
tions for reporting in PLS-PM studies, and Schreiber’s
(2017) suggestions for reporting CFA results. Listed in
the bottom part of the table are works about the use
of SEM in particular disciplines such as information
systems (Benitez et al., 2020) and imagining genetics
(Huisman et al., 2018), among others.
BOTTOM LINES
AND STATISTICAL BEAUTY
The points summarized next deal with the role of SEM
as a tool for science; that is, what it all means in the end:
not just models. The model analyzed represents predic-
tions based on a particular body of work, but outside
of this role, the model has little intrinsic value. This
means that the model provides a vehicle for testing
ideas, and the real goal of SEM is to evaluate these
ideas in meaningful and valid ways. Whether or not a
model is retained is incidental to this goal. Besides, any
wrong model can be retained simply by adding enough
free parameters until it is so complex that it would fit
basically any data, but that is testing nothing.
• If no model is retained, then explain the impli-
cations for theory. For example, in what way(s) could
theory be incorrect, based on your results?
• If a model is retained, explain just what was
learned as a result of your study; that is, what is the
substantive significance of your findings? How has the
state of knowledge in your area been advanced? What
new questions are posed? What comes next?

414

Pt4Kline5E.indd 414 3/22/2023 2:06:11 PM

 Best Practices in SEM 415

TABLE 23.1. Citations for Works About Best Practices and Standards
or Guidelines for Reporting of the Results in Structural Equation Modeling
Citation Comment
Best practices
Mueller & Hancock (2008) Best practice suggestions with analysis examples

Morrison et al. (2017) Recommendations for correct use in psychological research

General reporting guidelines or standards

Appelbaum et al. (2018) APA JARS-Quant reporting standards for SEM studies

Hair et al. (2019) Considerations and metrics about reporting results for PLS-PM analyses

Schreiber (2017) Core reporting practices including praise for retaining no model

Applying SEM and reporting results in particular disciplines

Benitez et al. (2020) Information systems (PLS-PM)

Fan et al. (2016) Ecological studies

Goodboy & Kline (2017) Communication research

Huisman et al. (2018) Imaging genetics

Igolkina & Samsonova (2018) Molecular biology

Ockey & Choi (2015) Language assessment

Zhang et al. (2021) Organizational and management research

Note. APA JARS-Quant, American Psychological Association journal article reporting standards for quantitative studies.

• If your sample size is not large enough to ran-
domly split and cross-validate your analyses, then
clearly state this as a limitation. If so, replication is a
necessary “what comes next” activity. This is espe-
cially true if a model is retained after a specification
search that was not part of a preregistered analysis plan.
• A strong analytical method such as SEM cannot
compensate for poor study design or shoddy ideas. For
example, expressing poorly thought-out hypotheses in a
path diagram does not give them credibility. The speci-
fication of direct or indirect effects cannot be viewed as
a substitute for an experimental or longitudinal design.
Inclusion of an error term for a measure with poor psy-
chometrics cannot somehow transform it into a good
measure. Applying SEM in the absence of good design,
measures, and ideas cannot spin gold from straw.
MIGHTILY DISTINGUISH YOUR WORK
(BE A HERO)
The four things listed next are best practices but,
unfortunately, they are rarely seen in the research
literature individually—much less all together. Their
general absence also marks the relative immaturity of
our collective use of SEM in the behavioral sciences.
You can greatly distinguish your own work by follow-
ing even one of the best practices listed next. All four?
Then count yourself as a hero among SEM practitio-
ners:
• Describe local model fit, not just global model fit.
Report the residuals either in article tables or appendi-
ces for smaller models or in the supplemental materi-
als for a journal article about a larger model. Doing so

Pt4Kline5E.indd 415 3/22/2023 2:06:11 PM

 416 Advanced Techniques
has been demonstrated many times in this book (e.g.,
Tables 8.2, 9.4, 12.4, 14.4, 17.4, 18.3, and 19.3). Show
us that the residuals fail to indicate appreciable dis-
crepancies between model and data at the level of the
measured variables, if any model is retained. Reporting
solely about global fit is insufficient.
• Acknowledge directly the phenomenon of equiva-
lent or near-equivalent models. Show us at least a few
plausible alternatives to a retained model, and offer us
arguments about why any retained model would be pre-
ferred over alternative models that explain the data just
as well, or nearly so. Without such arguments, there can
be no preference. Actually dealing with this issue can
reduce one of the most pernicious forms of confirma-
tion bias in the SEM literature.
• Preregister your analysis plan; specifically, tell us
how and why the initial model will be respecified, if
its fit to the data is poor. If the actual analysis differs
from the preregistered plan, then disclose that fact in
the written report and explain why.
• Report evidence that your findings replicate,
either internally, such as in cross-validation, or, even
stronger, externally, such as in a different sample col-
lected by a different researcher in a new location. Kraft
et al. (2009, p. 561) described how genetic epidemiol-
ogy “learned the importance of replication the hard
way” through the publication of many genotype–phe-
notype associations that failed to replicate. Now top
journals in this field generally require evidence for rep-
lication. This is a lesson not yet fully appreciated in the
SEM literature.
FAMILY RELATIONS
I would bet that many, if not most, readers were more
familiar with traditional (covariance-based) methods
for SEM before reading this book. Even though tradi-
tional SEM was the main focus here, I hope that pre-
sentations about the other two members of the family,
nonparametric SEM and composite SEM, expanded
readers’ sense of what else is possible:
• Use insights from Pearl’s structural causal model
(nonparametric SEM) to help you specify a recursive
structural model and plan the study. For example, you
can work with directed acyclic graphs where some
causes are assumed to be unmeasured in order to enu-
Pt4Kline5E.indd 416
merate which causal effects are identified versus oth-
ers that are not identified. Awareness of those effects
not identified should prompt you to think about how
to measure at least proxies (indicators) of omitted con-
founders (e.g., Figure 6.1) or locate instruments for
causal variables that overlap with the disturbances of
outcome variables, or endogeneity (e.g., Figure 6.6).
• Avoid common factor snobbery, or the false belief
that common factors are always superior to composites
as proxies for conceptual variables. If measurement is
assumed to be reflective, such as when tests are devel-
oped within classical measurement theory, then com-
mon factors are the way to go. But the problem of factor
indeterminacy—which is not the same thing as mea-
surement error—is serious enough to (1) blur the asso-
ciation between common factors and the theoretical
variables they are supposed to represent and (2) intro-
duce uncertainty in estimates of casual effects between
concepts approximated by common factors. The latter
form of uncertainty just mentioned is worse when there
are fewer indicators per factor and standardized fac-
tor loadings are lower, such as around .30, instead of
higher, such as .70 or so (Rigdon et al., 2019). Thus,
common factors are not royal roads to approximating
theoretical variables. Petter (2018) described additional
stereotypes about common factors versus composites
as proxies.
• Use valid and principled alternatives to reflective
measurement that include synthesis theory, which is for
forged concepts such as emergent variables made up of
their indicators, not the other way around. Composites
are natural proxies for emergent variables, not common
factors, which require assumptions about covariances
among indicators that are incompatible with formative
measurement. But composites are also imperfect prox-
ies: They are affected by measurement error in their
indicators, and indeterminacy also characterizes their
associations with conceptual variables although not
in ways that are yet directly estimable (Rigdon et al.,
2019).
• Do not fit to the same data reflective models based
on common factors versus formative models based on
composites in the hope of finding the “correct” mea-
surement model. There is actually no way to discern
the true measurement model in an individual empiri-
cal study. Instead, the model is assumed to be correct
and then fitted to the data. That model should be well
thought out and based on the researcher’s best under-
3/22/2023 2:06:11 PM

standing of theory and measurement in a particular
area. To do otherwise is HARKing, or hypothesizing
after the results are known. Thus, the choice between
common factors or composites as proxies should be
informed, not accidental, and shared with your readers
in written summaries of the results.
• Likewise, do not rely on empirical tests of whether
a set of indicators is formative or reflective. For exam-
ple, do not automatically conclude that a set of indi-
cators is formative if their intercorrelations are not all
positive. Also, do not rely solely on corresponding tests
of whether a variable is a proper instrument for another
variable that is involved in a causal loop or that is cor-
related with the disturbance of an outcome variable.
These kinds of specifications should come primarily
from your knowledge of measurement or substantive
issues about causation in a particular research area.
Empirical tests could just capitalize on sampling error,
especially in small samples.
• Do not forget that there are alternatives to reflec-
tive measurement with effect indicators and forma-
tive measurement with cause indicators or composite
indicators. Some of these alternatives, such as network
models or methods based on establishing content valid-
ity, refer to neither latent variables nor emergent vari-
ables. Measurement models with reactive indicators
assume mutual causation between proxies for theoreti-
cal variables and their indicators.
SPECIFICATION
Despite all the statistical machinations in SEM, speci-
fication is the most important step, but occasionally
researchers spend the least amount of time on it. Listed
next are ways to do your homework in this critical area:
• Describe the theoretical framework or body of
empirical results that form the basis for specification.
Articulate the specific problem addressed in the anal-
ysis. Explain why the application of SEM is needed,
including why using a simpler statistical technique is
not better.
• Define the corresponding theoretical variables
in clear terms for models with proxies. For example,
avoid vague labels for concepts such as “aggression.”
Instead, describe the kinds or aspects of aggression that
correspond to the target concept, and use more precise
Pt4Kline5E.indd 417
Best Practices in SEM 417
names, such as verbal aggression, defensive aggression,
dominance aggression, and so on.
• Use multiple-indicator measurement, which is
generally better than single-indicator measurement.
An exception is when only one among a set of indica-
tors has good psychometric characteristics. Another is
when a particular indicator can be viewed as the super
ultimate expression of theoretical concept. In either
case, it may be better to rely on a single best indicator.
• Avoid the specification error where the single
indicator of an exogenous concept is assumed to have
no measurement error, especially if this assumption
is known to be false. Instead, estimate the score reli-
ability for a single indicator and specify an error term
for that indicator, which isolates its measurement error
away from the structural model. An alternative is to
specify an instrument for a single indicator, but the
instrument must have excellent psychometric charac-
teristics.
• Specify design-driven correlated error terms,
such as correlated disturbances in a structural model
or correlated errors in a measurement model, if doing
so is theoretically justifiable and identification require-
ments can be satisfied. Omission of such terms can lead
to inaccurate results, especially for results based on
proxies for theoretical variables. In some disciplines,
such as economics, the specification of correlated error
terms is routine. Such specification should not be seen
as a necessary evil. The flip side of this advice is to add
correlated error terms without a basis in theory or study
design (e.g., repeated measures), such as to improve
model fit with no good reason to expect such effects.
Doing so makes the model more complex, which gener-
ally improves fit, but at the likely cost of capitalizing on
sampling error.
• Realize that it is sometimes appropriate to expect
that an indicator depends on two or more common
factors, but this specification should come from prior
knowledge of that variable. Just like error correlations,
the specification that an indicator is multidimensional
instead of unidimensional makes a measurement model
less parsimonious.
• State the rationale for directionality specifica-
tions. This includes both the measurement model and
the structural model. For example, is reflective mea-
surement appropriate for describing the directionali-
ties of indicator–proxy relations? Or would the speci-
3/22/2023 2:06:11 PM
 418 Advanced Techniques
fication of formative measurement make more sense?
Or perhaps both (i.e., mixed measurement or MIMIC
models)? For the structural model, explain hypotheses
about causal priority, especially if your research design
has no formal elements, such as time precedence, that
support causal inference.
• Provide explicit justification for specification
of causal loops in models fitted to data in cross-sec-
tional studies, or an account of why the variables are
expected to be both causes and effects of each other
and that causal lags are expected to be very short. Also
acknowledge the special assumptions of causal loops,
such as equilibrium and stationarity, and comment
on their plausibility in your study. Avoid specifying
mutual causation as a way to mask uncertainty about
directionality. For example, does Y1 cause Y2 or vice
versa—not sure, why not both (Y1  Y2)?
• Be mindful about the consequences of omitting
causes that are correlated with other variables in the
model. If an omitted cause is unrelated to measured
causes, then estimates of direct effects are not biased
due to this omission. But it is rare that the types of
causes studied by behavioral scientists are truly inde-
pendent. Depending on the pattern of correlations
between measured and unmeasured variables, esti-
mates of direct effects can be too high or too low.
• Respect the parsimony principle: Specify the
simplest model possible as your initial model, one
that includes the effects of highest priority, given rel-
evant theory. Doing so in a single sample corresponds
to model building, where the simplest model in a set
of nested models is tested first. But when testing for
measurement invariance in multiple-group CFA, it is
usually better to analyze the most complex model first.
This is the model of configural invariance, which is
then made simpler (it is trimmed) by imposing equality
constraints on certain parameters, such as factor load-
ings, intercepts, or error variances.
• Do not be discouraged by previous comments on
parsimony as they are not intended to deter you from
analyzing complex models per se. This is because a
phenomenon that is complex may require a relatively
intricate statistical model in order to capture its basic
essence. The main point is that the model should be
as simple as possible while still respecting theory and
prior empirical results. Models that are complex with-
out justification, or overparameterized, are probably so
specified to maximize fit.
Pt4Kline5E.indd 418
IDENTIFICATION
The problem of identification must be dealt with in
many, if not most, SEM studies. Some recommenda-
tions for managing identification are listed next:
• Explicitly tally the number of observations, free
parameters, and model degrees of freedom, df M for
the initial model. Keep track of df M for any respecified
models, that is, relate changes in model specification to
changes in df M for revised models.
• Scale the common factors or composites properly.
In multiple-group SEM, standardizing common factors
by fixing their variances to 1.0 is incorrect if groups
differ in their variabilities. Fixing the loading for a ref-
erence variable to 1.0 (i.e., the factor is unstandardized)
is preferable, but note that (1) the same loading must
be fixed in each group and (2) indicators with fixed
nonzero loading are assumed to be invariant across
all groups. The effects coding method, where aver-
age unstandardized loadings or intercepts are fixed to
equal, respectively, 1.0 or 0 in all groups, is an alterna-
tive for indicators of the same factor that also share the
same metric. In single-group analyses, fixing to 1.0 the
variances of factors measured over time is also wrong
if factor variability is expected to change. In composite
SEM, the specification of a dominant indicator orients
(determines the sign of) the associated composite, and
analyzing the composite in standardized form scales it.
• Comment on sufficient requirements that identify
the particular kind of structural equation model you are
analyzing. For example, if the structural model is non-
recursive, is the rank condition sufficient to identify it?
If the measurement model has indicators that depend
on multiple factors or has correlated error terms, does
their pattern satisfy sufficient conditions?
• Assure your readers that your model is actually
identified if it is an especially complex one. Remem-
ber that it is theoretically possible for the computer to
generate a converged, admissible solution for a model
that is not truly identified, yet give no warning about
the problem. Whatever solution is so computed, it is
but one of an infinite number of solutions (i.e., it has
no meaningful interpretation), if the model is not really
identified. If you are uncertain about whether your
model is identified, then you are not ready to analyze it
much less report analysis results for that model. See the
advice in Chapter 19 about handling identification for
3/22/2023 2:06:11 PM

nonrecursive models (e.g., start with a core model you
know is identified and next build it up).
MEASURES
Your scores come from your measures, so those mea-
sures better be good. Some advice for dealing with the
measurement problem in SEM are considered next:
• Explain the operationalizations for your target
concepts; that is, establish the links between concept
definitions and specific characteristics or behaviors that
are to be measured or observed.
• Describe the psychometric characteristics of your
measures, including evidence for score reliability (i.e.,
are they precise?) and validity (e.g., can they really be
interpreted as measuring the target concepts?). It is
best practice to estimate score reliability in your own
sample(s). If it is impossible to do so, report coefficients
from other samples (reliability induction), but describe
whether those other samples are similar to yours.
• Specify and measure auxiliary variables that may
predict the data loss pattern if you anticipate miss-
ing data—for example, the design is longitudinal and
participants can choose to withdraw from the study at
any point. These variables need not be included in the
model, but they may be helpful when imputing multiple
scores for each missing observation. That is, both the
variables in the model and auxiliary variables should
be part of the study plan.
• Report evidence about extreme multicollinearity,
such as values of the variance inflation factor (VIF),
among composite indicators for the same proxy (e.g.,
Table 16.2). This is especially true when inner weights
are specified as PLS Mode B, or regression weights,
which are based on all intercorrelations among the
indicators for the same composite. Extreme collinear-
ity can adversely affect regression weights.
• Be careful, in small samples, when analyzing
parcels—averages or total scores over sets of items—
as continuous indicators in CFA. Doing so generates
simpler models with fewer indicators compared with
item-level analyses (i.e., categorical CFA), where each
item is an indicator. It assumes that the items in each
parcel are unidimensional, a requirement that should
be addressed before analyzing the data in CFA. This
is because trying to establish the unidimensionality of
Pt4Kline5E.indd 419
Best Practices in SEM 419
parcels in the same analysis is likely to capitalize heav-
ily on chance. If so, then parceling can mask the true
multidimensionality and distort the results.
SAMPLE AND DATA
The nature of samples and data are critical in any type
of statistical analysis. Emphasized next are issues spe-
cific to SEM:
• Use a sample size that is large enough for your
model and estimation methods. As models become more
complex relative to the number of cases, the statistical
precision of the estimates is more doubtful in smaller
samples. There is greater capitalization on chance in
smaller samples, too. Methods that make fewer dis-
tributional assumptions generally require more cases.
The analysis of ordinal data may require more cases
compared with analyzing continuous data. Convince
your readers that the same size is large enough to do
the job. There is no shame in using a simpler statisti-
cal technique in a smaller sample (see Chapter 17 for
exceptions).
• Describe how the sample size for your study was
established. If a target sample size was established in a
power analysis, state the minimum level of power (e.g.,
.90) and describe the level of analysis (i.e., whole model
vs. individual parameters; e.g., Tables 10.3, 10.4). State
the specific null and alternative hypotheses and other
power analysis parameter, such as the level of signifi-
cance (a) and population values of approximate fit
indexes. If target sample size is estimated in precision
for planning, also called accuracy in parameter estima-
tion, then provide a rationale for the precision param-
eter, or the margin of error for the population value of
the RMSEA or related index. If sample size limitations
are fixed by resource limitations (i.e., time or money),
then just be honest and say so. This is much better than
making up a post hoc rationale for sample size.
• Be sure, if the sample is archival—that is, you are
fitting a model within an extant data set—to mention
possible specification errors due to omission of rel-
evant causal or outcome variables. Another drawback
to archival samples is the realization that the model is
not identified. With the data already collected, it may
be too late to do anything about identification. Adding
exogenous variables is one way to remedy an identifica-
tion problem for a nonrecursive structural model, and
3/22/2023 2:06:11 PM
 420 Advanced Techniques
adding indicators can help to identify a measurement
model.
• State the computer program and algorithm used,
the number and sizes of generated samples, and how
many generated samples were lost due to nonconver-
gence, inadmissible solutions, or other problems in the
analysis if any data are simulated.
• Do not in covariance-based SEM standardize the
raw scores (i.e., convert to normal deviates, z), especially
if you plan to use an estimation method that assumes
unstandardized variables. Situations where standard-
izing the scores is especially inappropriate include the
analysis of a model across independent samples with
different variabilities, longitudinal data characterized
by changes in variances or means over time, or a type
of SEM analysis that requires the analysis of means,
such as a latent growth model, which needs the input
of not only raw score means but covariances, too. Note
that standardized scores are often analyzed in compos-
ite SEM, but there are alternatives (Chapter 16).
• Describe how data-related complications were
handled. This includes the extent and strategy for
dealing with missing observations or outliers, how
­
extreme multicollinearity was managed, and the use
of transformations, if any, to normalize continuous
variables. Reporting standards call for transparency in
descriptions of modifications to the data before they are
analyzed, not just in SEM studies, but in other kinds of
empirical studies, too (Appelbaum et al., 2018; Inter-
national Committee of Medical Journal Editors, 2021).
• Keep in mind that some types of analyses in SEM
require the input of raw data, such as when using spe-
cial methods or estimators that analyze incomplete data
files, correct for nonnormality in continuous outcome
variables, or analyze ordinal data. In such cases, make
the raw data file available so that others can reproduce
your analyses. Some journals, such as Psychological
Science, encourage authors to submit data files along
with other supplemental materials and award open-
science badges for complete and transparent reporting
about data (Eich, 2014).
• Remember that other kinds of analyses in SEM—
such as when raw data files are complete, all outcomes
are continuous with normal distributions, and the esti-
mator is default ML—require only the input of sum-
mary statistics, including means, correlations, and
standard deviations (e.g., Tables 11.2, 12.1, 14.2, 15.2,
Pt4Kline5E.indd 420
15.6, and 16.2). Report sufficient descriptive statistics
so that others can perform a secondary analysis and
reproduce your original results. To save space, reli-
ability coefficients or values of standardized skew or
kurtosis indexes can be reported in the same place (e.g.,
Sauvé et al., 2021, p. 240). Verify that the data matrix
is positive definite.
• Evaluate distributional assumptions of your esti-
mation method, such as multivariate normality for the
default ML method. Report values of standardized
skew and kurtosis indexes for continuous outcomes.
Also verify that relations between continuous variables
are linear. Curvilinear relations are no problem, if the
researcher (1) detects them and (2) includes the appro-
priate power terms in the analysis (e.g., Figures 7.5–7.6)
or uses a nonparametric estimation method.
• State clearly the type of data matrix analyzed,
which is ordinarily a covariance matrix (and possi-
bly means) for models with continuous outcomes or a
matrix of polychoric correlations (along with thresh-
olds and asymptotic covariances) for ordinal indicators.
If just a Pearson correlation matrix with no standard
deviations is analyzed for continuous data, then use an
appropriate estimation method that is intended for ana-
lyzing correlation structures.
• If the data are nested, such as repeated measures
or collected in complex sampling designs, then explain
how nonindependence of the scores was taken into
account (e.g., correlated disturbances are specified for
repeated measures variables, a two-level model was
analyzed).
ESTIMATION
Undetected problems at earlier stages may make some
of the complications described next more likely to hap-
pen:
• State which SEM computer tool was used (and its
version), and list the syntax for your final model in an
appendix. If the latter is not feasible due to length limi-
tations, then post syntax along with other supplemental
materials for a journal article. If you are controlling
the analysis through a graphical user interface that can
automatically write syntax for your model, then post
that syntax file. That is, be transparent regarding both
the data and model specification as it was actually ana-
3/22/2023 2:06:11 PM

