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    STRUCTURAL EQUATION MODELING: USES AND ISSUES

    LISABETH F. DILALLA

    Sc ho ol o f M edicine, S ou ther n Illinois University. Ccirboncicile. Il in ois

    Structural equation modeling (SEM) has become a popular research tool

    in the social sciences, including psychology, m anag em ent, econom ics, sociol-

    ogy, political science, marketing, and education, over the past two to three

    decades. Its strengths include simultaneous assessment of various types of

    relat ions am ong variables an d the abili ty to r igorously examine and com pare

    similarities among and differences between two or more groups of study

    partic ipants. H ow ever, one o f its m ajo r lim ita tio ns is the ease with which

    researchers can misinterpret their results when anxious to prove" the

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    440 LISABETH F. DILALLA

    1. D EF IN ING STRU CT UR AL EQ UA TION MO DEL ING

    Latent variable analysis (Bentler . 1980) involves the study of "hidden"variables that are not measured directly but that are estimated by

    variables that can be measured. Latent variable analysis includes such

    techniques as factor analysis, path analysis, and SEM. Factor analysis

    (see also Cudeck, chapter 10. and Hoyle, chapter 16. this volume)

    involves assessing a latent factor that is operationalized by measured

    variables. The latent factor is identified by the variance that is shared

    among the measured variables: i t is the "true" variable that affects the

    m ea su red variables. Path analysis, first de scribed by Sewall Wrigh t (1934.

    1960). determines the causal relations between a series of independent

    and dependent variables. SEM encompasses both of these and is a

    m eth od for testing carefully delinea ted m odels based on hyp otheses

    about how observed and latent variables are interrelated (Hoyle. 1995b)

    in order to meaningfully explain the observed relations among the

    variables in the most parsimonious way (MacCallum. 1995).

    The strength of SEM lies in its ability to rigorously test a hypothesized

    model of relations among manifest and latent variables. The key to this is

    that the model must be specif ied a priori and be theoretically based. SEM

    can then provide a series of indices that indicate the extent to which the

    specified model appears to f i t the observed data. The results cannot beused to assert that a given model with a good fit must therefore precisely

    identify the mechanisms through which the variables are intercorrelated

    because , a lthough th a t one m odel m ay fit. th e re will also be countless o th ers

    that might fit equally well or even better. Therefore, as long as the model

    is theoretically strong, a goodfitting model can be said to be supported by

    the data and to be sensible, but. as with any other statistical technique,

    SEM cannot be used to "prove the model .

    Clearly, careful forethought is essential in developing a model. The

    first step is to develop a theoretical model delineated by the latent variables(drawn in ovals), which are the constructs that are of interest theoretically

    (see Figure 15.1). This part of the model is the structural model and is

    composed only of the latent, unmeasured variables. Then the variables that

    are actually measured (drawn in rectangles) and are used as indicators of

    the latent variables can be add ed to the m odel (see Figure 15.1). This pa rt

    of the model that specif ies the relations between the latent and manifest

    variables is called the measurement model. The final model, including both

    the structura l and the measu rem ent pa rts of the model, has the adv antage

    of allowing the researcher to explore the relations between the latent

    variables th at are of interest theoretically by including the o perationa lized

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    15. STRUCTURAL EQUATION MODELING 441

    F IG U R E 15.1 Structural mode! and i ts e laborat ion into a me asurem ent model.

    and Discipline in Figure 15.1) and several measures of aggression torepresent an aggression factor , and then the causal relat ion between the

    two latent variables can be assessed using these measures.

