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 Introduction to Structural Equations with Latent Variables

# Statistical Inference

When you specify the ML or GLS estimates with appropriate models, PROC CALIS can compute

• a chi-square goodness-of-fit test of the specified model versus the alternative that the data are from a multivariate normal distribution with unconstrained covariance matrix (Loehlin 1987, pp. 62 -64; Bollen 1989, pp. 110, 115, 263 -269)

• approximate standard errors of the parameter estimates (Bollen 1989, pp. 109, 114, 286), displayed with the STDERR option
• various modification indices, requested via the MODIFICATION or MOD option, that give the approximate change in the chi-square statistic that would result from removing constraints on the parameters or constraining additional parameters to zero (Bollen 1989, pp. 293 -303)

If you have two models such that one model results from imposing constraints on the parameters of the other, you can test the constrained model against the more general model by fitting both models with PROC CALIS. If the constrained model is correct, the difference between the chi-square goodness-of-fit statistics for the two models has an approximate chi-square distribution with degrees of freedom equal to the difference between the degrees of freedom for the two models (Loehlin 1987, pp. 62 -67; Bollen 1989, pp. 291 -292).

All of the test statistics and standard errors computed by PROC CALIS depend on the assumption of multivariate normality. Normality is a much more important requirement for data with random independent variables than it is for fixed independent variables. If the independent variables are random, distributions with high kurtosis tend to give liberal tests and excessively small standard errors, while low kurtosis tends to produce the opposite effects (Bollen 1989, pp. 266 -267, 415 -432).

The test statistics and standard errors computed by PROC CALIS are also based on asymptotic theory and should not be trusted in small samples. There are no firm guidelines on how large a sample must be for the asymptotic theory to apply with reasonable accuracy. Some simulation studies have indicated that problems are likely to occur with sample sizes less than 100 (Loehlin 1987, pp. 60 -61; Bollen 1989, pp. 267 -268). Extrapolating from experience with multiple regression would suggest that the sample size should be at least five to twenty times the number of parameters to be estimated in order to get reliable and interpretable results.

The asymptotic theory requires that the parameter estimates be in the interior of the parameter space. If you do an analysis with inequality constraints and one or more constraints are active at the solution (for example, if you constrain a variance to be nonnegative and the estimate turns out to be zero), the chi-square test and standard errors may not provide good approximations to the actual sampling distributions.

Standard errors may be inaccurate if you analyze a correlation matrix rather than a covariance matrix even for sample sizes as large as 400 (Boomsma 1983). The chi-square statistic is generally the same regardless of which matrix is analyzed provided that the model involves no scale-dependent constraints.

If you fit a model to a correlation matrix and the model constrains one or more elements of the predicted matrix to equal 1.0, the degrees of freedom of the chi-square statistic must be reduced by the number of such constraints. PROC CALIS attempts to determine which diagonal elements of the predicted correlation matrix are constrained to a constant, but it may fail to detect such constraints in complicated models, particularly when programming statements are used. If this happens, you should add parameters to the model to release the constraints on the diagonal elements.

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