lyzed. For even greater transparency, post the syntax
for the analysis of earlier versions of your final model,
too (e.g., Sauvé et al., 2021).
• Post the output file for your final model. If output
about the residuals is optional, then request that output
so that the reader can understand both global fit and
local fit of your model.
• Check your computer syntax carefully, then check
it again. Just as in manual data entry, it is easy to make
an error in syntax that misspecifies the model, data, or
analysis options. Although SEM computer tools have
become easier to use, they still cannot detect a mistake
that is logical rather than a syntax error. A logical error
does not cause the analysis to fail but instead results
in an unintended specification, for instance, Y1 → Y2
is specified when Y2 → Y1 is intended. Verify that the
model analyzed was actually the one that you intended
to specify.
• State the estimation method used, even if it was
default ML. If a different estimator is used, then clearly
state this method and give your rationale for selecting
it, such as robust DWLS for ordinal data. Justify the
application of a method for continuous data, such as
robust ML, to the analysis of ordinal data (e.g., there
are ≥ 6 response categories for Likert scale items and
item response histograms are reasonably symmetrical).
• Say whether estimation converged and whether
the solution is admissible. Describe any complica-
tions, such as failure of iterative estimation or Hey-
wood cases, and how such problems were handled (e.g.,
increasing the default limit on the number of iterations).
Remember that SEM computer programs do not always
print warning or error messages for inadmissible solu-
tions, so you must carefully inspect the entire output.
Likewise, do not interpret results from a solution that is
not admissible as it is untrustworthy.
• Never retain a model based solely on values of
global fit statistics. Specifically, do not uncritically
rely on cutting points or thresholds for approximate fit
indexes, whether such thresholds are static or dynamic,
to justify the retention of the model, especially if that
model failed the chi-square test or the endogenous vari-
ables are not continuous. Estimate and report the power
of the model chi-square test. If a model is retained yet
the power of the chi-square test is low, then explicitly
acknowledge that the test is unlikely over random sam-
ples to detect a false model.
Pt4Kline5E.indd 421
Best Practices in SEM 421
• Whenever possible, conduct local fit assessment;
that is, inspect fit at a more molecular level by examin-
ing the residuals, including implied conditional inde-
pendencies based on the d-separation criterion or cova-
riance, standardized, normalized, correlation, mean, or
threshold residuals generated in more standard kinds
of analyses. Treat significance levels of the residu-
als just mentioned, such as standardized residuals for
covariance residuals, with caution. In smaller samples,
such tests can fail to be significant even when the cor-
responding discrepancy between sample and predicted
values is substantial. In very large samples, these sig-
nificance tests can signal discrepancies that may be
considered trivial in magnitude.
• State the decision rule(s) used to select one model
over another. Report the results of the chi-square dif-
ference test for relevant comparisons of nested models.
If you compare the relative fits of alternative-but-not-
nested models with predictive fit indexes, such as the
AIC or BIC, do not forget that the particular rank order
indicated by the statistic is subject to sampling error;
that is, the model preferred by the index may not be
the true model in the population. The amount of this
sampling error in model selection also increases along
with the sample size instead of getting smaller. These
problems explain why replication is a gold standard in
science, not statistical prediction about the model that
is most likely to replicate in hypothetical future stud-
ies.
• Remember that equality constraints for the same
parameter, such as cross-group equality constraints in
multiple-group analyses, usually apply in the unstan-
dardized solution only. It is expected that values of the
standardized estimates for the same parameter will
be different across the groups. Keep in mind also that
values of standardized parameter estimates are, in gen-
eral, not directly comparable across groups.
• Assuming the model is identified, watch out for
empirical underidentification, which can occur due to
data-related problems such as extreme multicollinear-
ity or estimates of key parameters that are close to zero,
close to their absolute maximum values, or nearly equal
to each other. Measurement models where some com-
mon factors have just two indicators or nonrecursive
structural models with causal loops may be especially
susceptible to empirical underidentification. Respecifi-
cation of a model when the data are the problem may
lead to a specification error.
3/22/2023 2:06:11 PM
 422 Advanced Techniques
• Comparing group means on observed variables is
more complicated than simply applying the standard
t test for independent samples. Doing so requires that
scores in both groups measure the same conceptual
variable as approximated by common factors or by
composites. For reflective measurement models, direct
comparison of group mean differences on observed
variables requires strict invariance, or the assumption
of equal factor loadings, intercepts, and error vari-
ances and covariances over groups; otherwise, appre-
ciable differences in the parameters just mentioned
can confound real (i.e., latent) group differences on the
observed variables.
• Establish strong measurement invariance in order
to meaningfully compare group means on common
factors. This is because group differences in factor
loadings or intercepts say that the indicators do not
measure the common factors in the same way across
the groups. Formal comparison of groups on factor
variances or covariances requires only weak invari-
ance, or cross-group equality of the unstandardized
factor loadings.
RESPECIFICATION
Except when working in a strictly confirmatory mode,
respecification is part of most SEM analyses. It is cru-
cial to get right the things considered next:
• Explain the theoretical basis for respecifying a
model; that is, how are the changes justified? Indicate
the particular statistics, such as correlation residuals,
standardized residuals, or modification indexes, con-
sulted in respecification and how the values relate to
theory.
• Differentiate plainly between results from a priori
specifications versus those found after fitting the model
and otherwise examining the data. A specification
search guided entirely by statistical criteria is unlikely
to lead to the true model. Use your knowledge of theory
and empirical findings to inform the use of such statis-
tics.
• State clearly the nature and number of respecifica-
tions, such as how many free parameters were added or
dropped and which ones?
• Remember that if the final model is quite differ-
ent from your initial model, you need to reassure your
Pt4Kline5E.indd 422
readers that its specification was not merely the result of
chasing sampling error. If there is no such rationale, the
model may be overparameterized (good fit is achieved
at the cost of too many parameters), and results from
such models are unlikely to replicate. It is usually bet-
ter to retain no model in this case. This is a perfectly
acceptable outcome, if there is no theoretically defensi-
ble respecification that leads to satisfactory model–data
correspondence.
TABULATION
At the conclusion of the analysis, you must organize the
statistical results so that they can be reported. Here are
some suggestions for doing so in a clear and thorough
way:
• Report the parameter estimates for your model (if
a model is retained). This includes the unstandardized
estimates, their standard errors, and the standardized
estimates. It is an error to report just the standardized
solution. Explain how the standardized solution was
derived both in single-group analyses (e.g., all variables
standardized vs. common factors only) and in multiple-
group analyses (e.g., within-group standardization vs.
common metric standardization).
• Do not indicate anything about statistical signifi-
cance for the standardized parameter estimates unless
their standard errors are also included in computer
output. This is because p values are typically different
for unstandardized parameter estimates and their stan-
dardized counterparts.
• Report information about the residuals, either in
text, in a table, in an appendix, or as part of supplemen-
tal materials. Show your readers the details of fit. Just
reporting values of global fit statistics is inadequate, and
doing so can give the impression that the researcher is
trying to hide something. As a reviewer, I never accept
the failure to describe the residuals for analyses where
residuals are available in the output. Sometimes when
provided, those residuals do not suggest a problem
with local fit. But I have seen many examples where
the residuals indicate grossly poor fit for certain pairs
of measured variables even though values of global fit
statistics are not problematic (i.e., the model should not
be retained). Just as in regression analysis, the residuals
matter in SEM, too.
3/22/2023 2:06:11 PM

• Always report the model chi-square (or compa-
rable global fit statistic) and its degrees of freedom and
p value in analyses where the computer generates these
values. If the model fails the chi-square test, then explic-
itly state this result and tentatively reject the model. Do
not hem and haw, or avoid making a definite statement
here. For example, do not falsely claim that the chi-
square test is somehow “biased” by large sample size
or that its value is always inflated by sample size (true
for false models only). Reporting the model chi-square
without its p value comes across as an attempt to hide
bad news (i.e., the model failed the exact-fit test).
• Report, if possible, the values of a minimal set of
approximate fit indexes that include the RMSEA and its
90% confidence interval, CFI, and SRMR. The failure
to report the RMSEA confidence interval can be seen as
an attempt to hide an unfavorable result about the upper
bound of that interval. If the confidence interval based
on the RMSEA is not available in a particular type of
analysis (check the documentation for your computer
tool), then say so. Do not blindly refer to thresholds
for approximate fit statistics that supposedly indicate
“good” fit (they don’t work for all models or data). Avoid
selective reporting of the values of just those fit statistics
that favor your model. Explain the specification of the
baseline model in your computer tool for the CFI, which
is a comparative approximate fit index.
• Report information for individual outcome vari-
ables about the explanatory power of their presumed
direct causes, such as R2 for continuous endogenous
variables in recursive models or blocked-error R2 for
outcomes involved in nonrecursive relations. Remem-
ber that R2 in computer output for an ordinal indicator
in categorical CFA applies to the corresponding latent
response variable, and thus not directly to that indica-
tor. Also keep in mind that R2 for individual outcomes
has basically nothing to do with global model fit. Inter-
pret effect sizes (e.g., unstandardized or standardized
path coefficients, R2) in reference to results expected in
a particular research area.
INTERPRETATION
Issues in the interpretation of SEM results for various
kinds of effects and models are considered next:
• Do not automatically interpret “closer to fit” as
“closer to truth.” Close model–data correspondence
Pt4Kline5E.indd 423
Best Practices in SEM 423
could reflect any of the following (not all mutually
exclusive) possibilities: the model (1) accurately reflects
reality; (2) is an equivalent or near-equivalent version
of the one that corresponds to reality but itself is incor-
rect; (3) fits the data in a nonrepresentative sample (i.e.,
yours) but has poor fit in the population; or (4) has so
many freely estimated parameters that it can hardly
have poor fit even if it were grossly misspecified. In a
single study, it is usually impossible to determine which
one of these scenarios explains the acceptable fit of the
researcher’s model. If the analysis is never replicated,
then we will never know. This is another way of say-
ing that SEM is more useful for rejecting a false model
than for somehow “confirming” whether a given model
is actually true, especially without replication. For the
same reasons, close fit to the data does not “prove” the
directionality specifications (causal effects) represented
in the model.
• Do not confuse statistical significance with effect
size or whether results are clinically, theoretically, or
practically significant. Be careful not to commit one
of many kinds of cognitive errors about statistical sig-
nificance (e.g., the false belief that “significant” results
are real and not due to chance). Do not be dazzled by
asterisks (i.e., statistical significance), for they do not
light the path to truth in SEM—nor in any other kind of
statistical analysis.
• Do not automatically refer to estimates of indirect
effects in structural models as indicating “mediation” in
cross-sectional designs where all variables are concur-
rently measured. This is because mediation is a strong
causal hypothesis that generally requires time prece-
dence in measurement among putative cause, mediator,
and outcome variables. The only alternative in a cross-
sectional design is a strong argument about conceptual
timing that would convincingly rule out equivalent
models where some direct effects are reversed among
the presumed cause, mediator, or outcome in the origi-
nal model. If the causal variable is experimental but the
mediator is an individual difference variable, be espe-
cially wary that omitted common causes of the media-
tor and the outcome could bias the results.
• Do not commit the naming fallacy, or the false
belief that naming a common factor or composite
means that the corresponding theoretical concept is
understood. Factor or composite names are not expla-
nations. For example, if a three-factor CFA models fits
the data, this does not prove that the names assigned
3/22/2023 2:06:11 PM
 424 Advanced Techniques
to the factors by the researcher are correct. Alternative
explanations of factors are often possible in many, if not
most, factor analyses.
SUMMARY
So concludes this journey of discovery about SEM. As
on any guided tour, you may have found some places
along the way more interesting or relevant than others.
You may decide to revisit certain places by using par-
ticular techniques in your own work. In any event, I
hope that reading this book has given you new ways
of looking at your data and hypotheses. Use SEM in
all its guises and forms to address good questions and
to provide new perspectives on older ones, but use it
directed by good sense and strong domain knowledge.
Use it also as a way to reform methods of data analysis
by focusing more on models instead of specific effects
analyzed with traditional significance tests. And thank
you for your attention, hard work, dedication, and most
of all for including me as part of your journey. It has
Pt4Kline5E.indd 424
been a pleasure. As Garrison Keillor says at the conclu-
sion of The Writer’s Almanac, the daily podcast about
poetry, literature, and history: Be well, do good work,
and keep in touch.
LEARN MORE
McCoach et al. (2007) outline types of inference errors in
SEM, Tomarken and Waller (2005) survey common misun-
derstandings, and Tu (2009) addresses the use of SEM in
epidemiology and reminds us of its limitations.
McCoach, D. B., Black, A. C., & O’Connell, A. A. (2007).
Errors of inference in structural equation modeling. Psy-
chology in the Schools, 44(5), 461–470.
Tomarken, A. J., & Waller, N. G. (2005). Structural equa-
tion modeling: Strengths, limitations, and misconcep-
tions. Annual Review of Clinical Psychology, 1(1), 31–65.
Tu, Y.-K. (2009). Commentary: Is structural equation model-
ling a step forward for epidemiologists? International
Journal of Epidemiology, 38(2), 549–551.
3/22/2023 2:06:11 PM
 SUGGESTED ANSWERS TO EXERCISES
Suggested Answers to Exercises

CHAPTER 4

1. There is some slight rounding error in these calcula-
tions working from standard deviations (see Table 4.1):
s X2 = 6.20482 = 38.4995
sW2 = 14.57742 = 212.5006
sY2 = 4.69042 = 21.9999
covXW = .4699(6.2048)(14.5774) = 42.5024
covXY = .6013(6.2048)(4.6904) = 17.4996
covWY = .7496(14.5774)(4.6904) = 51.2530
2 2
2. Given s X = 12.00 and sY = 10.00, the covariance and
the out-of-bounds correlation are
covXY = rXY 12.00 × 10.00
    = rXY (10.9545) = 13.00
rXY = 13.00/10.9545 = 1.19
3. The full covariance matrix computed with pairwise
deletion for variables X, W, and Y, respectively, is
86.4 15.9 –26.3333
15.9 5.2 –10.6667
–26.3333 –10.6667 10.0
I used the R code in Topic Box 4.1 to input the
covariance matrix just listed and generate the
results described next. The eigenvalues are (98.229,
7.042, –3.671), and the determinant is –2,539.380.
The matrix is clearly NPD. The correlation matrix
implied by the covariance matrix for these data
is presented next in lower-diagonal form with an
out-of-bounds entry for the correlation between
W and Y:
1.0
.7501 1.0
–.8959 –1.4792 1.0
4. Listed next is the syntax for R that reads in the data
as an array and generates the box plot with values
for the requested parts of diagram or data:
scores <- rep(c(10,11,12,13,14,15,16,
17,27),times=c(5,15,14,13,5,5,4,1,
1))
boxplot(scores, horizontal = TRUE,
frame = FALSE)
a <- boxplot.stats(scores)$stats

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 b <- boxplot.stats(scores)$out Note that the computation of hinges for boxplots
SUGGESTED ANSWERS TO EXERCISES

values <- append(a,b) can vary over software, so don’t worry if your val-
text(x = values, labels = values,
ues for H1 and H2 are not exactly the same as those
y = 1.25)
just listed if you used a different computer tool.
The box plot generated in R is displayed next:
5. In a normal distribution, there is zero skewness
10 11 12 13.5 17 27
and kurtosis, so the distribution is clearly not nor-
mal. These results fall just short of a rule of thumb
for severe nonnormality (i.e., < 2.0 and < 7.0 for,
respectively, absolute skewness and kurtosis), but
that rule is not universal.

6. Base R 4.2.2 had no native functions for skewness

10 15 20 25
or kurtosis, so I used lessR (Gerbing, 2022). For the
The lowest and highest scores that are not outliers data in Exercise 4, G1 = 3.13 and G 2 = 15.93. Before
are 10 and 17; the median is 12; the hinges are H1 = applying a transformation, add the constant –9 so
11 and H2 = 13.5; H2 – H1 = 2.5; and the outlier is that the lowest score is 1.0. For a square root trans-
27, which exceeds formation, G1 = 1.29 and G 2 = 4.35. Even greater
reduction in nonnormality is afforded by the trans-
13.5 + 1.5(2.5) = 20.75 formation ln X, for which G1 = 0 and G 2 = .60.

CHAPTER 6

1. The modified DAG for Figure 6.1(e) that depicts 2. Both confounders and instruments directly affect
residual confounding is presented next: causal variables, but instruments do not directly
UC P influence the outcome, whereas confounding vari-
ables do. Proxies for unmeasured confounders or
measured confounding variables are usually treated
X Y
as covariates in standard regression analysis, but
The modified graph implies four paths between X instruments are analyzed in special instrumental
and Y, three of which are biasing paths: variable regression techniques, such as 2SLS.

X←P→Y
3. The graph presented next
X UC P→Y
X UC Y Y→A→X
X→Y implies that same conditional independence, or
X ⊥ Y | A, as in Figures 6.2(a) and 6.2(b), so all three
Regressing Y on X and P will close the first and sec-
graphs are d-separation equivalent.
ond biasing paths just listed, but the third biasing
path that involves only the unmeasured confounder
is not entirely closed. Thus, the coefficient for X will 4. These definitions are from Elwert and Winship
be biased by the amount of residual confounding (2014) for a cause X and its outcome Y: Confound-
due to P not perfectly measuring all of UC. ing bias results from the failure to condition on a

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 common cause of X and Y; overcontrol bias results The second graph is

SUGGESTED ANSWERS TO EXERCISES

from conditioning on a variable (or its descendant)
along a causal pathway between X and Y; and col-
X Y C
lider bias is due to conditioning on a collider (or
its descendant) on a noncausal pathway between X where C is a direct cause of only Y. Regressing Y on
and Y. both X and C will close the biasing path
X C→Y
5. Listed next are sets of conditional independencies
implied by the graphs in Figures 6.3(a)–6.3(c):
8. In Figure 6.5(a), there are three back-door paths
(a) E ⊥ S1 | A (b) E ⊥ A (c) E ⊥ S1 | A between D and Y, including
    E ⊥ S2 | A S1 ⊥ S2 | A, E
D←B→Y
6. The DAG shown next D←A→X→Y
D←A→X→E→Y
A
E S2
There are no colliders along any biasing path. The
adjustment set (A, B) would block all three paths
S1
just listed. The set (A, B) is also minimally suffi-
cient because conditioning on either member of this
represents the hypotheses that (a) E, A, and S1 are pair by itself would not close all three paths. The
all direct causes of S2; (b) E indirectly affects S2 set (B, X) is also sufficient because conditioning on
through A; and (c) E and S1 have a common latent both covariates would also close all three back-door
cause. In this graph, estimating the total effect of E paths. It is also minimally sufficient because both
by regressing S2 on both E and S1 (but not also A) covariates are required to close all biasing paths.
closes the only biasing path, or There are larger adjustment sets that identify the
E S1 → S2 total effect, such as (A, B, X), but they are not mini-
mally sufficient.

7. In the DAG presented next where C (a covariate) is

a direct cause of only X (exposure), 9. The sets (B, X) and (D, X) each d-separate vari-
ables E and Y in a modified version of Figure 6.5(a),
where the direct effect from E to Y is deleted. There
C X Y are larger sets of variables that d-separate E and Y,
such as (B, D, X), but they are not minimally suf-
regressing Y on both X and C will close the biasing ficient. There are no smaller sets (i.e., < 2 variables)
path that d-separate variables E and Y. Thus, (B, X) and
X←C Y (D, X) are the minimally sufficient adjustment sets
that each identify the direct effect of E on Y.