    II. C OM M ON U SES OF STRU C TU RA L EQ U A T I ON M OD EL IN G

    A path diagram can be created to test a set of relat ions among variables

    simu ltaneou sly. Thus, a variable can be regressed on se veral o ther variables

    and can in turn simultaneously predict another outcome variable. This set

    of relat ions cannot be tested using standard regression analysis because

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    442 USABETH F. DILALLA

    com par isons be tw een groups , to run growth curve models , and to com pare

    nested models, to name some of the more common uses.The most important rule to bear in mind is that a s trong theoretical

    m odel m ust be posited prior to model testing. W ithin this theoretical fram e-

    w ork. a series of nested m odels can be com pared to come up with a parsim o-

    nious ex planation for the relations amo ng the variables. Of course, exp lor-

    atory analyses can be run, but then the structure of the relations among

    the variables is being assessed for that particular data set. and replication

    using an ind epend ently assessed sam ple is essential in orde r to draw co nclu-

    sions with confidence. As with any statistical analysis, analyses that capital-

    ize on the chance relations among variables in a given data set are not

    useful for advancing our understanding of any of the sciences. This wouldresult if analyses are conducted without a theoretical framework to guide

    the model fitting.

    A. Exploratory Factor Analyses

    One of the typical uses of SEM is to conduct exploratory factor analyses.

    In exploratory factor analysis , no preexisting model is hypothesized.

    Rather, the relations among the variables are explored by testing a series

    of factors that account for shared variance among the variables. This isfeasible with SEM because there is a very specific type of model included

    in the exploration. Only models with no causal l inks between factors and

    with paths only between the factors and the manifest variables are tested

    (Loehlin, 1992). Therefore, there are only a specif ic number of models

    tested. This method is useful in allowing the researcher to determine the

    simplest factor model ( the one with the fewest number of factors and the

    fewest non zero paths in the pa ttern m atrix) tha t will adeq uately explain the

    observed intercorrelations among the various manifest variables (Loehlin.

    1992). In an SEM factor analysis, the latent variables are the factors, the

    manifest variables are the variables that make up the factors, the loadings

    be tw een th e m anif est and la te n t varia b le s form th e facto r p a tte rn m atr ix ,

    and the residuals on the m anifest variables are the specif ic or uniqu e factors.

    Thus, SEM can be used to explore the latent factor s tructure of a data set

    by consid ering su ccess ively in creasin g or decreasin g num bers o f facto rs and

    com par ing each new model to the p receding one to de termine the op t im al

    and most parsimonious model that best accounts for the manifest variable

    interrelations.

    B. Confirmatory Factor Analyses

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    15. STRUCTURAL EQUATION MODELING 443

    variables are assumed to be related sufficiently to submit to factor analysis.

    A dd ition ally, confirmatory factor analysis may sti ll involve a small am ou nt

    of tweaking of the model to imp rove i ts fit. W ith confirm atory factor analysis

    (see also Hoyle, chapter 16. this volume), a path model is designed that

    describes the interrelations among the manifest variables by hypothesizing

    a specific set of latent factors that account for those relations. These factors

    are based in theory, as are the items that load on them. This last fact is

    essential because i t both justif ies the model and requires that changes not

    be m ade to the m odel w it hout reconside ring th e th eo ry behin d th e analy sis .

    A com m on example of misuse of SEM is to modify the fac tor s t ruc ture o f

    the model based on modification indices without regard to the underlying

    theory on which the model was based. Assuming the theory is sound, i tp robab ly is w is er to m ain ta in th e orig in a l ite m s as lo ng as th ere are eno ugh

    items with high loadings to define the latent factor.

    Co nf i rmatory factor ana lyses can be cond ucted us ing SEM . The m odel

    is based on theory: that is. a hyp othesized struc tural m odel is fit to the d ata

    to determ ine how well the interrelation s am ong the variables are accoun ted

    for by the a priori model . Thus , the im po r tant di f fe rence be tween conf i rma-

    tory an d exp loratory factor analysis with SEM is that the factors that accou nt

    for the variable intercorrelations are specif ied up front with confirmatory

    analyses ra the r than becoming revea led thro ugh explora t ion o f the var iance

    accounted for with a different number of factors, as with exploratory

    analyses.