CHAPTER 7

1. There are 2(3)/2 = 3 observations for Figure 7.2(a) and the disturbance), and 1 coefficient for the effect
but 4 free parameters, including 2 variances (of X of X on Y, so df M = 3 – 4 = –1.
and the disturbance for Y), 1 covariance (between X

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 2. In the alternative version of Figure 7.2(b) presented
SUGGESTED ANSWERS TO EXERCISES
next
P
X Y
variable X covaries with P while P is still a cause
of Y. Because X and P are specified as correlated
causes, the overlap between them is controlled for
when the coefficient for the effect of X on Y is com-
puted. The model just presented and Figure 7.2(b)
are equivalent because both will perfectly fit the
data (i.e., df M = 0 for both models).
3. For Figure 7.3(a), it is assumed that exogenous vari-
ables X and W covary but for reasons unknown,
their scores are perfectly reliable (rXX = rWW = 1.0),
and there is zero interaction between them in their
strictly linear effects on Y. Also, directionality is
correctly specified (X → Y, W → Y), and all unmea-
sured causes of Y are independent of both X and W.
4. With v = 4 variables in Figure 7.4(a), there are
4(5)/2, or 10 observations. Free parameters include
4 variances (of X1, X2, and two error terms), 1 cova-
riance (of X1 and X2), and 5 coefficients for direct
effects for a total of 10, so df M = 10 – 10 = 0. There
is a single directed (causal) path between the two
endogenous variables, or Y1 → Y2, and three undi-
rected (back-door, biasing) paths for spurious asso-
ciations that involve common causes, or
Y1 ← X1 → Y2  Y1 ← X2 → Y2
and  Y1 ← X1 X2 → Y2
Even if Y1 → Y2 = 0, the two variables should covary
due to expected noncausal associations.
CHAPTER 8
1. Given the p values in Table 8.2 at three-decimal
accuracy,
428
AnswrsKline5E.indd 428
5. The correlation is practically zero, or rXY = –.047,
but the association is mainly quadratic. When Y is
regressed on both X and X2, R = .927. The equation
is
Ŷ = –.052X + .083X2 + 7.355
which defines the quadratic regression line plotted
next:
15
10
Y
5
−5 0 5
X
6. For variable W, M W = 16.375 and SDW = 6.022,
so the three target values are W = 10.353, 16.375,
22.387. When Y is regressed on X and W, the mul-
tiple correlation is R = .183, but when Y is regressed
on X, W, and XW, the multiple correlation is R =
.910. The unstandardized equation is
Ŷ = 1.768X + .734W – .108XW – 3.118
For every 1-point increase in W, the slope of the
linear regression of Y on X decreases by .108. By
entering the three different values for W into the
unstandardized regression equation, we generate
equations for the three simple linear regressions of
Y on X listed next:
W = 10.353, Ŷ = .650 X + 4.481
W = 16.375, Ŷ = –.001 X + 8.901
W = 22.387, Ŷ = –.650 X + 13.314
Your plot of the simple regression lines just listed
should resemble Figure 7.9 for the same data.
ln (.260) + ln (.455) + ln (.087)
+ ln (.118) + ln (.048) = –9.750
C = –2 (–9.750) = 19.500
3/22/2023 4:48:16 PM
 which is similar to the value calculated by the com-
puter for these data, C = 19.521, but at greater than
3-decimal accuracy as in these hand calculations.
2. In Table 8.3, a 1-point increase in the raw score
metric of the hardy variable predicts a decrease of
.203 points in raw score metric of the stress vari-
able. The significance test is z = –.203/.045 = –4.51,
p < .01.
3. In Table 8.3, a 1-point increase in stress predicts an
increase of .574 points in illness, controlling for fit-
ness. The significance test is z = .574/.089 = 6.45,
p < .01.
4. In Table 8.4, fitness and stress explain .177 of the
total variance for illness, so the standardized error
variance is 1 – .177, or .823. The observed variance
is 3,903.75, so the unstandardized error variance is
.823 (3,903.75), or 3,212.786.
5. In Figure 8.1(b), for every increase in exercise of 1
standard deviation, fitness is expected to increase
by .390 standard deviations; and stress is expected
to decrease by .230 standard deviations, given an
increase of 1 standard deviation in hardy.
CHAPTER 9
1. In Table 9.2, the quantity 1 – R2 = .840 = 3,212.567/σˆ 2I
where σˆ 2I is the predicted variance for illness. Thus,
σˆ 2I = 3,212.567/.840 = 3,824.485
which is very close to the value in lavaan output
from the fitted covariance matrix for this variable,
or 3,824.102 (see the output file for analysis 1, Table
9.1).
2. There is a single noncausal path between fitness and
stress in the covariance structure of Figure 9.1; it is
AnswrsKline5E.indd 429
6. In Figure 8.1(a), the unstandardized indirect effect
SUGGESTED ANSWERS TO EXERCISES
of hardy on illness through stress is estimated as
–.203(.574), or –.117 at three-decimal accuracy. This
result indicates that illness is expected to decrease
by .117 points in its original metric while holding
hardy constant but decreasing stress to whatever
value it would attain under a 1-point increase in the
original metric of hardy. The standardized estimate
is –.230(.308), or –.071, so illness should decrease
by .071 standard deviations while keeping hardy
constant and decreasing stress by the value it would
attain, given an increase in hardy of a full standard
deviation.
7. In Table 8.3 for unstandardized variables, a = .108,
SEa = .013 for the effect of exercise on fitness and
b = –.849, SEb = .162 for the effect of fitness on
illness controlling for stress. The value of Sobel
approximate standard error for ab = –.092 is calcu-
lated as
=SE ab .108 2 (.162 2 ) + (−.849
= 2
)(.0132 ) .021
8. In Table 8.5 for the indirect effect of exercise on
illness through fitness, the Sobel test result for the
product estimator is z = –.092/.021 = 4.38, p < .01;
the test result for the estimator based on hardy as
the covariate is z = –.080/.048 = 1.67, p = .096; and
the test result for the estimator based on stress as
the covariate is z = –.059/.046 = 1.28, p = .200.
Fitness ← Exercise Hardy → Stress
The product of the standardized coefficients (Table
9.2) for this tracing is
.390 (–.030) (–.230) = .003
so the predicted correlation is .003. The sample
correlation is –.130 (Table 4.3), so the correlation
residual equals (–.130 –.003), or –.133.
429
3/22/2023 4:48:16 PM
 2
3. For these data, M X = 11.00, s X = 38.50, MY = 25.00, 4. The intercept in Figure 9.1 for regressing illness on
SUGGESTED ANSWERS TO EXERCISES

2
and sY = 22.00. fitness and stress is 114.874, which is the predicted
score on illness in its raw score metric when the
a. Ŷ = .455 X + 20.000, R2 = .3616. scores on both fitness and stress equal zero.
b. Ŷ = .455 X + 20.000 UNIT, the coefficient for
the constant is the intercept for the regression of 5. The means of all variables are zero in the Std.all
Y on X in the standard analysis (3a). solution, so all means and intercepts in the mean
structure of Figure 9.1 would equal zero in this
c. X̂ = 11.000 UNIT, the coefficient for the con-
standardized solution.
stant is the mean of X.
d. Disturbance variance = (1 – .3616) (22.000) =
6. In Figure 9.1, the coefficient for the direct pathway
14.054:
from the constant to illness is 114.874. There are
14.054 two parents of illness, fitness and stress. Earlier the
1
predicted mean for fitness was calculated as 67.10.
11.000 20.000 DY The predicted mean for stress equals the sum of the
1
intercept for its regression on hardy, 24.00, and the
product of the mean of its parent, hardy, and the
38.500 X Y
.455 regression coefficient, or 0(–.203) = 0; that is, the
predicted mean for stress is 24.00. The unstandard-
Predicted mean for Y = 20.000 + 11.000 (.455) = ized regression coefficients for regressing illness on
25.000. The mean structure has no degrees of free- fitness and stress are, respectively, –.849 and .574,
dom, so the predicted and observed means for Y are so the predicted mean for illness is
equal.
114.8714 – .849 (67.10) + .574 (24.00) = 71.68
which equals the sample mean for illness, 71.67,
within slight rounding error (Table 4.3).

CHAPTER 10
11.107 − 5 
1. The result chiML = 0 means that the model has per- CFI = 1 –   = .961
fect fit, but ê = 0 says only that chiML ≤ df M.  165.608 − 9 

4. In lavaan, free parameters of the baseline model

2. In Table 10.2, ln L 0 = –9,429.689, ln L1 = –9,424.135,
include the variances and covariances of the exog-
so
enous variables, exercise and hardy, and the vari-
–2 (–9,429.689) + 2 (–9,424.135) = 11.108, ances of the endogenous variables, fitness, stress,
and illness, which have no covariances with any
which matches within slight rounding error
other variable, for a total of 6 free parameters. The
chiML(5) = 11.107 for this analysis.
number of observations is 5(6)/2 = 15, so df B = 15 –
6 = 9. The lavaan syntax listed next specifies the
3. In Table 10.2, N = 373, chiML (5) = 11.107, and baseline model just described. By lavaan default,
chiB(9) = 165.608, so the variances of the exogenous variables are speci-
11.107 − 5 fied as free model parameters:
RMSEA = = .057
5(372)
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AnswrsKline5E.indd 430 3/22/2023 4:48:17 PM

 roth.baseline <- ‘ 5. In Table 10.3 at N = 373, if the model does not have

SUGGESTED ANSWERS TO EXERCISES

exercise ~~ hardy close fit in the population, the probability of cor-
fitness ~~ fitness
rectly rejecting in significance testing the close-
stress ~~ stress
fit hypothesis is .317. The minimum sample size
illness ~~ illness ‘
required for power ≥ .90 is N = 1,997.
Fitting the baseline model just specified to the data
in Table 4.3 in default ML generates chiB (9) =
165.608.

CHAPTER 11

1. The scaled chi-square difference statistic is calcu- chiD (1) = 11.107 – 5.937 = 5.170, p = .03
lated for these results as follows:
Values of approximate fit indexes are RMSEA =
df D = 17 – 12 = 5; chiD (5) = 57.50 – 18.10 = 39.40 .036, 90% CI [0, .092], CFI = .988, SRMR = .034.
57.50 18.10 The two largest absolute correlation residuals are
c1 = = 2.028; c2 = = 1.567 –.095 for hardy and illness and .082 for hardy fit-
28.35 11.55
39.40 39.40 ness. The standardized residual for hardy and ill-
chiSD (5) = = ness (–1.963) is just significant at the .05 level.
[2.028(17) − 1.567(12)] / 5 3.134
Although the respecified model has better global fit
         = 12.57, p = .028
than the original model, there remain concerns at
the level of local fit.
2. The model chi-square is predicted to decrease by
MI = 3.907, which would be a significant reduc-
4. With 5 observed variables in Figure 11.1(b), there
tion at the .05 level (p = .048). The actual reduction
are 5(6)/2 = 15 observations. Free parameters
is chiD (1) = 3.972. The expected unstandardized
include 5 variances (of illness symptoms, neurolog-
parameter change (from zero) by freely estimat-
ical dysfunction, and disturbances for diminished
ing the disturbance covariance between fitness and
SES, low morale, and poor relationships), 1 covari-
stress is –56.529, and the estimated standardized
ance (between illness symptoms and neurological
parameter change for the same respecification is
dysfunction), and 6 direct effects for a total of 12,
–.102. These estimates suggest that stress and fit-
so df M = 15 – 12 = 3.
ness share at least one common unmeasured cause
that acts by increasing fitness while reducing stress.
5. In Table 11.4, for the psychosomatic model,
3. Syntax for the respecified path model with a direct AIC = –2 (–8,572.844) + 2 (10) = 17,165.688
effect from fitness to stress in lavaan is listed next: AIC2 = 40.488 + 2 (10) = 60.488
roth2.model <- ‘ BIC = –2 (–8,572.844) + 10 (ln 469) = 17,207.194
fitness ~ exercise BIC2 = 40.488 + 10 (ln 469) = 101.994
stress ~ fitness + hardy
illness ~ fitness + stress ‘ and for the conventional medical model,
The respecified model passes the chi-square test, AIC = –2 (–8,554.222) + 2 (12) = 17,132.444
chiML (4) = 5.937, p = .204, and the reduction in the AIC2 = 3.245 + 2 (12) = 27.245
model chi-square from the original model is signifi- BIC = –2 (–8,554.222) + 12 (ln 469) = 17,182.251
cant at the .05 level, or
BIC2 = 3.245 + 12 (ln 469) = 77.052

431

AnswrsKline5E.indd 431 3/22/2023 4:48:17 PM

 which match the results in Table 11.4 within slight
SUGGESTED ANSWERS TO EXERCISES
rounding error.
6. The conventional medical model in Figure 11.1(b)
passes the chi-square test, chiML (3) = 3.245, p = .355,
and results for approximate fit indexes do not signal
a gross global fit problem: RMSEA = .013, 90%
CHAPTER 12
1. In Table 12.6, for every 1-point increase in achieve-
ment in its original metric, there is in the Black
sample a decrease of .493 points in delinquency,
controlling for SES, effort, and verbal IQ. The
significance test for this result is z = –.493/.138 =
3.572, p < .01. In the White sample, the comparable
decrease is .087 points, and z = –.087/.124 = .701,
p = .483.
2. For the Black sample in Table 12.6, the R2 values
for achievement and delinquency are, respectively,
1 – .697 = .303 and 1 – .855 = .145. The correspond-
ing values in the White sample for achievement and
delinquency are, respectively, 1 – .668 = .332 and
1 – .913 = .087. Because R2 is a standardized effect
size, its values are not directly comparable over
groups with different variances and covariances
(see Table 12.1). Instead, the unstandardized distur-
bance variances in Table 12.6 are directly compa-
rable over groups. For example, there is somewhat
CHAPTER 14
1. For v = 3 indicators, the number of observations
is 3(4)/2, or 6. Free parameters include 1 factor
variance, 3 indicator error variances, and 2 factor
loadings (the third is fixed to 1.0 for the reference
variable) for a total of 6. Thus, df M = 6 – 6 = 0 (the
model is just-identified).
2. For v = 2 indicators, there are 2(3)/2, or 3 obser-
vations. Free parameters include 1 factor variance,
432
AnswrsKline5E.indd 432
CI [0, .080], CFI = .999, and SRMR = .016. Abso-
lute correlation residuals range from 0 to .041, and
there are no significant standardized residuals, so
local fit is also not grossly problematic. Remember
that these results do not confirm the correctness of
the original model, and there are equivalent ver-
sions, too.
more unexplained variance for delinquency in the
Black sample (2.306) than in the White sample
(1.881).
3. In Table 12.7, the ratios of unstandardized indirect
effects to their standard errors are all < 1.0 in the
White sample. In the Black sample, z = –.016/.005
= 3.20, so the unstandardized indirect effect of ver-
bal IQ on delinquency through achievement is sta-
tistically significant at the .01 level. The other two
unstandardized indirect effects are not significant
in the Black sample.
4. In Table 12.7, the unstandardized indirect effect
of verbal IQ on delinquency through achievement
in the Black sample is –.016. Thus, while holding
verbal IQ constant while increasing achievement to
the level it would attain under a 1-point increase in
verbal IQ, the level of delinquency is expected to
decline by .016 points in its raw score metric.
2 indicator error variances, and 1 factor loading (the
other is fixed to 1.0) for a total of 4, so df M = 3 – 4 =
–1 (the model is underidentified).
3. In Figure 14.2(b), there are 6(7)/2 = 21 observations
and, assuming the variances for both factors are
fixed to 1.0, free parameters include 6 factor load-
ings, 6 indicator error variances, and 1 factor cova-
riance for a total of 13, so df M = 21 – 13 = 8.
3/22/2023 4:48:17 PM
 4. In Figure 14.2(c), the ECI constraint for indicators
X4 –X6 of factor B is
(d + e + f)/3 = 1.0,
which is equivalent to 3 – d – e – f = 0
5. In Figure 14.3, the number of observations is 8(9)/2
= 36, and model free parameters include 10 vari-
ances (of 2 factors and 8 indicator error terms), 6
factor loadings (2 are fixed to 1.0 as scaling con-
stants), and 1 factor covariance for a total of 17, so
df M = 36 – 17 = 19.
6. In a word, awful. To elaborate, absolute correlation
residuals range from .003 to .397, and the worst
results are for the pairs of indicators listed next:
Hand Movement, Word Order, .101
Number Recall, Word Order, .397
Number Recall, Gestalt Closure, –.130
A total of 9 standardized residuals are significant at
.05, including those for all 3 pairs of indicators just
listed. Not a pretty sight (i.e., local fit is poor).
CHAPTER 15
1. For v = 9 indicators in Figure 15.1(b), there are
9(10)/2 = 45 observations. Free parameters include
12 variances (1 for exogenous factor A, 2 for the dis-
turbances of endogenous factors B and C, and 9 for
indicator error terms), 6 factor loadings for indica-
tors that are not reference variables (2 per factor),
and 2 direct effects between the factors for a total of
20. Thus, df M = 45 – 20 = 25.
2. For v = 11 indicators in Figure 15.3, the number
of observations is 11(12)/2 = 66. Free parameters
include 15 variances (of 2 exogenous factors, 2 dis-
turbances for endogenous factors, and 11 indicator
error terms), 1 covariance between exogenous fac-
tors, and 4 direct effects between factors for a sub-
AnswrsKline5E.indd 433
7. The estimated factor correlation is .557 (Table
SUGGESTED ANSWERS TO EXERCISES
14.3). Structure coefficients computed with slight
rounding error are shown next:
Indicator Simultaneous
HM .497 (.557) = .277
NR .807 (.557) = .449
WO .808 (.557) = .450
Indicator Sequential
GC .503 (.557) = .280
TR .726 (.557) = .404
SM .656 (.557) = .365
MA .588 (.557) = .328
PS .782 (.557) = .436
8. The sample variance for Hand Movements is s2 =
3.402, or 11.560 (Table 14.2). In lavaan, the vari-
ance for this indicator for N = 200 is rescaled as
S2 = (199/200) 11.560, or 11.502. The standard-
ized loading for this indicator is .497 (Table 14.3),
so R2 = .4972, or .247. The standardized common
(explained) variance is .247(11.502), or 2.841. This
result is within the bounds of expected rounding
error from the estimated variance of the sequential
factor, 2.838 (Table 14.3).
total of 20. There is one unit loading identity (ULI)
constraint per factor, so the number of free factor
loadings is 3(2) + 1, or 7, across all four factors.
Thus, the total number of free parameters for the
whole model is 20 + 7 = 27, so df M = 66 – 27 = 39.
3. Given the standardized path coefficients in Table
15.5, for every increase in the cognitive ability of
a full standard deviation, the level of classroom
adjustment is expected to increase by .431 standard
deviations, while controlling for risk. A decrease of
.151 standard deviations in adjustment is predicted,
given an increase in risk of a full standard deviation
controlling for achievement.
433
3/22/2023 4:48:17 PM
 4. In Table 15.5, the estimated proportions of explained
SUGGESTED ANSWERS TO EXERCISES
variation for the endogenous factors are the comple-
ments of their standardized disturbances, or R2 =
1 – .498 = .502 for the achievement factor and R2 =
1 – .732 = .268 for the adjustment factor.
5. In Figure 15.6, v = 7 and the number of observations
is 7(8)/2 = 28. Free parameters include a total of 5
loadings, 6 error variances, and two 2 covariances
for indicators of the cognitive factor. The 3 other
free parameters are the variance of the cognitive
factor, the disturbance variance for the unaware-
ness factor, and the direct effect of cognitive level
on unawareness. The total number of free param-
eters is 16, so df M = 28 – 16 = 12.
6. For Figure 15.6, I used semTools to estimate the
power of the chi-square test for N = 193, df M = 12,
e0 = 0, e1 = .05, and a = .05, and the result is .284.
Thus, the likelihood of detecting a model that does
not perfectly fit the population data matrix over ran-
dom samples is just a bit over .28. The target sample
size for power to equal or exceed .90 is N = 729, or
nearly 4 times larger than the actual sample size—
see the output file for analysis 4 in Table 15.1.
7. The lavaan syntax for a model where SUMD is
regressed directly on the cognitive factor (i.e.,
treated as a single indicator in a path model with no
separate error term) is listed here:
sauveSR2.model <- ‘
CHAPTER 16
1. Given Equation 16.2, common variance for 4 ele-
ments is counted 4 times among the total variances
and 12 times among their covariances, or 2 × 4(3)/2
= 12, for a total of 16 times. In contrast, unique vari-
ance is counted only 4 times within the total vari-
ances. Thus, the relative contribution of common
variance to unique variance is 16:4, or 4:1.
434
AnswrsKline5E.indd 434
Cognitive =~ isl + islr + gml + ocl
+ cpal + gmr
isl ~~ islr
gml ~~ gmr
sumd ~ Cognitive ‘
The global fit of the model just specified to the data
in Table 15.6 is identical to that of Figure 15.6; that
is, the two models are equivalent (e.g., chiML(12) =
9.885 for both models). Their estimates differ only
for the symptom unawareness outcome:
Parameter Unst. St.
Figure 15.6
(separate error and disturbance terms)
Cognitive → Unaware –.105 –.254
Disturbance variance 1.060 .936
No separate error term
Cognitive → SUMD –.105 –.221
Disturbance variance 1.420 .951
Note. Unst., unstandardized; St., standardized.
When an outcome is measured with error but that
error is uncontrolled (i.e., the second set of results
listed in the table just presented), standardized
coefficients tend to be too small (i.e., –.221 vs.
–.254 when error is controlled), but unstandard-
ized coefficients are unaffected (i.e., –.105 in both
models). Disturbance variance both standardized
and unstandardized is greater in the analysis where
measurement error is not removed from the distur-
bance for the same outcome.
2. Fixing the error variance for the single indicator
to a constant and its unstandardized loading to
1.0 identifies the measurement part of the model.
The structural part of Figure 16.1 is recursive, so
it, too, is identified. Because the measurement and
structural parts of the model are both identified, the
whole model is identified (Rule 15.1).
3/22/2023 4:48:17 PM
 3. For v = 8 indicators in Figure 16.1, there are 8(9)/2
= 36 observations. Free parameters include 11 vari-
ances (2 for exogenous factors [acculturation, SES],
2 for disturbances of endogenous factors [stress,
depression], and 7 indicator measurement errors
[the error variance for SCL90D is fixed to equal a
constant]); 2 covariances (1 between a pair of exog-
enous factors and 1 between a pair of indicators); 4
factor loadings for indicators that are not reference
variables; and 3 direct effects on endogenous fac-
tors for a total of 20. Thus, df M = 36 – 20 = 16.
CHAPTER 17
1. The number of observations for Figure 17.1 is 5(6)/2
= 15. Free parameters include 2 factor loadings for
the mother and father-mother indicators, 2 factor
variances and 1 factor covariance, and 5 indicator
error terms for a total of 10. Thus, df M = 15 – 10 = 5.
2. Fixing the unstandardized loadings for both indica-
tors of marital adjustment, problems and intimacy,
to 1.0 assumes their metrics are the same, which
is not true in these data, so it is no surprise that
the reanalysis in lavaan with the constraints just
mentioned generates a Heywood case (the error
variance for intimacy is –37.158.)
3. The MIIV-2SLS estimate of factor covariance
in Table 17.3 is 157.495. Variances of the marital
adjustment and family-of-origin experiences factors
CHAPTER 18
1. The threshold t2 = .253 in Figure 18.1(b) is the
value of the normal deviate that corresponds to the
60th percentile in a normal distribution. It marks
that point on the continuous variable X* where the
responses on X shift from “2” for neutral to “3” for
agree.
AnswrsKline5E.indd 435
4. The OLS estimate for the standardized indirect
SUGGESTED ANSWERS TO EXERCISES
effect of acculturation on depression through
stress in analysis 4 for Figure 16.3 is .059 with a
standard error of .014. In the bootstrap percentile
method, the 95% confidence interval is [.034, .093].
The ML estimate in HO specification for the same
effect is .064 with a standard error of .017. Thus,
the expected increase in depression is about 6% of
a standard deviation while keeping acculturation
constant and increasing stress to whatever level it
would attain under an increase in acculturation of
one standard deviation.
estimated in this method are, respectively, 702.393
and 158.501, so the estimated factor correlation is
157.495
= .472
702.393 × 158.501
4. In the output for analysis 1, Table 17.1, sample
SRMR = .045 with a standard error of .014. The
p value for the exact-fit test is .196. The unbiased
estimate for population SRMR (designated as
"usrmr" in the output) is .032 with the 90% confi-
dence interval [–.013, .076]. In the close-fit test of
the null hypothesis where population SRMR = .05,
the p value is .749. Neither the exact-fit test nor the
close-fit test is failed in this analysis, but power is
probably low. The normal deviate for the Bentler-
type correlation residual of –.112 for the problems
and father indicators, or z = –2.421, is significant at
the .05 level.
2. The lavaan syntax to specify the model in Figure
18.2 but where the depression common factor is
scaled in the effects coding method is listed here:
radloff.model <- ‘
Depression =~ NA*x1 + a*x1 + b*x2
   + c*x3 + d*x4 + e*x5
5 - a - b - c - d - e == 0 ‘
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3/22/2023 4:48:17 PM
 Estimates for the unstandardized loadings of X1*
SUGGESTED ANSWERS TO EXERCISES
through X 5* are, respectively,
.889, .951, 1.142, .892, and 1.126
which average to 1.0. The estimated unstandardized
variance of the depression factor in the effects cod-
ing method is .469, which as expected is different
from the estimate of .370 in the reference variable
method where X1 is the reference variable (Table
18.2). Values of all other parameter estimates,
global fit statistics, and correlation residuals are
identical across the two methods to scale the com-
mon factor.
CHAPTER 19
1. In Figure 19.3(b), a total of 3 variables are excluded
from the equation for Y1, or (X2, X3, Y2); there are
2 excluded variables for Y2, or (X1, X3); and 4 vari-
ables are excluded for Y3, or (X1, X2, Y1, Y2). The
required minimum number of excluded variables
for each equation is 3 – 1 = 2, so the model meets
the order condition.
2. We can exclude Y3 from the system matrix for Fig-
ure 19.4(a) because it is recursively related to all
other variables in the model. Evaluation for Y1:
X1 X2 Y1 Y2
► Y1 1 0 1 1
Y2 1 0 1 1 → 0 → → Rank = 0
After crossing out all entries in the row for Y1, the
columns for X1, X2, and Y2 are also deleted because
there are 1s in the corresponding row for Y1. What
remains is a matrix with a single element that
equals zero, which is then deleted. Because no rows
remain in the final reduced matrix, the rank is zero,
so the equation for Y1 is underidentified. The same
conclusion is reached for Y2: The rank of the final
reduced system matrix for Y2 is zero, so its equation
is underidentified, too. Thus, the Figure 19.4(a) fails
the rank condition.
436
AnswrsKline5E.indd 436
3. The lavaan-generated thresholds for item X1 are
.772, 1.420, and 1.874 (Table 18.2). Using a normal
curve calculator or table, the cumulative propor-
tions that correspond to these normal deviate val-
ues are, respectively, .7799, .9222, and .9695. The
cumulative proportions of responses for X1 over the
four categories coded as (0, 1, 2, 3) in the data are,
respectively, .7799, .9222, .9696, and 1.0. (The last
value just listed is not a threshold.) These observed
proportions match those generated by the lavaan
thresholds within slight rounding error.
3. Figure 19.4(b) has a direct feedback loop with no
disturbance covariance and a single instrument (X
for Y1) and matches Figure 19.2(b) using the block
classification method. Thus, Figure 19.4(b) meets
the minimum requirement for identifying the
parameters of its causal loop.
4. Figure 19.4(b) fails the order condition for a mini-
mum of 2 – 1 = 1 excluded variable for each of two
endogenous variables; specifically, there are zero
omitted variables for Y1. The rank condition is also
failed for Y1:
X Y1 Y2
► Y1 1 1 1
Y2 0 1 1 → → Rank = 0
After crossing out the first row for Y1 and then
deleting all columns with 1s in the row for Y1, the
reduced system matrix is empty, so rank = 0. The
minimum rank under the rank condition is 2 – 1 =
1. The rank of the system matrix for Y2 is also zero.
5. If Figure 19.4(b) is respecified so that the distur-
bance covariance is a free parameter, an instrument
is required for Y2. That instrument should by theory
have a direct effect on Y2, but not also on Y1. For
3/22/2023 4:48:17 PM
 example, adding a second exogenous variable X2
and the path X2 → Y2 would identify the parameters
of the direct feedback loop, including the distur-
bance covariance (see Figure 19.3(a)).
6. Given v = 6 indicators, there are 6(7)/2 = 21 obser-
vations in the analysis of Figure 19.5. There are a
total of 4 variances of exogenous variables (1 for
monarchy, 1 for the information technology com-
CHAPTER 20
1. In Table 20.2, the product estimator for the unstan-
dardized indirect effect is –.028, which says that
for every 1-point increase in academic values in
its original metric, the level of deviant behavior
is expected to decrease by .028 points in its raw
scores metric through the effect of academic values
on deviance tolerance. The standardized indirect
effect is .291(–.479), or –.140, which says that devi-
ant behavior is predicted to increase by .14 standard
deviations, given an increase in academic values of
a full standard deviation transmitted through devi-
ance tolerance.
2. Given the results in Table 20.2:
P̂M = –.028/–.038 = .733
R̂ M = –.028/–.010 = 2.744
υ̂ = (–.140)2 = .019
The observed unstandardized indirect effect of
achievement values on deviant behavior through
deviance tolerance corresponds to 73.3% of the
total effect and is 2.744 times larger in magnitude
than the direct effect. The proportion of variance in
deviant behavior jointly explained by achievement
values and deviance tolerance while controlling for
spurious associations is .019, or 1.9%.
3. In Figure 20.3(a), there are 5(6)/2 = 15 observa-
tions and a total of 14 free parameters, including 5
variances (of 3 exogenous variables and of 2 distur-
bances), 4 covariances (3 among exogenous covari-
AnswrsKline5E.indd 437
mon factor, 2 for the disturbances of trust and insti-
SUGGESTED ANSWERS TO EXERCISES
tutional quality); 2 covariances between pairs of
exogenous variables (monarchy, technology and the
disturbances of trust and quality); 4 direct effects in
the structural model; 2 loadings in the measurement
model; and 4 error terms for indicators of common
factors for a total of 16 free parameters. Thus, df M =
21 – 16 = 5.
ances and 1 disturbance covariance), and 5 direct
effects, so df M = 1. The disturbance covariance is
in a bow-free pattern, so the model is identified.
Adding a direct effect from X at time 1 to Y at time
2 would result in a just-identified model (df M = 0)
with perfect fit to the data.
4. In Figure 20.3(a), no direct causal effect of X on Y is
represented in the model. That is, variable X cova-
ries with Y at time 1 and has an association with Y
at time 2 through two noncausal paths, or
X1 Y1 → Y2
X1 M1 → Y2
but the indirect effect of X at time 1 on Y at time 2
can be estimated by the product ab for a linear
model of continuous variables and no interactions.
5. The product a2 b2 in Equation 20.18 represents all
effects of X on Y that are mediated by M2, but not
including any variable affected by M2. The path-
specific indirect effects are listed next:
X → M2 → Y
X → M1 → M2 → Y
X → M3 → M2 → Y
X → M1 → M3 → M2 → Y
X → M3 → M1 → M2 → Y
437
3/22/2023 4:48:17 PM
 CHAPTER 21
SUGGESTED ANSWERS TO EXERCISES
1. For all models in Figure 21.2, v = 4 and the num-
ber of observations, including means, is 4(7)/2, or
14. For the random intercept-only model (Figure
21.2(a)), free parameters include the factor mean
(1) and variance (1) and the error variances of the
repeated measures (4), so df M = 14 – 6 = 8. Free
parameters in the basis growth model (Figure
21.2(b)) include the factor means (2), variances (2),
and covariance (1); 2 freely estimated basis coef-
ficients; and 4 error variances for the repeated
measures, so df M = 14 – 11 = 3. The linear change
model (Figure 21.2(d)) has a total of 9 free param-
eters, including factor means (2), variances (2), and
covariance (1) plus 4 error variances for repeated
measures, so df M = 14 – 9 = 5.
2. In Figure 21.3, the number of observations is 14.
Free parameters include 7 variances (3 latent
growth factors and 4 indicator errors) and 3 covari-
ances and 3 means (for latent growth factors) for a
total of 13, so df M = 1.
3. Specification in lavaan syntax of Figure 21.2(c) is
listed next:
kimspoonBasis2.model <- ‘
Intercept =~ 1*R1 + 1*R2 + 1*R3 + 1*R4
Shape =~ 0*R1 + 1*R2 + R3 + R4
R1 ~~ 0*R1 ‘
Estimates for the indicators and Intercept are iden-
tical for Figures 21.2(b) and 21.2(c), and the two
models have identical global fit, predicted means,
and residuals. The two models differ only in esti-
mates for the basis coefficients, the mean and vari-
ance of Shape, and the covariance between Shape
and Intercept (but not the correlation, or .410):
Shape Intercept,
mean Shape
Figure Basis coefficients (variance) covariance
21.2(b) (0, .678, .646, 1.0) .817 (.487) .014
21.2(c) (0, 1.0, .953, .554 (.224) .010
1.475)
438
AnswrsKline5E.indd 438
For example, l4 = 1.0 for Figure 21.2(b) says that all
growth has occurred by age 17 years, but l4 = 1.475
for Figure 21.2(c) says that the level at age 17 years
is the initial level plus 1.475 times the increase
from ages 14–15 years. The mean of .817 for Fig-
ure 21.2(b) is the average increase over ages 14–17
years, but the mean of .554 for Figure 21.2(c) is the
average increase over ages 14–15 years. All results
just listed reflect nothing more than just different
ways to scale Shape in a basis growth model.
4. Specification of the polynomial growth model in
Figure 21.3 in lavaan syntax is listed next:
kimspoonQuadratic.model <- ‘
Intercept =~ 1*R1 + 1*R2 + 1*R3 + 1*R4
Linear =~ 0*R1 + 1*R2 + 2*R3 + 3*R4
Quadratic =~ 0*R1 + 1*R2 + 4*R3 + 9*R4
R1 ~~ 0*R1 ‘
There are three Heywood cases: In the unstandard-
ized solution, the variances of Linear (–.045) and
Quadratic (–.038) are both negative, and in the
standardized solution, the estimated correlation
between Linear and Quadratic is 1.60, or > 1.0 in
absolute value. The solution is clearly inadmissible.
5. In Figure 21.4, the mean of the Intercept factor is
µ I = a I + β IGµG + β IFµF
6. In Figure 21.4, the predicted mean of A4 is
µ A 4 = a I (1.0) + a L (3.0) + β IGµG (1.0) + β LFµF (3.0)
+ β IFµF (1.0) + β LGµG (3.0)
7. In Table 21.8, the mean level of alcohol use at age
13 for years for young women (coded gender = 1)
is .011 higher than the mean for young men (coded
gender = 0) at the same age, while controlling for
family status. This difference is not statistically sig-
nificant at the .05 level (z = .011/.105 = .10).
3/22/2023 4:48:17 PM
 CHAPTER 22
1. For 5 indicators in a single-group analysis of Figure
22.1, there are 5(8)/2, or 20 observations (5 vari-
ances, 10 covariances, 5 means). Effects coding
identification constraints reduce the number of free
loadings and intercepts by 1 each per factor. Thus,
the mean structure has 5 parameters, including 2
factor means and a total of 3 intercepts (2 for Line
Meaning, 1 for Real World). Because the mean
structure is just-identified (i.e., 5 observations [indi-
cator means], 5 parameters), all predicted means
will equal their sample counterparts. Parameters
for the covariance structure include 3 loadings
(2 for Line Meaning, 1 for Real World), 7 variances
(of 5 indicators and 2 factors), and 1 factor cova-
riance, for a total of 11. The total number of free
parameters for the whole model is 5 + 11 = 16, so
df M = 20 – 16 = 4.
2. Direct comparison of factor means requires at least
partial strong invariance, where most unstandard-
ized intercepts and loadings are constrained to
equality over groups. There are no cross-group
equality constraints in the single-group analyses of
Figure 22.1.
AnswrsKline5E.indd 439
SUGGESTED ANSWERS TO EXERCISES
3. The error variances of the five indicators in Figure
22.1 can be automatically constrained to equality
over groups by adding this command to the lavaan
syntax for the partial strong invariance model:
group.equal = c(“residuals”)
The global fit of this model is poor—chiML(17) =
84.622, p < .001; RMSEA = .113, 90% CI [.090,
.138], CFI = .943, SRMR = .074—and the residuals
suggest poor local fit in the Chinese sample (e.g.,
two correlation residuals exceed .20).
4. The variances of the two factors in Figure 22.1 can
be constrained to equality by adding the lavaan
statement
group.equal = c(“lv.variances”)
to the syntax for the partial strong invariance
model. The fit of the model so constrained is poor—
chiML(14) = 170.920, p < .001; RMSEA = .190, 90%
CI [.165, .217]; CFI = .867; SRMR = .074—and both
the correlation residuals and standardized residuals
are bad news (i.e., poor fit is indicated).
439
3/22/2023 4:48:22 PM
AnswrsKline5E.indd 440 3/22/2023 4:48:22 PM
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 Author Index

Abelson, R. P., 22 Baron, R., 125, 126, 130

Abt, M., 133 Barrett, P., 16
Abu-Bader, S. H., 56 Bartholomew, D. J., 12
Acharya, A., 366 Bartle-Haring, S., 246, 247, 311
Acock, A. A., 75 Bartlett, M. S., 316
Aguinis, H., 116, 162 Bauer, D. J., 69, 256, 403
Aiken, L. S., 19, 20 Bauldry, S., 220, 223, 248, 259
Akaike, H., 190 Baumgartner, H., 401
Albers, C. J., 20 Beauducel, A., 170
Allison, P. D., 64, 65, 139 Beaujean, A. A., 16, 72
Altman, D. G., 204 Beck, B., 270
Alvarado, J. M., 259 Becker, J.M., 299
Amador, X. F., 41, 278 Bedeian, A. G., 109
Amemiya, Y., 232 Benitez, J., 414, 415
Amrhein, A., 22 Bentler, P. M., 12, 74, 138, 142, 161, 164, 165, 168, 169, 170, 171,
Ananth, C. V., 350 174, 182, 184, 186, 200, 225, 247, 267, 269, 283, 327, 346
Andersen, H. K., 72 Beran, R., 286
Anderson, J. C., 170, 264, 265, 268, 283, 309 Berkson, J., 87
Anderson, S. F., 175 Bernstein, I. H., 320
Andrews, R. M., 365 Berry, W. D., 337, 338
Angrist, J. D., 83, 84, 99 Bishop, J., 388
Antonakis, J., 20, 105, 225, 258, 350, 353 Black, A. C., 424
Appelbaum, M., 25, 37, 39, 40, 42, 44, 45, 172, 414, 415, 420 Blalock, H. M., 11
Arbuckle, J. L., 68, 74, 104, 138, 139, 150, 327 Block, J., 206
Asparouhov, T., 138, 161, 186, 200, 230, 231, 329, 409, 411, 412 Blozis, S. A., 385
Audigier, V., 65 Blum, M. G. B., 350, 366
Austin, J. T., 16, 17 Blunch, N. J., 74
Boker, S. M., 71
Bagozzi, R. P., 12, 218, 239 Bolin, J. E., 75
Bailey, M., 253 Bollen, K. A., 3, 10, 12, 14, 18, 25, 26, 29, 34, 41, 42, 82, 83, 103,
Baiocchi, M., 82, 83 105, 107, 110, 117, 131, 133, 136, 137, 144, 145, 188, 220, 221,
Balla, J., 169 223, 225, 228, 248, 249, 252, 264, 269, 276, 293, 309, 312, 313,
Bandalos, D. L., 139, 176 338, 389

471

IndxKline5E.indd 471 3/22/2023 3:12:10 PM

 472 Author Index

Bonett, D. G., 164, 169 Clifton, A., 227

Bono, R., 61 Coffman, D. L., 135, 139, 159, 199
Boomsma, A., 37, 309 Cohen, J., 29, 59, 113, 136
Bornstein, M. H., 394, 395, 399, 401, 402, 412 Cole, D. A., 104, 244, 315, 356, 357
Borsboom, D., 227, 228 Cole, S. R., 87
Bound, J., 84 Collier, J. E., 74
Box, G. E. P., 61, 163, 179 Collins, L. M., 139
Boyle, M. H., 385 Combrisson, E., 188
Brailean, A., 386 Comeau, J., 385
Brandmaier, A. M., 188 Comrey, A. L., 240
Brandt, J. S., 350 Cooper, H., 39, 45
Breckler, S. J., 198 Cooper, S. R., 18
Breitsohl, H., 9 Cornoni–Huntley, J., 325
Breivik, E., 168 Cortina, J. M., 18, 39
Brett, J. M., 127 Costa, P., 376
Brick, T. R., 100 Cox, D. R., 61
Brito, C., 110 Crawford, J. R., 186
Broc, G., 72 Crombie, G., 372
Brønnick, K., 356, 357 Crosswell, A. D., 294
Brosseau-Liard, P. É., 166, 168, 169, 330 Crowne, D. P., 258
Brown, T. A., 230, 231, 243, 244, 251, 252, 255, 259, 276, 410, 411 Cudeck, R., 141, 167, 170, 318
Browne, M. W., 140, 141, 167, 170, 291, 293 Culkin, J. M., 67
Bryant, F. B., 186 Cumming, G., 22, 162
Brydges, C. R., 276 Curran, P. J., 69, 158, 167, 168, 176, 322, 372, 373, 376, 386, 389
Bryk, A. S., 372 Curran, T., 361, 362
Bullock, J. G., 350, 368, 371
Burt, R. S., 268, 310 Daly, A., 113
Byrne, B. M., 74, 372, 398, 401 Daniel, R. M., 366, 367, 371
Davidov, E., 411, 412
Cain, M. K., 60 Davidson, L., 219
Calin-Jageman, R., 22, 162 Davies, N. M., 84
Campbell, D. T., 252 Davis, W. R., 293
Campbell, I., 194 Demirtas, H., 65
Carvacho, G., 86 Dempster A. P., 65
Castanho Silva, B., 18 Deng, L., 316, 318
Chakraborty, S., 317 Depaoli, S., 18, 172
Chalak, K., 95 Derogatis, L., 193, 290
Chambers, C. D., 41 Desai, R. J., 83
Chang, W., 224 Deshon, R. P., 397
Chatterjee, S., 56 Devlieger, I., 310
Chen, B., 144 Diamantopoulos, A., 225, 226, 228
Chen, F., 134, 167, 168, 399 Dickman, K., 72, 120
Chen, F. F., 257, 258 Didelez, V., 365
Chen, J., 345 Dienes, Z., 192
Chen, J. W., 69 Diggle, P. D., 155
Chen, Q., 130 Dijkstra, T. K., 286, 294, 299
Chen, Y., 249 Ding, P., 88
Cheng, C., 365 DiStefano, C., 38, 60, 137, 140, 141, 151, 160, 323, 324, 330
Cheong, J., 212, 213 Dolan, C. V., 153
Cheung, G. W., 159, 399, 402 Dombrowski, S. C., 38
Chin, W. W., 224 Dong, Y., 38, 54, 62, 64, 65
Cho, E., 242, 255, 259 Douma, J. C., 118
Cho, Y., 385 Drasgow, F., 170, 393
Choi, I., 415 Dumas, D., 38
Choi, J., 408 Duncan, S. C., 372, 382, 384
Chou, C. P., 184, 185, 187, 267 Duncan, T. E., 372, 382, 384
Chou, C.C., 280 Dunn, G., 74
Chou, J.S., 188 Dunn, K. J., 258
Choudhary, A., 11 Dunn, W. M., III., 34
Cieciuch, J., 394 Dwivedi, A. K., 129
Cliff, N., 218 Dziak, J. J., 192, 199

IndxKline5E.indd 472 3/22/2023 3:12:10 PM

 Author Index 473

Edwards, J. R., 116, 203, 204, 225, 358, 359 Gill, C. A., 59
Edwards, M. C., 323, 329 Glaser, D. N., 269
Efron, B., 129 Glymour, C., 252
Eich, E., 420 Glymour, M. M., 90
Eid, M., 253, 256 Goldberger A. S., 222
Einstein, A., 219 Golden, R. M., 190
Eisenhauer, J. G., 148 Goldstein, S. M., 16, 17, 39
Elwert, F., 82, 85, 88, 90, 99, 426 Gomer, B., 164
Enders, C. K., 49, 52, 54, 65, 66, 132, 137, 138, 139, 155, 373 Gonzalez, O., 350, 365, 368
Epskamp, S., 70 Gonzalez, R., 235
Epstein, D., 372 Goodboy, A. K., 415
Erceg-Hurn, D. M., 21 Gottfredson, N. C., 155
Ernst, A. F., 20 Gottfredson, R. K., 116
Esposito Vinzi, V., 299 Grace, J. B., 14, 29, 41, 42, 220, 221
Estabrook, R., 390, 409, 410, 412 Graham, J. M., 242
Eysenck, S. B. G., 39, 42 Graham, J. W., 49, 65, 66, 135, 139
Grayson, D., 253
Fabrigar, L. R., 231 Green, D. P., 350, 368, 371
Fairchild, A. J., 358 Green, S. B., 199, 269
Falk, C. F., 188 Greene, W. H., 154
Falk, R. F., 286 Greenland, S., 168
Falke, A., 164 Gregorich, S. E., 395, 396, 397, 398
Fan, W., 267 Greiff, S., 42, 170, 179
Fan, X., 169, 170, 354 Grewal, R., 160
Fan, Y., 339, 345, 415 Grice, J. W., 231
Featherman, D. L., 193 Griffith, G. J., 87
Feng, Y., 176 Grimm, K. J., 372, 388, 390
Fewell, Z., 81 Grömping, U., 26
Fidell, L. S., 49, 56, 119 Gudergan, S. P., 286
Fiedler, K., 108 Guliyev, H., 106
Finch, W. H., 75, 394 Guo, Y., 402, 403, 405, 408
Finkel, S. E., 332 Guttman, L., 231
Finn, A., 252
Finney, S. J., 60, 137, 140, 141, 151, 160, 323, 324, 330 Hadaya, P., 310
Fisher, F., 249, 312 Hagemann, D., 244
Fisher, R. A., 119 Hair, J. F., 13, 17, 18, 222, 225, 239, 285, 288, 289, 299, 414, 415
Fiske, D. W., 252 Haller, H., 21
Fitzpatrick, D. C., 230 Halpin, P. F., 218
Flake, J. K., 230, 231, 239 Hamann, J. D., 71
Flora, D. B., 230, 231, 239, 258, 322 Hammack-Brown, B., 402
Fox, J., 41, 71, 72, 129 Hancock, G. R., 134, 137, 138, 160, 168, 175, 176, 182, 190, 194,
Fraley, R. C., 193 201, 267, 330, 415
Freeman, M. J., 175 Harbaugh, A. G., 396
French, B. F., 176, 394 Hardt, J., 54
French, D. P., 225 Harring, J. R., 388
Fritz, M. S., 107 Hastie, T., 317
Hatcher, L., 75
Gagne, P., 134 Hau, K.T., 246, 309
Gal, D., 21 Hausman, J. A., 84
Galimard, J.E., 66 Hayduk, L. A., 8, 14, 37, 42, 156, 157, 158, 159, 162, 163, 164, 179,
Gana, K., 72 180, 225, 226, 232, 269, 276, 344, 345, 346, 395, 398, 399
Garn, A. C., 358 Hayes, A. F., 128, 129, 203, 350, 358, 360
Geiser, C., 75, 256 Heath, M. T., 328
Gelman, A., 185, 266 Heck, R. H., 75
Gerbing, D. W., 170, 264, 265, 268, 283, 309, 426 Heene, M., 42, 160, 170, 179
Geyer, C. J., 65 Heisey, D. M., 175
Ghisletta, P., 148 Hejazi, N. S., 368
Ghosh, M., 317 Henly, S. J., 318
Giffin, D., 235 Henningsen, A., 71
Gigerenzer, G., 21 Henseler, J., 13, 219, 221, 222, 225, 284, 285, 286, 288, 296, 297,
Gignac, G. E., 257 298, 299, 300, 305, 394

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 474 Author Index

Hernán, M. A., 82, 84, 98 Karvanen, J., 96

Hershberger, S. L., 194, 196, 199, 222, 249 Kashy, D. A., 253
Herzog, W., 160 Kaufman, A. S., 236, 237, 238
Hill, A. P., 362 Kaufman, J. S., 363
Hinson, V. K., 193 Kaufman, N. L., 236, 237, 238
Hipp, J. R., 345 Keesling, J.W., 12
Ho, M. H. R., 37, 104, 112, 268 Keith, T. Z., 237, 245
Hoekstra, R., 22 Kelley, K., 129, 164, 168, 176, 353, 354, 355
Hoenig, J. M., 175 Kenny, D. A., 14, 25, 34, 86, 104, 109, 111, 125, 126, 130, 135,
Hollebeek, L. D., 38 144, 160, 168, 169, 234, 238, 244, 249, 250, 252, 253, 260, 261,
Hong, S., 129, 358 336, 399
Howards, P. P., 88 Kenward, M. G., 153, 155
Hoyle, R. H., 37, 39, 45, 107, 349 Kerr, N. L., 183
Hu, L.-T., 164, 169, 170, 171, 174 Kim, K. H., 175
Huang, W., 225 Kim, M., 379
Hubert, M., 57 Kim-Spoon, J., 374, 379, 392
Hubona, G. S., 288 Kline, R. B., 20, 22, 27, 31, 45, 53, 56, 107, 140, 156, 175, 204,
Huck, S. W., 28, 31 239, 245, 272, 284, 290, 349, 408, 415
Huh, J., 184, 185, 187 Kmetz, J. L., 20
Huisman, S. M. H., 414, 415 Knight, C. R., 86
Hulin, C. L., 393 Kock, N., 310
Hulme, C., 251 Kolenikov, S., 248
Hung, J., 159 Kompier, M. A. J., 332
Hunsley, J., 26 Koziol, N. A., 320, 327, 329
Hurlbert, S. H., 24 Kraft, P., 416
Hwang, H., 285, 288 Krauss, S., 21
Hyman, H., 108 Krueger, A. B., 83, 84, 99
Kühnel, S., 8
Iacobucci, D., 350, 371
Igolkina, A. A., 76, 415 Lachowicz, M. J., 127, 354
Ing, M., 188 Lai, K., 168, 176, 182, 199, 200, 201, 202
Ioannidis, J. P. A., 20, 21 Lambdin, C., 22
Isherwood, J. C., 37, 39 Lambert, L. S., 203, 204, 358
Lance, C. E., 255, 401
Jaccard, J., 112 Lang, K. M., 65, 139, 151, 377, 378
Jackson, D. L., 16, 37 Lanza, S. T., 12, 199
Jacobucci, R., 188, 317 Latan, H., 285, 305
Jacoby, J., 112 Lautenschlager, G. J., 393
James, L. R., 127 Law, K. S., 332, 333
James, W., 414 Lawton, M. P., 193
Jarvis, C. B., 223 Lee, H., 349, 350, 368
Jerbi, K., 188 Lee, H. B., 240
Jermiin, L. S., 199 Lee, J., 80, 255
Jessor, R., 355 Lee, S., 194
Jessor, S. L., 355 Lee, S.-Y., 327
Jia, F., 49 Lefcheck, J. S., 71, 117, 118, 120, 130
Jiang, G., 316 Lei, M., 60
Jin, S., 132 Leiman, J. M., 258
Joanes, D. N., 59 Leite, W. L., 176, 188
John, L. K., 23 Lek, K., 411
John, R., 345 Levy, R., 182, 190, 194, 199, 201
Johnson, D. R., 49 Lewis, C., 169
Jöreskog, K. G., 12, 33, 67, 74, 139, 146, 148, 156, 162, 164, 165, Leys, C., 58
168, 184, 187, 204, 205, 222, 229, 231, 322 Li, C. H., 320, 325
Jorgensen, T. D., 71, 120, 139, 176, 237, 270, 300, 410 Li, L., 168
Jose, P. E., 350 Li, R., 199
Ju, Y., 155 Liang, X., 317
Jung, E., 402 Likert, R., 319
Lin, L. C., 192
Kaiser, H. F., 72, 120 Linting, M., 62
Kaplan, D., 3, 17, 135, 140, 188, 333, 343, 386 Little, R. J. A., 49, 53, 66

IndxKline5E.indd 474 3/22/2023 3:12:10 PM

 Author Index 475

Little, T. D., 52, 65, 68, 69, 86, 108, 139, 151, 156, 163, 169, 231, Mehta, P. D., 386
236, 310, 332, 349, 357, 372, 377, 390, 391, 392, 394, 396, 397, Mellenbergh, G. J., 393
400, 401 Meredith, W., 372
Littvay, L., 232, 276 Merkle, E. C., 190, 192, 193, 194, 201
Liu, M., 138, 396 Meshcheryakov, G., 76
Liu, X., 55 Michell, J., 218
Liu, Y., 393 Mikis, D., 173
Llabre, M. M., 379 Milan, S., 34, 252
Lockwood, K. G., 294 Miles, J., 169
Loehlin, J. C., 16, 114 Miller, N. B., 286
Loeys, T., 371 Millsap, R. E., 8, 159, 268, 269, 393, 395, 398, 409, 410, 411
Loh, W. W., 309, 310, 350, 366, 367, 368, 370, 371 Miočević, M., 318
Lohmöller, J.B., 286 Mirosevich, V. M., 21
Loken, E., 185, 266 Mitchell, M. A., 356, 357
Lomax, R. G., 60 Moerkerke, B., 371
Lombardi, C. M., 24 Mohan, K., 52, 53
Lubke, G. H., 194 Molenaar, D., 394
Lúcio, P. S., 411 Molenaar, P. C. M., 153
Luo, S., 18 Molenberghs, G., 153
Lynam, D. R., 205, 206, 208, 209 Molina, K. M., 204
Lynch, J. G., 130 Mooijaart, A., 160
Lynch, K. G., 350 Moon, K.W., 129, 358
Morey, R. D., 22
MacCallum, R. C., 16, 17, 33, 36, 37, 44, 45, 175, 177, 187, 196, Morikawa, K., 155
204, 243, 291, 293, 369 Morin, A. J. S., 231
MacKenzie, S. B., 220, 223 Morrison, T. G., 415
MacKinnon, D. P., 14, 108, 127, 128, 349, 350, 358 Moshagen, M., 160
Madans, J. H., 325 Moss, T. P., 38
Mai, R., 171, 268 Mowbray, F. I., 56, 58
Mai, Y., 70 Mudge, J. F., 162
Majewska, J., 58 Mueller, R. O., 160, 330
Malhotra, N. K., 394 Mueller, R, O., 415
Manly, C. A., 62 Mulaik, S. A., 3, 132, 140, 145, 164, 167, 190, 192, 196, 229, 268,
Maraun, M. D., 218 269
Marchetti, G. M., 96 Munafò, M. R., 87
Marcoulides, G. A., 103, 159, 188, 194, 196, 199, 249 Murphy, S. A., 391
Marcoulides, K. M., 181, 188, 318 Murray, D., 21
Mardia, K. V., 59 Muthén, B., 329, 409, 411, 412
Markland, D., 159 Muthén, B. O., 12, 14, 74, 116, 133, 138, 153, 155, 161, 168, 172,
Markus, K. A., 225 186, 200, 211, 230, 231, 320, 328, 329, 372, 408, 409, 411, 412
Marlowe, D., 258 320, 372
Marquart-Pyatt, S., 345 Muthén, L. K., 74, 116, 133, 138, 153, 155, 161, 168, 172, 186, 211,
Marsh, H. W., 169, 170, 231, 246, 253, 309 328, 408
Mastrotheodoros, S., 410 Myers, N. D., 176
Matsunaga, M., 311
Mauro, R., 30 Naimi, A. I., 365
Maxwell, S. E., 356 Neale, M. C., 72, 328, 386
Maydeu-Olivares, A., 146, 147, 151, 154, 161, 163, 316, 317, 330, Nestler, S., 131
339 Nevitt, J., 137, 168
Mayo-Wilson, E., 45 Newsom, J. T., 233, 235, 332, 372, 386, 389, 390, 391, 392, 394
McArdle, J. J., 75, 100, 103, 148, 149, 372, 388, 389 Nezlek, 12
McCloskey, D., 21, 23 Nezu, A. M., 45
McCoach, D. B., 160, 424 Nguyen, T. Q., 349, 363, 368, 371
McCray, G., 258 Niemand, T., 171
McDonald, R. P., 37, 75, 100, 103, 104, 112, 149, 268 Niemiec, C. P., 362
McGonagle, A. K., 256 Nilsson, A., 85
McIntosh, C. N., 159 Nimon, K., 394
McKinney, J. L., 394 Nitzl, C., 224
McNeish, D., 171, 317, 373, 376, 377, 378 Noonan, R., 285, 298, 305
McShane, B. B., 21 Nosek, B. A., 33
Meade, A. W., 393, 399, 403 Nuijten, M. B., 21

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 476 Author Index

Nunkoo, R., 37 Raffard, S., 280

Nunnally, J. C., 218 Raftery, A. E., 192
Nye, C. D., 170 Ram, N., 390
Rao, S. M., 45
Oakes, M., 21 Raudenbush, S. W., 372
Oberski, D. L., 315 Ray, S., 288
O’Boyle, E. H., 268 Raykov, T., 103, 159, 190, 196, 198, 241, 249, 346
O’Brien, R. M., 56, 244 Rebueno, M. C. D. R., 38
Ockey, G. J., 415 Reinartz, W. J., 225
O’Connell, A. A., 424 Reio, T. G, Jr., 394
Ogden, C. L., 369 Reise, S. P., 257, 258
Olaru, G., 188 Rensvold, R. B., 159, 399, 402
O’Laughlin, K. D., 350 Revelle, W., 120, 231
Oldenburg, R., 76 Reynolds, C. R., 393
Olivera–Aguilar, M., 398 Rhemtulla, M., 65, 139, 161, 176, 177, 220, 222, 223, 228, 319,
Olsson, U. H., 141, 167, 168 320, 324, 330
Ondé, D., 259 Rhoades, B. L., 12
Oppong, F. B., 59 Richardson, H. A., 258
O’Rourke, N., 75 Richiardi, L., 363, 365
Osborne, J. W., 57, 61, 107, 230 Richter, N. F., 37
Ou, L., 389 Riddles, M. K., 155
Rigdon, E. E., 1, 110, 217, 218, 219, 224, 226, 228, 230, 287, 297,
Panwar, M. S., 386 299, 300, 304, 305, 333, 334, 335, 337, 338, 339, 345, 346, 416
Park, H., 345 Rights, J. D., 310
Patrician, P. A., 65 Rindskopf, D., 246
Pavlov, G., 186 Ringle, C. M., 289, 305
Paxton, P., 337, 338, 345 Rioux, C., 310, 311
Pearl, J., 1, 4, 9, 10, 13, 14, 18, 52, 53, 72, 79, 86, 87, 89, 90, 93, Rippe, R. C. A., 62
94, 95, 96, 99, 105, 110, 125, 144, 194, 196, 198, 349, 360, 363, Robbins, B. G., 338, 339, 344
365, 416 Rockwood, N. J., 203, 358, 360
Pedhazur, E. J., 8 Rogosa, D. R., 9
Pek, J., 107, 349 Roid, G. H., 38
Penev, S., 196, 198 Romney, D. M., 190, 192, 193, 194
Peng, C. Y. J., 54, 62, 64, 65 Rönkkö, M., 225, 242, 255, 259
Peng, H. L., 127 Roos, J. M., 259
Perry, J., 339 Ropovik, I., 42, 171, 283
Peters, C. L. O., 139 Rose, N., 54
Petersen, M. L., 364 Rosseel, Y., 71, 103, 119, 132, 147, 153, 157, 186, 236, 237, 270,
Pett, M. A., 119 309, 310, 316, 317, 324, 330, 408
Petter, S., 416 Rossiter, J. R., 226
Phahladira, L., 44 Roth, D. L., 62, 63, 96, 111, 120, 122, 123, 125, 142, 143, 173, 177,
Phillips, L. W., 218 188
Pietrzak, R. H., 41, 278 Rothman, K. J., 168
Pilgrim, C. C., 205 Rousseeuw, P. J., 57
Pinter, J., 133 Rubin, D. B., 13, 14, 49, 54, 66
Pituch, K. A., 58 Rucker, D. D., 127, 204
Platt, R. W., 88 Rust, R. T., 190
Podsakoff, P. M., 253, 258 Rutkowski, D., 412
Pohl, S., 255, 256 Rutkowski, L., 399, 412
Porte, G., 38 Ryder, A. G., 396
Preacher, K. J., 104, 128, 164, 172, 192, 193, 194, 201, 204, 315, Ryu, E., 211, 212, 213
353, 354, 355, 356, 362, 387, 388
Price, B., 56 Sabatelli, R. M., 246, 311
Pritikin, J. N., 329 Salzberger, T., 226
Putnick, D. L., 394, 395, 399, 401, 402, 412 Samsonova, M. G., 415
Sargan, J. D., 249
Qiu, W., 176 Saris, W. E., 175
Sarstedt, M., 224, 305
Raborn, A., 188 Sass, D. A., 399
Rademaker, M. E., 286, 296, 288 Satorra, A., 160, 161, 175, 182, 186, 200, 315
Radloff, L. S., 325 Satterthwaite, F. E., 163

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 Author Index 477

Sauerbrei, W., 204 Sun, J., 164

Sauvé, G., 41, 43, 44, 278, 279, 280, 281, 420 Sutton, S., 225
Savalei, V., 65, 137, 138, 139, 153, 161, 166, 169, 315, 316, 324, Suzuki, L. A., 393
325, 330 Svetina, D., 72, 399, 408, 409, 410, 412
Sayer, A. G., 372 Swain, 316
Schafer, J. L., 49, 66 Swanson, S. A., 82, 84, 98
Schaffner, K. F., 218, 219 Szucs, D., 20
Schamberger, T., 286
Schmelkin, L. P., 8 Tabachnick, B. G., 49, 56, 119
Schmid, I., 371 Takane, Y., 285
Schmid, J., 258 Takeuchi, D. T., 289, 290, 294, 300
Schmitt, N., 30, 109 Takezawa, K., 115
Schmittmann, V. D., 227 Tan, Q., 394
Schneeweiss, S., 83 Tanaka, J. S., 164
Schneider, E. B., 87, 88 Tang, N., 155
Schönemann, P. H., 230, 231 Taris, T. W., 332
Schreiber, J. B., 8, 37, 45, 414, 415 Tate, C. U., 108, 112, 127, 350, 353
Schuberth, F., 13, 222, 285, 286, 288, 300, 301, 316 Taylor, J. M., 328
Schwarz, 192 Teitcher, J. E., 394
Schweizer, K., 236 Teng, G., 320
Selig, J. P., 356 Textor, J., 34, 96, 198
Seixas, 159 Thelwall, M., 17, 38
Shah, R., 16, 17, 39 Thoemmes, F., 54, 119, 176, 196, 352, 353, 366
Shao, C., 345 Thomas, S. L., 75
Sharma, S., 164 Thompson, B., 24
Sheather, S. J., 188 Thompson, G. C., 56
Shen, B. J., 289, 290, 294, 300 Thompson, Y. T., 400
Shevlin, M., 169 Tikka, S., 96
Shi, D., 146, 147, 151, 160, 326, 327, 330 Ting, K.F., 252
Shipley, B., 90, 96, 117, 118, 130 Tisak, J., 372
Shirkey, G., 345 Tobak, S., 220
Shrier, I., 88 Tomarken, A. J., 424
Silvia, E. S. M., 187 Torres, M., 363
Simmons, J., 23 Trafimow, D., 349
Simms, L. J., 320 Tsai, T.L., 110
Simonton, K. L., 358 Tu, Y.K., 424
Sivo, S. A., 169, 170 Tucker, L. R., 169
Smid, S. C., 317 Tukey, J. W., 58
Snowling, M. J., 251 Tunca, B., 38
Sobel, M. E., 125
Sörbom, D., 12, 67, 74, 139, 146, 148, 156, 164, 165, 168, 187, 204, Uddin, M. J., 81, 82, 84
322 Urbina, S., 25, 30
Spearman, C., 11, 252
Spirtes, P., 110, 252 Vacha-Haase, T., 24
Spruill, J., 270 van Bork, R., 228
Srivastava, M. S., 286 van Buuren, S., 64
Stankov, L., 255 van de Schoot, R., 318, 411, 412
Stanovich, K. E., 109 van der Kloot, W. A., 230
Stark, S., 398 Van Der Voort, A., 62
Steenkamp, J.B. E. M., 401 van der Zander, B., 94
Steiger, J. H., 68, 75, 141, 158, 160, 165, 167, 230, 231, 236 van Ginkel, J. R., 62, 64, 66
Steinmetz, H., 401 van Prooijen, J.W., 230
Sterba, S. K., 310, 311, 386 Van Ryzin, M. J., 369
Stevens, G., 193 van Veelen, R., 212
Stevens, J. P., 58 van Widenfelt, B. M., 394
Steyer, R., 255, 256, 389 Vandenberg, R. J., 401
Stine, R. A., 137 VanderWeele, T. J., 81, 89, 99, 350, 364
Stoel, R. D., 372, 386 Vansteelandt, S., 366, 367, 371
Streiner, D. L., 30 Verdam, M. G. E., 38
Stuart, E. A., 350, 371 Vernon, T., 39, 42
Stürmer, T., 82, 83 Viera, A. L., 74

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 478 Author Index

Vo, T. T., 368 Wittman, W., 170

Voelkle, M. C., 389 Wold, H., 12, 285, 286, 298
von Oertzen, T., 73, 100, 133 Wolf, E. J., 16
Wolf, M. G., 171
Wagner, J., 65 Wolfle, L. M., 18
Waller, N. G., 133, 424 Wong, C.S., 332, 333
Wang, L., 71, 129, 252, 333 Worland, J., 270
Wang, P., 204 Wothke, W., 50, 51, 139, 246, 309
Wang, Y. A., 176, 177 Wright, S., 1, 10, 11, 144, 343
Wasserstein, R. L., 24, 159 Wu, A. D., 397
Waters, E., 107 Wu, E. J. C., 74, 327
Webster, G. D., 227 Wu, H., 409, 410, 412
Wegener, D. T., 231 Wu, S. R., 345
Welch, W. J., 133 Wu, W., 49, 377, 378
Wells, R. S., 62
Wen, Z., 354 Xia, Y., 170, 326
West, S. G., 164, 169, 171, 172
Westfall, J., 26, 315 Yalcin, I., 232
Westland, C. J., 16 Yang, J.G., 188
Wetzel, E., 396 Yang, M., 318
Whitaker, B. G., 394 Yang, Y., 170, 326
White, H., 96 Yaremych, H. E., 194
White, W., 219 Yarkoni, T., 26, 315
Wickrama, K. K. A. S., 75 Yi, Y., 12, 218, 239
Widaman, K. F., 258, 412 Yoon, M., 402
Wilcox, J. B., 223, 225 Young, R., 49
Wiley, D., 12 Yuan, K.H., 161, 168, 169, 170, 176, 180, 181, 316, 399
Willaby, H. W., 310 Yung, Y. F., 258
Willett, J. B., 372
Williams, L. J., 196, 256, 268 Zhang, J., 69
Williams, M. N., 20, 25, 26, 104, 107, 277 Zhang, M. F., 17, 41, 172, 415
Williams, M. N., 278 Zhang, Z., 71, 129, 176
Williams, N., 76 Zhao, X., 127, 128, 130
Williams, T. H., 255 Zheng, X., 374
Wilson, P., 17, 38 Ziegler, M., 244
Wilson, W. J., 206 Ziliak, S., 21, 23
Winship, C., 85, 86, 88, 99, 426 Zou, H., 317
Wirth, R. J., 329 Zumbo, B. D., 411

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 Subject Index

Note. Page numbers followed by an f or t indicate a figure or table.

A (Asymmetric) matrix, 100 reporting results and, 423

A priori (prospective) power, 174–177, 177t thresholds for, 170–172
Absolute fit indexes, 164 types of, 164–165
Accelerated longitudinal designs, 388–389 Approximate measurement invariance, 411
Accept–support test, 159–160 Approximate zero constraints, 411
Accuracy in parameter estimation (AIPE), 168 Arbitrary distribution function (ADF) method, 140–141
Acquiescence response style (ARS), 397 Arbitrary GLS, 327–328
ADANCO (Advanced Composite Modeling) program, 288–289. Arcs, 79
See also Software for SEM analyses Aroian test, 125, 128
Adaptive quadrature, 328 Ascertainment bias. See Collider bias
Adjacent variables, 79 Assumptions
Adjusted goodness-of-fit (AGIF) index, 164 common factor models and, 220
Adjusted test statistics, 316–317 diagrams for, 103–105, 103f
AGReMA (A Guideline for Reporting Mediation Analyses) Long- measurement errors in manifest-variable path models and,
Form Checklist, 368, 371 315–316
Akaike Information Criterion (AIC), 190–194, 192t, 193t, 328–329 mediation and, 126–128, 126f
Alignment method, 411–412 reporting results and, 420
Alternative models, 33, 37, 198–199. See also Specification Asymptotic covariance matrix, 133
Amos (Analysis of Moment Structures) program, 74, 138, 139, Augmented moment matrix (AMM), 148
150. See also Software for SEM analyses Automatic modification, 187, 188
Analysis (estimation) step of MI, 65–66. See also Multiple Autoregression latent trajectory (ALT) model, 389
imputation (MI) Autoregressive errors, 105
Analysis model, 65–66 Autoregressive models, 106
Analysis of variance (ANOVA), 10, 20, 392 Autoregressive paths, 332, 332f
Analysis plan, 416 Auxiliary theory, 2, 219
Ancestors in a DAG, 80 Auxiliary variables, 54, 419
Annotated syntax, data, and output files, 68, 69. See also Software Available case methods, 54
for SEM analyses Average variance extracted (AVE), 239–240
Answer-scale validity, 226
Ant colony optimization methods, 188 Back-door criterion, 93, 94f
Approximate fit indexes Back-door path, 81, 81f
history of, 164 Backward MI method, 402
measurement invariance and, 408–409 Backward search. See Model trimming
models with continuous and ordinal indicators, 325 Badness-of-fit statistic, 157, 165–166
overview, 163, 173–174, 174t, 178 Baseline confounders, 365n

479

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 480 Subject Index

Baseline model, 168 item response theory and, 329

Basic CFA models, 232–234, 233f, 236–242, 237f, 238t, 240t, measurement invariance and, 409–410
243t. See also Confirmatory factor analysis (CFA) measurement model and diagram, 323, 323f
Basic growth models, 374–381, 374f, 375f, 379f, 380t, 381t methods to scale latent response variables, 323–324
Basic latent growth models, 372–374 models with continuous and ordinal indicators, 325
Basis coefficients, 376 other estimation strategies for, 327–329
Basis growth models, 375f, 376–377, 379–381, 380t, 381t overview, 319, 329–330
Basis set, 90–92, 91t, 92t polychoric correlations, 321–322, 322f
Bayes factor (BF), 192 Categorical data, 319–320
Bayes Information Criterion (BIC), 192–194, 193t, 328–329 Categorical exogenous variables, 113, 113t
Bayesian estimation Categorical indicators, 321–322
basic growth models with no covariates and, 378 Causal directionality, 103–104
measurement invariance and, 412 Causal indicators, 220–221, 225
SEM and, 18 Causal inference methods, 9, 14
small samples and, 317 Causal loops
software for SEM analyses and, 74 assumptions of, 333
Bentler Comparative Fit Index (CFI). See Comparative fit index identification requirements, 333–336, 334f, 335f
(CFI) overview, 331–333, 332f, 345
Bentler–Raykov R2, 346 specification and, 418
Bentler–Weeks representational system, 74 Causal mediation analysis, 360–368, 362f. See also Mediation
Berkson’s paradox, 87 Causal modeling, 10
Best fitting probability distribution (PFPD), 201 Causal pathways, 349
Best single indicator, 232 Causal–formative measurement, 219, 219f, 220–221, 223–224
Best-fitting proper indices (BFPI), 299 Causally-linked observed variables, 227
Best-subsets regression, 188 Centrality coefficients, 227
Between-imputation variance, 65 Centroids, 58
Bias, 42, 224, 393 Chain, 84–85, 85f
Bias-corrected bootstrap, 129 Chains of relations, 349
Biasing path, 81, 81f Change point, 388
Bidirectional edge, 80 Children in a DAG, 80
Bifactor models, 255–258, 257f. See also Nested models Chi-square
Bivariate ordinary least squares (OLS) regression, 80 categorical data and, 319–320
Block classification method, 333–334, 337 composite models and, 300–301
Block recursive models, 335f, 336, 337–338, 347–348 conditional indirect effects over groups, 211
Blocked-error model, 344–345, 345t fit indexes and, 163, 164
Blocked-error R2 (beR2), 344–345, 345t multiple-group path analysis and, 207–208, 207t
Bollen–Stine bootstrap, 137–138 nonrecursive models and, 339
Bootstrapping. See also Significance testing overview, 156–161, 184–186, 198–199
analyzing nonnormal data and, 137–138 reporting results and, 420, 422–423
common factor model in a small sample and, 312 scaled chi-squares, 161, 163
composite models and, 285 strengths of, 162
conditional indirect effects over groups, 211–212 structural regression models and, 272
indirect effects and, 128–129 Close-fit hypothesis, 180
overview, 19, 26 Close-yet-failing models, 180
software for SEM analyses and, 74 Clustering methods, 227
Bow pattern, 110 C-OAR-SE method, 226–227
Bow-free pattern, 110 Code variables, 113, 113t, 114f
Box plots, 58 Coefficient omega, 241
Box-and-whisker plots. See Box plots Collider, 85, 87–88
Box–Cox transformations, 61 Collider bias, 87–88, 89f
Bright-line rule, 24 Collinearity, extreme, 56
Building, 183–184, 188–190, 189t, 398 Combination rule, 170
Burn-in period, 65 Common factor model
CFA and EFA and, 229
CALIS (Covariance Analysis of Linear Structural Equations) overview, 220, 309–311
procedure, 75 in a small sample, 311–315, 311f, 312t, 313t, 314t, 315t
Casewise ML, 138–140, 155 Common factors, 229
Categorical confirmatory factor analysis. See also Confirmatory Common metric completely standardized solution, 204
factor analysis (CFA); Continuous/categorical variable Common metric standardized solution, 204
methodology (CCVM) Common variance, 219–220, 229
estimators, 324 Comparative fit index (CFI)
example demonstrating, 325–327, 326t, 327t, 328t common factor model in a small sample and, 312

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composite models and, 300–301 indicator selection and, 231–232

measurement invariance and, 398–399
model comparison and, 202
models with continuous and ordinal indicators, 325
multiple-group path analysis and, 207t
overview, 165–166, 168–169, 173–174, 174t
reporting results and, 423
thresholds for, 170–172
T-size indexes and, 181
two-factor CFA model and, 239
Competitive mediation, 127
Complementary mediation, 127
Complete mediation, 127
Completely overlapping, 194
Composite indicators, 221–222, 225
Composite latent construct, 220–221
Composite measurement, 219, 219f, 221–222, 223–224, 228
Composite SEM. See also Structural equation modeling (SEM)
alternative composite model, 294–297, 295f
computer tools and, 288–289
example demonstrating, 289–294, 289f, 290t, 291t, 292f, 295f
Henseler–Ogasawara (HO) specification and, 301–304, 302f,
303t, 304t
overview, 1–2, 11, 12–13, 284–285, 304–305
partial least squares path modeling (PLS-PM) and, 297–301,
298t
reporting results and, 416–417
sample size and, 12, 15–16
terminology, 285–288
Composite–formative models, 284–285
Computer software. See Software for SEM analyses
Concept proxy framework, 1–2, 218–219, 218f
Conditional causality, 107
Conditional effects, 204, 209–212, 210t
Conditional growth models, 382, 383f
Conditional independencies, 84–88, 85f, 90–92, 91t, 92t
Conditional instrument, 95–96, 95f
Conditional linear effects, 115
Conditional multivariate normality, 136
Conditional process analysis, 358–360, 359f
Conditioning set, 84
Confidence intervals, 129, 272, 298t, 423
Configural invariance, 395. See also Measurement invariance (MI)
Confirmation bias, 17
Confirmatory composite analysis (CCA)
formative measurement and, 225
Henseler–Ogasawara (HO) specification and, 304
overview, 4, 11, 287, 288
Confirmatory factor analysis (CFA). See also Categorical
confirmatory factor analysis; Factor analysis
basic CFA models, 232–234, 233f
compared to exploratory factor analysis (EFA), 229–231
composite models and, 300–301
covariance structure analysis and, 11
dynamic thresholds and, 171–172
equality constraints and, 251–252
equivalent CFA models, 249–251, 250f, 251f
estimation problems, 246–249, 247t
example demonstrating, 236–242, 237f, 238t, 240t, 243t
formative measurement and, 225
identification rules for correlated errors or multiple loadings,
260–261, 260t, 262f
item response theory and, 329
measurement invariance and, 38, 394, 397, 399–401, 408–410,
411, 412
models with continuous and ordinal indicators, 325
multitrait–multimethod (MTMM) data and, 252–255, 254f, 256
overview, 4, 15, 229, 258–259
respecification of CFA models, 243–246, 245t
sample size and, 419
scaling factors in, 234–236, 235f
second-order and bifactor models of, 255–258, 257f
software for SEM analyses and, 75
structural regression models and, 265–268, 266f, 273, 280, 281
Confirmatory path analysis. See Piecewise SEM
Confirmatory tetrad analysis (CTA), 252, 286
Confounding
causal mediation analysis and, 365–366
confounder bias, 81f, 82–84
covariate selection and, 88
full SR models and, 267–268
overview, 80–81, 81f, 82
in parametric models, 105–106, 106f
Congeneric indicators, 241, 251–252
Consistent mediation, 127
Consistent PLS (PLSc), 286
Constrained baseline approach, 398
Constrained estimation, 141, 249–251, 250f, 251f
Constrained parameter, 102
Constraint interaction, 236n
Construct bias, 393
Constructs, 218
Continuous indicators, 325
Continuous variables
interactive effects of, 115–116, 115f, 116f
reporting results and, 420, 421
SEM and, 10
Continuous/categorical variable methodology (CCVM)
estimators, 324
example demonstrating, 325–327, 326t, 327t, 328t
latent response variables and thresholds and, 321, 322f
measurement model analyzed in, 323, 323f
models with continuous and ordinal indicators, 325
overview, 320
Contracted chains, 80–81, 81f, 103–106, 103f, 106f
Controlled direct effect (CDE), 363, 364–365. See also Direct
effects
Convergence, 61, 133, 246–248, 247t, 420
Corrected normal theory method, 138
Correlated causes, 106–109, 107f
Correlated error, 80, 260–261, 260t, 262f
Correlated measurement error, 26, 276, 277–278, 277f
Correlated traits–correlated methods (CTCM) model, 253, 254f
Correlated traits–correlated methods minus one (CTC(M-1))
models, 256
Correlated-uniqueness (CU) model, 244, 253, 254f, 255
Correlation matrix, 47, 47t, 141–142, 300–301
Correlation residuals, 145–147, 146t, 314–315, 315t, 341t
Correlation root mean residual (CRMR), 316
Correlation weights, 299
Correlations, 47t, 141–142
Correspondence rules, 2, 219
Counterfactuals, 13, 360–368, 362f

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 482 Subject Index

Counting rule, 104 Determinants, 48

Covariance equivalence, 194 Diagonal weighted least squares (DWLS), 324, 325, 327t, 328t,
Covariance matrix, 160, 300–301, 420 329
Covariance matrix nesting, 200, 200f Dichotomania, 20, 23
Covariance residuals, 145–147, 146t Dichotomous outcomes, 117
Covariance structure analysis, 11. See also Traditional SEM Differential additive response bias, 397
Covariances, 10, 43, 47t Differential functioning, 394
Covariate selection, 81–82, 88–89, 89f Differential item functioning, 394
Coverage, 177 Diggle–Kenward selection modeling, 155
Credibility crisis, 20 Dimensional invariance, 395n
Cross-domain change, 386, 387f Direct causal effects, 122–123, 123t
Cross-group equality constraint, 102 Direct effect growth curve model, 386, 387f
Cross-lag direct effects, 332 Direct effects
Cross-lag panel designs, 356–358, 357f causal mediation analysis and, 360, 363–368, 369–370
Cross-loadings, 229 cross-lag panel designs for mediation and, 356
Cross-products information, 154 example demonstrating, 96–98, 96f, 97t, 98t
Cross-sectional designs nonrecursive models and, 343
mediation analysis in, 350–353, 351f, 352f single-door criterion and, 94
reporting results and, 423 starting values and, 134
specification and, 418 Direct feedback loop
Cross-validation, 416 identification requirements, 333–336, 334f, 335f
Cross-world independence, 365 nonrecursive models and, 341f, 343
C-rules. See Correspondence rules overview, 331, 332f
CTA-PLS, 286 Directed acyclic graph (DAG)
Curve-of-factors latent growth model, 386–388, 387f causal loops and, 333
Curvilinear effects, 113–115, 114f, 117, 420 d-separation criterion and, 90–92, 91f, 92t
example demonstrating, 96–98, 96f, 97t, 98t
Data analysis. See also Software for SEM analyses graph vocabulary and, 79–80
inputting data, 46–47, 47t graphical identification criteria and, 92–96, 94f, 95f
missing data and, 49 mediation analysis and, 368, 371
overview, 34, 37 nonparametric SEM and, 11
reporting standards and, 40t overview, 79
Data loss mechanism, 49. See also Missing data piecewise SEM and, 118
Data matrix Directed cyclic graph (DCG), 11, 79, 333
model comparison and, 202 Directed edge, 79
overview, 63t Directed path, 80
positive definiteness and, 48–49, 50–51 Directionality, 103–104
reporting results and, 420 Disacquiescence response style (DRS), 397
Data preparation Disconfirmability, principle of. See Principle of
distributions, 58–61, 60t disconfirmability
extreme collinearity and, 56 Discrete-time survival indicators, 155
handling incomplete data and, 54–56 Disjunctive cause criterion, 89, 89f
inputting data, 46–47, 47t Distinguishable models, 201
missing data and, 49, 52–54 Distributions, 58–61, 60t, 420
outliers, 56–58 Disturbance, 103, 123, 123t
overview, 46, 61, 62 Disturbance covariances, 134
positive definiteness and, 48–49, 50–51 Disturbance variances, 134
relative variances, 62, 63t Do-calculus, 96
reporting results and, 419–420 Dominant indicators, 296
Data screening, 50, 61 Donor cases, 64
Default ML, 135–138. See also Maximum likelihood (ML) Donor set, 64
estimation Drawing editor, 68, 69–70. See also Software for SEM analyses
Definition variable approach, 386 d-separation (d-sep) test, 118–119, 120–122, 121t, 130
Degrees of freedom d-separation criterion
composite models and, 296–297 equivalent models and, 197–198
full SR models and, 268 graphical identification criteria and, 92–93
model degrees of freedom, 102–103 overview, 89–92, 91f, 92t
reporting results and, 42, 44, 422–423 reporting results and, 420
Delta scaling (parameterization), 323–324 d-separation equivalence, 194
Derived concept, 218 Dynamic (flexible) thresholds, 171–172
Descendants in a DAG, 80 Dynamic Model Fit, 171

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 Subject Index 483

Edges. See Arcs Exogeneity, 82

EFA in CFA framework (E/CFA), 231 Exogenous regressor, 80
Effect decomposition, 143–144, 144t, 343 Exogenous variables in SEM
Effect indicators, 219–220, 219f advanced topics in parametric models and, 113–116, 113t, 114f,
Effect sizes 115f, 116f
fit indexes and, 163 assumptions and, 104
for indirect effects, 353–356, 355t default ML and, 136
measurement invariance and, 401 fixed-X option and, 136
overview, 38 overview, 33
Effects coding identification (ECI) constraints, 235f, 236 RAM graphical symbolism and, 101–102
Effects coding method, 235f, 236, 400–401 Expectation–maximization (EM) algorithm, 65
Eigenvectors, 48 Expected information matrix, 153–154
80/20 rule of data analysis, 61 Expected parameter change, 188, 243
Elastic net method, 317 Explaining aware effect, 87
Emergent variables, 222 Exploratory bifactor models, 258
Empirical concepts, 218 Exploratory factor analysis (EFA). See also Factor analysis
Empirical growth records, 373 compared to confirmatory factor analysis (CFA), 229–231
Empirical overidentification, 246 indicator selection and, 231–232
Empirical respecification, 184. See also Respecification of models measurement invariance and, 394
Empirical underidentification, 135, 246 overview, 229
Empirical weights, 299 software for SEM analyses and, 74
Endogeneity, 81, 105–106 Exploratory structural equation modeling (ESEM), 231
Endogenous regressor, 81 Exploratory tetrad analysis (ETA), 252
Endogenous selection bias. See Collider bias Extended instruments, 96
Endogenous variables, 33, 104 Extra dependent variable (DV) method, 139
Enhancing the Quality and Transparency of Health Research Extreme collinearity, 56
(EQUATOR) network, 39 Extreme response style (ERS), 396
Epistemic correlations. See Correspondence rules
EQS program, 74, 186. See also Software for SEM analyses F (Filter) matrix, 100
Equal-fit hypothesis, 184, 201 Factor analysis, 15–16, 231–232. See also Confirmatory factor
Equality constraint analysis (CFA); Exploratory factor analysis (EFA)
common factor models and, 309 Factor covariances, 234–235, 246, 400–401
confirmatory factor analysis (CFA) and, 251–252 Factor indeterminacy, 230
measurement invariance and, 405–408, 406t, 407t Factor score indeterminacy, 230, 231
overview, 102 Factor score regression (FSR), 310
Equilibrium, 333, 343 Factor variances, 235, 235f, 401
Equivalence testing, 180–181 Factorial (factor) weighting, 298–299
Equivalent models Factor-ratio test, 402
confirmatory factor analysis (CFA) and, 249–251, 250f, 251f Faithfulness assumption, 90
coping with, 196–198 Fallacy of the transposed conditional. See Inverse probability
overview, 17, 194–196, 195f errors
reporting results and, 44, 416 Falsification tests, 84
Error covariances, 246, 260–261 Feedback loops, 331–333, 332f
Error of estimation, 167 Fences, 58. See also Box plots
Error propagation, 131–132 Filter myth, 22
Error variance homogeneity. See Strict invariance First- and second-stage conditional process model, 360
Errors of approximation, 167 First-order factors, 255, 257
E-step (expectation), 65 First-stage conditional process model, 358–360, 359f, 361–362, 362f
Estimation accuracy fit index (EAFI), 163 Fisher information matrix. See Information matrices
Estimation methods Fit indexes
alternative estimators for continuous outcomes, 140–141 approach to fit evaluation and, 172–173
for categorical data, 319–320 CFI overview, 168–169
confirmatory factor analysis (CFA) and, 246–249, 247t example demonstrating, 173–174, 174t
relative variances and, 61 measurement invariance and, 398–399
reporting results and, 40t, 42, 44, 420–422 multiple-group path analysis and, 207–208
sample size and, 15 overview, 163–166, 166f
Exact-fit hypothesis, 157, 175 reporting results and, 420, 423
Exact-fit test, 172, 294 RMSEA overview, 166–168, 166f
Excess kurtosis, 59 thresholds for, 170–172
Exclusion restriction, 82 Fitted correlations. See Predicted correlations
Excrescent variables, 301 Fitted covariances. See Predicted covariances

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 484 Subject Index

Fitted means. See Predicted means chi-square and, 159

Fitted residuals. See Covariance residuals composite models and, 285
Fitting propensity, 201–202 example demonstrating, 173–174, 174t
Fixed parameter, 101–102 full SR models and, 268
Fixed thresholds, 170–171 measurement invariance and, 404–405, 404t
Fixed weights, 299 model comparison and, 202
Fixed-X option, 136 nonrecursive models and, 339
Fork, 84–85, 85f overview, 41, 177–178
Formative measurement, 224–225, 227–228, 299–300 reporting results and, 44, 415–416, 420
Forward CI method, 402 structural regression models and, 272t
Four-step modeling, 268–269, 272 thresholds for, 170–172
Fourth moment about the mean, 59 Global SAM, 310. See also Structural-after-measurement (SAM)
Fourth standardized moment, 59 approach
Fraction of missing information (FMI), 65 Goodman test, 125, 128
Free baseline approach, 398 Goodness-of-fit index (GFI), 164
Free parameter, 101–102, 244, 246 Goodness-of-fit statistics, 163, 225
Front-door path. See Directed path Graph vocabulary, 79–80
Full information maximum likelihood (FIML) Graphical editors, 69–70. See also Software for SEM analyses
basic latent growth models and, 373 Graphical identification criteria
composite models and, 285 causal loops and, 333–336, 334f, 335f
for incomplete data, 138–140 example demonstrating, 96–98, 96f, 97t, 98t
missing data and, 55 overview, 92–96, 94f, 95f, 98–99
overview, 2, 65 Graphical symbolism
software for SEM analyses and, 72, 74–75 basic CFA models and, 232–233, 233f
Full LISREL model, 263. See also Structural regression (SR) basic growth models with no covariates and, 374–375, 375f
models diagrams for contracted chains and, 103–105, 103f
Full longitudinal design, 357–358, 357t full SR models and, 263–265, 264f, 270, 270f
Full SR models. See also Structural regression (SR) models mediation analysis and, 368, 371
example demonstrating, 269–273, 270f, 271t, 272t, 274t RAM graphical symbolism, 100–103, 111
other modeling strategies for, 268–269 Group differences. See Multiple-group path analysis
overview, 263–265, 264f, 281 Group-mean substitution, 55
two-step modeling and, 265–268, 266f Growth predictor model, 373, 382–385, 383f, 384t
Full-information maximum likelihood (FIML) estimator, 328, 329
Full-information methods. See Global estimation Half longitudinal design, 356–357, 357t
Fully conditional specification, 64, 65 HARKing, 183–184
Fully weighted least squares (WLS) estimation, 140 Hausman specification test, 84
Fundamental confidence fallacy, 22 Hawthorne effect, 225
Fungible weights method in regression, 133 Henseler–Ogasawara (HO) specification, 285, 301–304, 302f,
303t, 304t
General (nonmonotone) missing data, 64. See also Missing data Heywood cases, 134–135, 246–248, 247t, 249
General linear model (GLM), 11 Hierarchical CFA model, 255–258, 257f
Generalized least squares (GLS), 140, 327–328 Hierarchical linear modeling, 373
General-specific models, 255–258, 257f Hierarchically related models, 182–183, 198–199, 200–202, 200f
Genetic data, 18, 188 High-dimension data, 366
Global estimation High-dimension mediation, 366
alternative estimators for continuous outcomes, 140–141 Hinges, 58. See also Box plots
analyzing nonnormal data and, 137–138 Holistic construal, 218
default ML, 135–137 Homogeneity assumption, 213
error propagation, 131–132 Homogeneous indicators, 231–232
estimation problems in CFA and, 248–249 Homophily bias. See Collider bias
example demonstrating, 142–147, 142t, 143t, 144t, 146t Hyman–Tate Criterion, 108
fitting models to correlation matrices, 141–142 Hypothesis testing, 7, 15, 16, 410
maximum likelihood (ML) estimation, 132–135
overview, 117–118, 131–132, 142, 151, 177–178 Identification
reporting results and, 422–423 basic CFA models and, 234
SEM computer tools and, 150–151 causal loops and, 333–336, 334f, 335f
Global fit. See also Chi-square; Model fit; Root mean square error causal–formative measurement and, 221
of approximation (RMSEA); Standardized root mean square composite models and, 297
residual (SRMR) confirmatory factor analysis (CFA) and, 244, 246
approach to fit evaluation and, 172–173 estimation problems in CFA and, 248
basic growth models with no covariates and, 378 measurement invariance and, 410

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overview, 2, 34, 35–36 Iterative estimation methods, 61, 133, 309

reporting results and, 418–419 Iterative steps, 298t
Identification rules, 260–261, 260t, 262f
Idiosyncratic error, 80 Johnson–Neyman technique, 362
Ill-scaled covariance matrix, 62 Joint interventional indirect effect (IIEjo), 367
Imaging data, 18 Journal article reporting standards for quantitative studies (JARS-
Impact, 393 Quant), 25, 39, 40t. See also Reporting results
Implied conditional independence, 84 Journal article reporting standards (JARS), 39, 40t. See also
Imputation model, 64 Reporting results
Imputation step of MI, 64–65. See also Multiple imputation (MI) Just-determined equations. See Identification; Just-identified
Inadmissible solutions, 134–135, 246–248, 247t, 309 equations
Incomplete data. See Missing data Just-identified equations, 35, 36, 110–111. See also Identification
Inconsistent mediation, 127 JWK (Jöreskog, Keesling, Wiley) model, 12
Incremental (relative, comparative) fit indexes, 164–165
Incremental validity, 26 Kaiser–Dickman algorithm, 120
Independence (null) model, 168–169 Kappa-squared, 354
Index of moderated mediation, 360 Kelley–Lai precision method, 176, 177
Indicator selection, 231–232, 234–235 Knot, 388
Indirect effects Kolmogorov–Smirnov (K-S) test, 59
causal mediation analysis and, 360, 363–368, 369–370 Kurtosis, 59–61, 60t, 420
conditional indirect effects over groups, 211–212
cross-lag panel designs for mediation and, 356 L → M block (latent to manifest), 220, 284
effect sizes for, 353–356, 355t Lagrange Multiplier (LM), 187
estimates of, 128t Lasso (least absolute shrinkage and selection operator) method,
example demonstrating, 125–129, 126f, 128t 317
the four steps and, 126–128, 126f Last observation carried forward (LOCF), 55
multiple-group path analysis and, 210–212, 210t Latent basis curve model. See Latent basis growth model
overview, 106–109, 107f Latent basis growth model, 375f, 376–377
reporting results and, 423 Latent class analysis, 12
Indirect feedback loop, 331, 335f, 336 Latent difference score models, 389
Indistinguishable models, 201 Latent growth curve models, 372, 389, 391–392
Individually varying time points, 385 Latent growth factors, 373
Inequality constraint, 102 Latent growth modeling
Information matrices, 133–134, 153–154, 248 basic growth models with no covariates and, 374–379, 374f,
Information-theoretic fit indexes. See Predictive fit indexes 375f, 379f
Informative priors, 317 basic latent growth models, 372–374
Initialization, 297, 298t example analyses of basic growth models, 379–381, 380t,
Inner estimation, 297–298, 298t 381t
Inner model, 295f, 296, 297–298 example for a growth predictor model with time-invariant
Instrumental variables, 81f, 82–84, 94–96, 95f covariates, 382–385, 383f, 384t
Interaction misspecification, 160–161 extensions of, 385–389, 387f, 388f
Interactive effects, 115–116, 115f, 116f overview, 371, 372, 385, 389
Intercept, 148–150, 208–209, 375–376, 382, 384, 389, 391–392, Latent response formulation (LRF), 320
396 Latent response variables, 321, 322f, 323–324
Interchangeable methods (raters), 256 Latent state-trait models, 389
Interpretation, 423 Latent variable longitudinal curve model. See Curve-of-factors
Interpretational confounding, 267–268 latent growth model
Intervening (intermediate) variables, 33 Latent variable models, 12, 15. See also Structural regression (SR)
Interventional direct effect (IDE), 366–368, 369–370. See also models
Direct effects Latent variable path analysis with partial least squares (LVPLS),
Interventional indirect effect (IIE), 366–368, 369–370. See also 286
Indirect effects Latent variable path models, 15, 263
Invariance, 395–398, 412. See also Measurement invariance (MI) Latent variables, 24
Inverse probability errors, 21–22 Latent-to-observed (L2O) transformations, 249
Inverted fork, 85, 85f lavaan. See also Software for SEM analyses
I-step (imputation), 64–65 casewise ML and, 139
Item response theory (IRT) comparing nonnested models and, 192–193, 192t
categorical confirmatory factor analysis and, 329 correlation residuals and, 147
measurement invariance and, 411, 412 information matrices and, 153–154
software for SEM analyses and, 72, 74, 75 mean structures and, 148
training in, 20 nonrecursive models and, 339–340, 340t

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lavaan (continued) Longitudinal independence model, 169

regularized SEM and, 317 Longitudinal measurement invariance, 393. See also
robust ML and, 161, 163 Measurement invariance (MI)
structural regression models and, 273, 280 Lower diagonal form, 47, 47t
Law of diffusion of idiocy, 22
Learning SEM M → C block (manifest to composite), 221, 284
assessing your knowledge, 27–31 M → L block (manifest to latent), 220, 284
obstacles to, 20–23 MacCallum–RMSEA method. See also Root mean square error of
overview, 26–27 approximation (RMSEA)
preparing for, 7–9, 19 basic growth models and, 380
significance testing and, 23–24 common factor model in a small sample and, 312
training in graduate programs and, 19–20 example demonstrating, 176–177, 177t
Lee–Hershberger replacing rules, 194 full SR models and, 269, 270–271
Leptokurtic distributions, 59 nonrecursive models and, 339
Level and shape model. See Latent basis growth model overview, 175, 176
Likelihood fallacy, 23 structural regression models and, 280–281
Likelihood ratio test, 157, 211 MACS (mean and covariance structure) models, 394, 399–400
Likert items, 319 Mahalonbis distance, 58
Limited-information methods. See Local estimation Manifest variable path models
Linear and quadratic (polynomial) growth models, 378–379, 379f, controlling measurement error in, 315–316
391–392 example demonstrating, 96–98, 96f, 97t, 98t
Linear effects, 10 full SR models and, 263–265, 264f
Linear growth models, 378–379, 379f overview, 14–15
Linear–linear growth process, 388–389, 388f partial SR models with single indicators, 275–276
Link function, 117 Marginal model, 367
Links, 79 Marker variable method. See Reference variable method
LISREL (Linear Structural Relations) program. See also Software Markov assumption, 90
for SEM analyses Markov Chain, 64–65
casewise ML and, 139 Markov Chain Monte Carlo (MCMC) approach, 64–65, 328
fit indexes and, 163 Masking, 57
indirect effects and, 129 Matrix input, 47, 47t, 48–49, 50–51
JWK model and, 12 Maximum likelihood (ML) estimation
modification procedure and, 187 basis growth models and, 381, 381t
multiple-group path analysis and, 204 casewise ML, 138–140
overview, 67, 74 categorical data and, 319–320, 329
scaled chi-square difference tests and, 186 common factor model in a small sample and, 314–315, 314t, 315t
standardized residuals and, 146 default ML, 135–137
symbols and notation and, 4 estimation problems in CFA and, 248–249
Listwise deletion, 54 Henseler–Ogasawara (HO) specification and, 301–304, 302f,
Little MCAR Test, 59 303t, 304t
Local estimation measurement invariance and, 405–408, 406t, 407t
common factor models and, 309 multiple-group path analysis and, 210, 210t, 211t
estimation problems in CFA and, 248–249 nonrecursive models and, 342t
example demonstrating, 120–129, 121t, 122t, 123t, 126f, 128t overview, 132–135, 151
overview, 117–118, 130 partial SR models with single indicators, 274–275, 275t
piecewise SEM and, 120 robust ML, 138
Local fit. See also Model fit scaled chi-squares and, 161, 163
approach to fit evaluation and, 172 structural regression models and, 273, 274t, 281, 282t
overview, 41, 42 two-factor CFA model and, 239–240, 240t
reporting results and, 44, 415–416, 420 Maximum Wishart likelihood (MWL), 135–137
Local SAM, 310. See also Structural-after-measurement (SAM) McArdle–McDonald RAM system. See Reticular action model
approach (RAM)
Local Type I error fallacy, 21 Mean residual, 150
Locally independent effect indicators, 220 Mean structures, 147–150, 149f
Loess procedure, 115 Mean substitution, 55
Logistic regression for dichotomous outcomes, 20 Mean-adjusted chi-square, 161
Longitudinal data Means, 10, 401
basic latent growth models and, 373 Measured confounding bias, 82, 88
causal loops and, 331–333, 332f Measurement. See also Measurement error; Psychometrics
cross-lag panel designs for mediation and, 356–358, 357t categorical data and, 323, 323f
latent growth modeling and, 386, 389 estimation problems in CFA and, 246–249, 247t

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measure selection, 34 software for SEM analyses and, 75

overview, 2, 7, 8, 14–15, 24–25, 26 steps of multiple imputation (MI) and, 64–66
reporting results and, 419 Missing completely at random (MCAR). See also Missing data
sample size and, 15–16 categorical data and, 329
selecting a measurement model and, 223–224 diagnosing, 53–54
training in, 23 handling incomplete data and, 54–56, 139–140
unequal measurement intervals and options for defining the information matrices and, 153–154
intercept and, 391–392 overview, 49, 52, 53f
Measurement error. See also Measurement steps of multiple imputation (MI) and, 64–66
causal–formative measurement and, 221 Missing data
composite models and, 287 basic latent growth models and, 373
formative measurement and, 225 casewise ML and, 155
in manifest-variable path models, 315–316 categorical data and, 329
overview, 104 diagnosing, 53–54
regression analysis and, 25–26 handling, 54–56, 138–140
Measurement invariance (MI) information matrices and, 153–154
analysis decisions, 398–401 overview, 49, 52–54, 53f
confirmatory factor analysis (CFA) and, 408–410 reporting results and, 419
example demonstrating, 402–408, 403f, 404f, 406t, 407t software for SEM analyses and, 74–75
levels of invariance, 395–398 steps of multiple imputation (MI) and, 64–66
other statistical approaches to, 410–412 Missing not at random (MNAR). See also Missing data
overview, 393–394, 408–409, 412 basic latent growth models and, 373
partial measurement invariance, 401–402, 403t casewise ML and, 140, 155
replication and, 38 diagnosing, 53–54
Median absolute deviation (MAD), 57 overview, 52, 53f
Mediation software for SEM analyses and, 75
based on nonparametric models and counterfactuals, 360–368, steps of multiple imputation (MI) and, 64–66
362f Missingness graphs, 52
conditional process analysis, 358–360, 359f Missingness mechanism, 52
cross-lag panel designs for, 356–358, 357f Misspecification, 131–132
in cross-sectional designs, 350–353, 351f, 352f Mixture modeling, 12, 74
effect sizes for indirect effects and, 353–356, 355t Model building, 183–184, 188–190, 189t, 398
the four steps, 125, 126–128, 126f Model chi-square, 156–161, 162, 163. See also Chi-square
mediation myth, 349 Model degrees of freedom, 102–103. See also Degrees of
mediation ratio, 354 freedom
overview, 86, 349–350, 371 Model fit. See also Identification
reporting results and, 368–370, 423 approach to fit evaluation and, 172–173
timing criterion and, 107–109 model comparison and, 202
Mesokurtic distributions, 59 model fit indexing, 156, 163–166
Method variance, 230 multiple-group path analysis and, 207, 207t
Methodology, 40t, 44 overview, 37, 415–416
Metric invariance. See Weak invariance reporting standards and, 39, 40t, 41, 44
M-graphs, 52 Model parameters
Midpoint response style (MRS), 396 basic CFA models and, 233f, 234
MIIVsem package, 312–315, 313f, 314t. See also Software for composite models and, 296–297
SEM analyses overview, 14–15, 34
MIMIC (multiple indicators and multiple causes) modeling RAM graphical symbolism and, 101–102
composite models and, 293, 294 Model size effect, 160
with covariates, 410 Model trimming, 183–184, 398
other statistical approaches to, 410–411 Model-implied instrumental variables (MIIV), 312, 313–315,
overview, 222–223, 222f 313f
Minimally sufficient (adjustment) set, 93, 94f Model-implied instrumental variables using two-stage least
Minimum covariance determinant (MCD) method, 286 squares (MIIV-2SLS), 248–249, 309, 312
Minimum fit chi-square, 157 Modeling school, 163
Missing at random (MAR). See also Missing data Models. See also Specification
basic latent growth models and, 373 model hacking, 23
categorical data and, 329 overview, 8, 14–15
diagnosing, 53–54 reporting standards and, 39, 42
handling incomplete data and, 55–56, 139–140 selection uncertainty, 193–194
information matrices and, 153–154 specification of, 32–33
overview, 52, 53f testing, 156

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Moderated mediation, 204 Naming fallacy, 218, 423

Moderated multiple regression (MMR), 115–116 Natural direct effect (NDE), 363, 364–365. See also Direct effects
Moderated path analysis, 203. See also Multiple-group path analysis Natural indirect effect (NIE), 363, 364–365. See also Indirect
Modification index (MI), 187–190, 189t effects
Modified Bollen–Stine bootstrap, 138 Nearly equivalent models, 198, 416
Modularity, 86 Negative bias, 104
Moment equivalence, 194 Negative excess kurtosis, 59
Moment matrix nesting, 200 Negative skew, 59, 61
Monotone missing data, 64. See also Missing data Negligible randomness assumption, 90
Monte Carlo simulations Neo-Fisherian significance assessments (NFSA), 24
conditional indirect effects over groups, 211–212 Nested models
model comparison and, 202 building and trimming, 183–184
model size effect and, 160 chi-square difference test and, 184–186
overview, 175–176, 177, 178f conditional indirect effects over groups, 211–212
software for SEM analyses and, 72, 74, 75 confirmatory factor analysis (CFA) and, 255–258, 257f
Mplus. See also Software for SEM analyses overview, 182–183, 198–199, 200–202, 200f
categorical data and, 328–329 Nesting and equivalence testing (NET), 200, 200f
indirect effects and, 129 Network models, 227
measurement invariance and, 408 Neutral cycle, 339
overview, 2, 75 Neyman–Rubin model. See Potential outcomes model (POM)
scaled chi-square difference tests and, 186 Nil hypothesis, 157
traditional SEM and, 12 Nodes, 79
M-step (maximization), 65 Nominal variables, 10
Multi-agent estimation algorithm, 133 Nominalist fallacy, 218
Multicollinearity, 336, 419. See also Extreme collinearity Nonadjacent variables, 79
Multidimensional measurement, 232 Noncentrality fit indexes, 165
Multinormality. See Multivariate normality Noncontinuous variables, 10
Multiphase longitudinal designs, 332 Nonignorable missing data. See Missing data; Missing not at
Multiple imputation (MI) random (MNAR)
casewise ML and, 139–140 Nonlinear constraint, 102
distributions and, 59 Nonlinear curve fitting, 376
missing data and, 55–56, 138–140 Nonnegative least squares (NNLS), 299
R packages and, 72 Nonnested models, 190–194, 191f, 192t, 193t
software for SEM analyses and, 74–75 Nonnormal data, 137–138, 153–154
steps of, 64–66 Non-normed fit index (NNFI), 169
Multiple loadings, 260–261, 260t, 262f Nonoverlapping models, 201
Multiple optima, 133 Nonparametric bootstrapping, 285
Multiple regression (MR), 20, 25–26. See also Regression analysis Nonparametric causal models
Multiple-group path analysis correlated causes and, 107
conditional indirect effects over groups, 211–212 covariate selection and, 88–89, 89f
example demonstrating, 205–211, 205t, 206f, 207t, 208t, 209t, example demonstrating, 96–98, 96f, 97t, 98t
210t, 211t overview, 79, 98–99
overview, 203–205, 212 Nonparametric models, 360–368, 362f
Multiple-indicator measurement Nonparametric regression, 114–115
alternative measurement models and approaches, 225–227 Nonparametric SEM, 1, 4, 11, 13–14, 98–99, 416–417. See also
causal–formative measurement and, 220–221 Structural equation modeling (SEM); Structurally causal
composite measurement and, 221–222 model (SCM)
formative measurement and, 224–225 Nonpositive definite (NPD) data, 48–49, 50–51
mixed-model measurement and, 222–223, 222f Nonrecursive models
overview, 14, 15, 217–219, 218f, 227–228 blocked-error model and, 344–345, 345t
reflective measurement and, 219–220, 219f causal loops and, 334
reporting results and, 417 evaluation of the rank condition, 347–348
selecting a measurement model and, 223–224 example demonstrating, 338–344, 340t, 341f, 342t
Multiple-indicators and multiple-causes (MIMIC) model. See identification requirements, 336
MIMIC (multiple indicators and multiple causes) modeling mediation analysis in cross-sectional designs and, 350, 351f
Multitrait–multimethod (MTMM) study, 252–255, 254f, 256 order condition and rank condition and, 337–338
Multivariate growth model, 386, 387f overview, 109–111, 109f, 345
Multivariate imputation by chained equations (MICE). See Fully respecification of, 336–337, 337f
conditional specification Nonsingular matrix, 48
Multivariate normality, 58–59, 136–137 Normal distributions, 117
Multivariate outlier, 58. See also Outliers Normal theory method, 136

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Normalized noncentrality parameter, 167 with correlated causes or indirect effects, 106–109, 107f
Normalized residuals, 145–147, 146t diagrams for contracted chains and, 103–105, 103f
Normalizing transformations (normalization), 60–61, 60t example demonstrating, 111, 111f
Normed chi-square. See Chi-square overview, 100, 111
Normed chi-square (NC), 161 recursive, nonrecursive, and partially recursive models and,
Notable-null hypothesis, 157 109–111, 109f
Not-close-fit hypothesis, 175, 180 symbolism for, 100–103
Null hypothesis rejection, 16, 118, 211, 312 Parametric models
Numerical integration, 328 advanced topics in, 113–116, 113t, 114f, 115f, 116f
confounding in, 105–106, 106f
Observational equivalence, 194 with estimates, 123–125
Observational sector, 218 overview, 14–15
Observed correlation, 118 Parceling, 310–311
Observed information matrix, 153–154 Parents in a DAG, 80
Occasion-specific congenerity, 387f, 388 Pareto principle, 61
Odds-against-chance fallacy, 21 Parsimony principle, 103, 418
One-sided confidence, 167 Parsimony-adjusted indexes, 164
One-step modeling, 265 Partial correlations, 120–122, 121t
Order condition, 337–338 Partial least squares path modeling (PLS-PM). See also
Ordered-categorical variables, 319. See also Ordinal variables Composite SEM
Ordinal indicators, 325 composite models and, 285, 294–296, 295f, 297–301, 298t,
Ordinal variables, 10, 421 304
Ordinary least squares (OLS). See also Ordinary least squares overview, 297–300, 298t
(OLS) regression terminology, 285–288
composite models and, 288, 303–304, 304t Partial measurement invariance, 401–402, 403t, 412
Henseler–Ogasawara (HO) specification and, 303–304, 304t Partial mediation, 127
mediation analysis and, 355–356, 355t Partial SR models. See also Structural regression (SR) models
Ordinary least squares (OLS) regression. See also Ordinary least example demonstrating, 278–281, 279f, 282t
squares (OLS) overview, 263, 281
composite models and, 285 with single indicators, 274–278, 275f, 277f
local estimation and, 117 Partial-information methods. See Local estimation
maximum likelihood (ML) estimation and, 132 Partially overlapping models, 200f, 201
mediation analysis and, 353 Partially recursive models, 109–111, 109f
overview, 80, 83 Partially reduced form model, 293, 294
piecewise SEM and, 122–123, 123t Path-specific indirect effects, 366
Outcome (dependent) variables. See Endogenous variables Pattern invariance. See Weak invariance
Outcome model, 367 Pattern matching, 55
Outer estimation, 297–298, 298t Pattern-mixture modeling method, 155
Outer model, 295f, 296, 297–298 Pearson correlations, 50, 118, 240, 242
Outliers, 56–58, 59–61 Pedagogical approach, 3, 14–15
Overall discrepancy, 167 Penalized likelihood estimation, 317
Overall effect, 368 Permanent illusion. See Inverse probability errors
Overcontrol (overadjustment) bias, 85, 88, 89f Person-level fit, 159
Overdetermined equations. See Identification; Overidentification Piecewise latent growth model, 387f, 388
Overidentification, 36, 110–111, 246. See also Identification Piecewise SEM, 14, 118–129, 121t, 122t, 123t, 126f, 128t, 130
Platykurtic distributions, 59
p hacking, 23 PLS Mode A, 299–300
p values, 21–22, 24, 26, 159, 422–423 PLS Mode B, 299–300
Pairwise deletion, 54–55 PLS Mode BNNLS, 299
Pairwise estimation of Pearson correlations, 321 Polychoric correlations, 321–322, 322f, 420
Panel model, 332, 332f Polynomial growth model. See Linear and quadratic (polynomial)
Parallel growth process model, 386, 387f growth models
Parallel indicators, 251–252 Polynomial regression, 113–114
Parallel latent growth curve model, 386, 387f Polytomous items, 321, 322f
Parallel mediation model, 350, 352–353, 352f Pooling (combination) step of MI, 66. See also Multiple
Parameter estimates, 51, 137–138, 209–211, 210t imputation (MI)
Parameter nesting, 182–183 Poor-fit hypothesis, 175, 180
Parameterization, 399–401 Population discrepancy, 167
Parametric causal models Population-corrected robust RMSEA, 168
advanced topics in, 113–116, 113t, 114f, 115f, 116f Positive definite (PD) data, 48–49, 50–51
confounding in, 105–106, 106f Positive excess kurtosis, 59

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Positive semidefinite, 300 Recursive models

Positive skew, 59, 61
Positivity assumptions, 363
Posttreatment (treatment-dependent) confounders, 365
Potential outcomes model (POM), 13–14
Power. See also Statistical power
chi-square and, 159–160
example demonstrating, 176–177, 177t
overview, 174–177, 177t
power analysis, 44
power terms, 113–114
reporting results and, 423
sample size and, 16
selecting a measurement model and, 224
Precision, 22, 168, 174–177, 177t
Predicted correlations, 144–145
Predicted covariances, 144–145
Predicted means, 150
Prediction, 13
Predictive fit indexes, 165, 190
Predictive mean matching method, 64
Predictor growth model, 382–385, 383f, 384t
Pretest sensitization, 225
Principle of disconfirmability, 36
Principles of SEM, 4
PROCESS, 129, 358. See also Software for SEM analyses
Product term XW, 115–116, 115f
Propagation of measurement error, 25
Propagation of specification error, 118
Proportionality, 102, 377–378
Pseudo-groups, 204
P-step (posterior), 64–65
Psych package, 120–122, 121t
Psychometrics. See also Measurement
assessing your knowledge, 27–31
overview, 2, 19, 24–25, 26
reporting results and, 419
training in, 23
Psychometrics Primer, 274, 316
Quantile–quantile (Q-Q) plots, 146
R packages. See also Software for SEM analyses
analyzing nonnormal data and, 138
comparing nonnested models and, 192–193, 192t
composite models and, 288
conditional process analysis and, 358
indirect effects and, 129
measurement invariance and, 410
mediation analysis and, 354–355, 355t
overview, 2, 71–73, 71t
piecewise SEM and, 120–122, 121t
regularized SEM and, 317
structural regression models and, 270–272, 271t
R2 statistic, 344–345, 345t, 423
Random hot-deck imputation (RHDI), 55
Random intercept-only model, 375–376
Random seed, 66
Rank condition, 338, 347–348
Raw residuals. See Covariance residuals
Reactive measurement, 225–226
identification requirements, 335f
indirect effects in, 128t
mean structures and, 149–150, 149f
mediation analysis in cross-sectional designs and, 350, 351f
Monte Carlo simulations and, 178f
overview, 109–111, 109f
structural regression models and, 273
Recursive structural models, 331, 333
Reduced-form R2, 346
Reference group method, 235, 235f, 400
Reference method, 256
Reference variable method, 233, 233f, 235f, 400
Referent loading identification approach. See Reference variable
method
Reflective measurement
overview, 219–220, 219f, 228
partial least squares path modeling (PLS-PM) and, 299–300
reporting results and, 416–417
selecting a measurement model and, 223–224
Regions of significance, 362
Regression analysis
assessing your knowledge, 27–31
compared to SEM, 10
overview, 2, 7, 19, 25–26, 27–31
reporting standards and, 41, 44
traditional SEM and, 11–12, 18
Regression diagnostics, 20
Regression method, 64
Regression residuals, 41
Regression substitution, 55
Regression through the origin (RTO) method, 148
Regression weights, 299
Regularization methods, 317
Regularized SEM, 317
Reject–support test, 159–160
Relative variances, 60t, 62, 63t
Relativity of reliability, 25
Relevance, 82
Reliability, 15, 315–316
Reliability coefficients, 24–25
Reliability induction, 24–25
Reliability paradox, 160
Replacement variate, 218
Replacing rule, 196, 197–198
Replication of results, 17, 22, 38, 416
Reporting results
approach to fit evaluation and, 172–173
best practices in, 415–416
estimation, 420–422
example demonstrating, 41, 43–44, 43f
family relations, 416–417
identification, 418–419
interpretation, 423
measures, 419
for mediation studies, 368–370
overview, 37
sample and data, 419–412
specification and respecification, 417–418, 422
standards for, 7, 39–41, 40t, 42, 414, 415t
tabulation, 422–423

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 Subject Index 491

Residual confounding, 82 Satorra–Saris method, 175, 176

Residual invariance. See Strict invariance Saturated correlates method, 139
Respecification of models. See also Models; Specification Saturated equations. See Identification; Just-identified equations
confirmatory factor analysis (CFA) and, 243–246, 245t Scalar invariance. See Strong invariance
empirical versus theoretical respecification, 184 Scaled (corrected) model test statistic, 138
nonrecursive models that are not identified, 336–337, 337f Scaled chi-squares, 161, 163, 185, 186. See also Chi-square
overview, 33, 37 Scaling, 103, 104, 135, 234–236, 235f, 399–401, 418
reporting results and, 40t, 42, 422 Scaling latent response variables, 323–324
Response styles, 396 Schmid–Leiman (SL) transformation, 258
Restricted measurement models, 229 Score test, 187
Reticular action model (RAM) Second-order CFA model, 255–258, 257f
basic CFA models and, 232–233, 233f Second-order factor, 255
basic growth models with no covariates and, 374–375, 375f Second-order growth curve model. See Curve-of-factors latent
diagrams for contracted chains and, 103–105, 103f growth model
example demonstrating, 111, 111f Second-stage conditional process model, 360
full SR models and, 263–265, 264f, 270, 270f Seed, 129
mean structures and, 149–150, 149f Seeming unrelated regressions (SUR), 72
overview, 100–103, 111 SEM trees, 188
Retrospective (post hoc, observed) power analysis, 174–175 SEMNET, 9
Reversed indicator rule, 251 Sensitivity analysis, 49
Rho-A, 286 Sequential (serial) mediation model, 352, 352f
Ridge method, 51, 317 Sequential ignorability, 363, 365
Robust DWLS, 324, 329 Sequential regression multivariate imputation. See Fully
Robust ML, 138, 150, 161, 163, 185 conditional specification
Robust PLS, 286 Sign indeterminacy, 296
Robust PLSc method, 286 Sign rule, 297
Robust standard error estimates, 138 Significance testing. See also Statistical significance
Robust WLS, 328 assessing your knowledge, 27–31
Root mean square error of approximation of the path component assumptions of, 21
(RMSEA-P), 268 based on the RMSEA, 180–181
Root mean square error of approximation (RMSEA). See also confirmatory factor analysis (CFA) and, 234
MacCallum–RMSEA method distributions and, 59
measurement invariance and, 398–399 inaccuracies, errors, and hacking in, 21–23
model comparison and, 202 indirect effects and, 129
models with continuous and ordinal indicators, 325 measurement invariance and, 397, 408–409
multiple-group path analysis and, 207, 207t mediation analysis and, 353
overview, 165–168, 166f, 173–174, 174t overview, 2, 19, 23–24
power analysis and, 175–177, 177t power analysis and, 175–176
reporting results and, 423 reporting standards and, 42
significance testing and, 180–181 sample size and, 16
structural regression models and, 272 training in, 20
thresholds for, 170–172 Significance Testing Primer, 22
T-size indexes and, 181 Significosis, 20, 23
two-factor CFA model and, 239 Simple linear regressions, 116
Root mean square residual (RMR), 169 Simultaneity, 34, 81. See also Global estimation
Rotational indeterminacy, 230, 231 Single-door criterion, 94
Single-equation methods. See Local estimation
S (Symmetric) matrix, 100 Single-factor CFA model, 238, 238t, 280. See also Confirmatory
Sample means. See Centroids factor analysis (CFA)
Sample size. See also Small samples Single-factor measurement model, 44
approach to fit evaluation and, 172 Single-group approach, 212
chi-square and, 158 Single-imputation methods, 54
overview, 15–16, 415 Single-indicator measurement, 14, 417
replication and, 38 Singular matrix, 48
reporting results and, 44, 419–420 Skew normal distribution, 138
traditional SEM and, 12 Skew t distributions, 138
Sample-corrected robust RMSEA, 168 Skewness, 59–61, 60t, 138, 420
Sampling, 21, 50, 419–420 Skew-SEM, 138
Sandwich standard errors, 138 Slippery slope of nonsignificance. See Zero fallacy
Sargan overidentification test, 249 Small samples. See also Sample size
Satorra–Bentler scaled chi-square, 161, 163 adjusted test statistics for, 316–317

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 492 Subject Index

Small samples (continued) Standardized average individual case residuals, 198

Bayesian methods and regularized SEM and, 317
common factor models in, 311–315, 311f, 312t, 313t, 314t, 315t
measurement errors in manifest-variable path models and,
315–316
overview, 2, 309, 318
parceling and, 310–311
reporting results and, 419
SmartPLS program, 289. See also Software for SEM analyses
Sobel approximate standard error, 125, 128
Social network analysis, 227
Soft modeling, 12–13. See also Composite SEM
Software for SEM analyses. See also individual software
packages/programs
analyzing nonnormal data and, 137–138
availability of, 17
casewise ML and, 139, 155
categorical data and, 327–329
causal loops and, 333–334
commercial tools, 73–76
commercial versus free tools, 70–71, 73t
common factor model in a small sample and, 312–315, 313f,
314t, 315t
composite models and, 13, 76, 285, 288–289, 300–301
diagrams for contracted chains and, 103–104
distributions and, 58–59
fit indexes and, 165, 166
fixed-X option and, 136
global estimation and, 150–151
Henseler–Ogasawara (HO) specification and, 301, 302f
human-computer interaction and, 68, 69–70
indirect effects and, 128–129
information matrices and, 153–154
inputting data, 46–47, 47t
JWK model and, 12
local estimation and, 118
mean structures and, 148
measurement errors in manifest-variable path models and, 316
measurement invariance and, 408–409, 410
multiple-group path analysis and, 204, 206–207, 207t
nonparametric path model and, 14, 96–98, 97t, 98t
nonpositive definite (NPD) data matrices and, 50–51
overview, 2, 4, 8–9, 34, 37, 67–68, 76
partial least squares path modeling (PLS-PM) and, 300–301
piecewise SEM and, 118, 120–122, 121t
power analysis and, 175, 176
reporting results and, 420–422
sample size and, 16, 316–317
scaled chi-square difference tests and, 186
standardized residuals and, 145–146
using, 68, 70
Spatial autoregression, 105–106
Specific variance, 219–220, 229–230
Specification. See also Models; Respecification of models
overview, 2, 32–33
reporting results and, 40t, 42, 417–418
specification searches, 183
Spurious mediation, 108
Squares and cross products matrix (SSCP), 148
Stability index, 343
Standard errors, 24, 133–134, 137, 298t, 312
Standard multiple regression (identity link), 117
Standardized mean residuals, 208t, 209, 209t
Standardized residuals, 145–147, 146t
Standardized root mean square residual (SRMR)
basic growth models and, 380
common factor model in a small sample and, 312
composite models and, 288, 300
formative measurement and, 225
measurement invariance and, 399
model comparison and, 202
multiple-group path analysis and, 207t
overview, 165–166, 169–170, 173–174, 174t
reporting results and, 423
structural regression models and, 272
thresholds for, 170–172
two-factor CFA model and, 239
Standards for reporting. See Reporting results
Starting values, 133, 134, 247
Stationarity, 333
Statistical beauty, 17
Statistical power, 16, 224. See also Power
Statistical precision, 16
Statistical significance, 20, 23, 24, 423. See also Significance testing
Steiger–Lind Root Mean Square Error of Approximation
(RMSEA). See Root mean square error of approximation
(RMSEA)
Steps in SEM, 32–38
Stochastic regression imputation, 55
Strict invariance, 397–398, 412
Strictly confirmatory application, 33. See also Specification
Strong invariance, 397, 402–408, 403f, 404f, 406t, 407t
Structural causal model (SCM). See Nonparametric SEM
Structural equation modeling (SEM). See also Composite SEM;
Nonparametric SEM; Traditional SEM
best practices in, 414–424, 415t
identification and, 34
overview, 9, 16–17, 18, 414, 424
Structural regression (SR) models
basic latent growth models and, 373
example demonstrating, 269–273, 270f, 271t, 272t, 274t,
278–281, 279f, 282t
full SR models, 263–265, 264f
models with continuous and ordinal indicators, 325
other modeling strategies for, 268–269
overview, 4, 263, 281, 283
partial SR models with single indicators, 274–278, 275f, 277f
two-step modeling and, 265–268, 266f
Structural-after-measurement (SAM) approach, 309–310
Structurally causal model (SCM), 1, 4, 9–10
Structurally different methods (raters), 256
Structure coefficient, 242
Sufficient (adjustment) set, 92–93
Synthesis model, 295f, 296
System matrix, 347–348
Tabu list, 188
Tabu search, 188
Tabulation, 422–423
Tailored tests, 329
Tailored-fit evaluation strategy, 268
Tau-equivalent indicators, 251–252, 315–316
Tau-equivalent reliability, 241

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 Subject Index 493

Temporal precedence, 86 Unanalyzed association, 101

Test bias, 393 Unconditional causality, 107
Test statistics, 316–317, 341t Unconditional growth models, 382
Testable implications, 91f, 92 Unconditional linear effects, 115
Tetrachoric correlation. See Polychoric correlations Unconditional multivariate normality, 136
Theoretical concept, 218 Underdetermined equations. See Identification;
Theoretical respecification, 184. See also Respecification of models Underidentification
Theta scaling (parameterization), 323–324 Underidentification, 35, 246. See also Identification
Third central moment, 59 Undirected path, 80
Third standardized moment, 59 Unidimensional measurement, 232, 311, 315–316
Three-indicator rule, 234 Union basis set, 90–92, 91t, 92t, 118
Three-stage least squares (3SLS), 83 Unique variance, 219–220, 229
Thresholds, 321, 322f, 323, 323f, 326, 399, 409–410 Unit loading identification (ULI) constraint, 103, 233, 235f
Time binning, 385 Unit variance identification (UVI) constraint, 235f
Time structured data, 372–373 Univariate nonnormality, 59
Time-invariant covariates, 373, 382–385, 383f, 384t Univariate outlier, 56–57. See also Outliers
Time-varying covariates, 374 Unknown weights, 299
Timing criterion, 107–109 Unmeasured confounders, 80, 81, 81f
Tolerance, 56 Unnormalized (raw) noncentrality parameter, 166
Total causal effect. See Total effect Unrestricted measurement models, 229
Total effect Unstandardized estimates, 44
back-door criterion and, 93 Unstandardized residual path coefficient, 103
example demonstrating, 96–98, 96f, 97t, 98t Unweighted least squares (ULS) method, 140
graphical identification criteria and, 92–96, 94f, 95f Upsilon, 354–355
overview, 80 User-specified weights, 299
single-door criterion and, 94
Total indirect effects, 143 Valid tracing, 144–145
Total interventional effect (TIE), 367–368 Validity (valid research hypothesis) fallacy, 22
Traditional SEM, 1–2, 11–12, 15–16. See also Covariance Vanishing partial correlations, 91f, 92
structure analysis; Structural equation modeling (SEM) Vanishing tetrad test (VTT), 252
Training in graduate programs, 19–20 Vanishing tetrads, 252
Trait-specific method effects, 253 Variance estimates, 132–133
Transformed sample, 137–138 Variance inflation factor (VIF), 56, 419
Transparency, 39, 408, 420 Variance standardization method, 235, 235f, 400
Triangle inequality, 48 Variance-adjusted chi-square, 161
Trifactor models, 256 Variance-based SEM. See Composite SEM
Trimming, 183–184, 398 Vertices. See Nodes
T-size indexes, 180–181 Vicious cycle, 339
Tucker coefficient of congruence, 38 Virtuous cycle, 339
Tucker-Lewis Index (TLI), 169 v-MAR, 52. See also Missing at random (MAR)
2+ emitted paths rule, 293
Two-factor CFA model. See also Confirmatory factor analysis Wald test, 187, 211, 212
(CFA) Weak instrument, 83–84
equivalent CFA models and, 249–251, 250f, 251f Weak invariance, 396, 402–408, 403f, 404f, 406t, 407t
measurement invariance and, 402–408, 403f, 404f, 406t, 407t Weakly informative priors, 317
overview, 239–242, 240t, 243t Weight matrix, 140–141
Two-index strategy, 170 Weighted least squares (WLS), 324, 328, 421
Two-indicator rule, 234 Weights, 298–299, 298t
Two-stage least squares (2SLS) Welch-James t test, 408
common factor model in a small sample and, 314–315, 314t, Whiskers, 58. See also Box plots
315t Within-group completely standardized solution, 204
common factor models and, 309 Within-group standardized solution, 204
composite models and, 285, 288 Within-imputation variance, 65
estimation problems in CFA and, 248–249 Wright’s tracing rules, 144–145
mediation analysis and, 353
overview, 82–83 Z-bias, 88
piecewise SEM and, 122–123 Zero fallacy, 22
Two-step estimation, 310 Zero matrix, 157
Two-step identification rule, 264–265 Zero vector, 157
Two-step modeling, 265–268, 266f, 269–273, 270f, 271t, 272t, Zero-error variance model, 293, 294
274t, 281
Type I errors, 212, 315

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 About the Author

Rex B. Kline, PhD, is Professor of Psychology at Concordia University in

Montréal, Québec, Canada. Since earning a doctorate in clinical psychology,
he has conducted research on the psychometric evaluation of cognitive
abilities, behavioral and scholastic assessment of children, structural equation
modeling, training of researchers, statistics reform in the behavioral sciences,
and usability engineering in computer science. Dr. Kline has published a
number of chapters, journal articles, and books in these areas.

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