    The measurement model of an SEM is a conf i rmatory fac tor ana lys is

    because it reflects the th eo retically designed config urati on o f m anife st v a r i-

    ables as they load on the latent factors. For this reason, it is important that

    changes not be made to the measurement model l ight ly when a t tempting

    to achieve a parsimonious and significant fit. It is prudent to maintain the

    original measurement model even when some of the manifest variables

    load m ore highly on a different la tent factor than the o ne originally specif ied

    or when a manifest variable does not add significantly to the definition ofa la tent factor because the m odel supp osed ly was based on sound theoretical

    underpinnings. Using SEM in an exploratory fashion is acceptable and can

    be enorm ously usefu l as one explo res the ways in which certa in variab les

    relate to each o ther, but it is essen tial that a t the end of this ex plo rato ry

    foray the researcher is aware of the exploratory nature of the analyses and

    describes them as such. U nd er these circum stances, the confirmatory aspect

    of the modeling is lost and further confirmation with another data set is

    necessary to determine that the final mode! is not simply a reflection of an

    unusual data set .

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    444 USABETH F. DILALLA

    variables. For exam ple, i f we hy pothesize that socioeconomic status (SES)

    p red ic ts th e hom e en v iro n m en t, which in tu rn p redic ts ch ild ren 's p la y b e -

    haviors with peers, then a model can be designed with paths from SES tohome envi ronment and f rom home envi ronment to p lay behaviors , and

    these p aths can be tested simultaneously. This analysis cannot be c ond ucted

    with a standard regression analysis. Addit ionally, i f we want to measure

    each of these variables with several i tems, then with SEM we can form

    three factors SES. home e nvi ronment , and play behaviors and a num ber

    of items that load on each of the factors to define them. So for instance,

    p a ren ta l educa tion and occu pa ti on and fa mily in com e can load on SES. a

    set of items assessing parental discipline and sociability can load on home

    environment, and i tems based on videotaped analyses of children's play

    behav io rs can lo ad on the pla y behav iors facto r. T hen each o f these th ree

    factors can be regress ed a cco rding to the theory tha t was originally specified,

    and these interrelat ions can be assessed direct ly and simultaneously.

    D. M oderator-Mediator Analyses

    Th e use of m od era tor and m ediato r var iables also can be tested using

    SEM. For instance, with the above example, we can ask whether home

    environm ent m ediates the re la t ion between SES and children 's p lay behav -

    iors or whether SES has a direct inf luence on play behaviors even af ter the effects of the home environment are included in the model . Thus, we

    can test the model specif ied above and then add the direct path from SES

    to play behaviors to d eterm ine w heth er this path significantly improves the

    overal l model f i t . The use of moderator var iables is more complex, but

    these variables also can be tested using SEM . M ethods for assessing l inear ,

    quad rat ic, and stepwise effects of the m oderat ing variable on the dep en de nt

    variable are descr ibed in Baron and Kenny (1986) and can be applied

    to SEM.

    III. P LANN ING A STR UC TU RA L EQUAT ION

    M O D E LIN G A N A L Y S IS

    Clearly, SEM has a nu m be r of unique m ethodological advantages, such as

    using mult iple measures as both independent and dependent var iables.

    However , one dist inct disadvantage, as with many of the procedures de-

    scribed in this volume, is that it has become so easy to use many of the

    SEM programs th at a user can run analyses without being aw are of some

    of the basic assumptions that are necessary for conducting the analysescorrect ly. Incorrect results can be reported if the user does not read and

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    15. STRUCTURAL EQUATION MODELING 445

    necessary steps for understanding the basics of perform ing and in terp reting

    an SEM analysis.

    Prior to setting up an SEM analysis, the variables must be examinedto determine their appropriateness for the analysis. Certain assumptions

    m ust be met. Sample size is im porta nt b ecause SEM requires larger sam ples

    than mo st other statistical procedures. T he form at of da ta input also must

    be considered. E stim atio n pro ced u res m ust be chosen based on th e types

    of variables in the model. Each of these issues is considered in the follow-

    ing sections.

    IV . DAT A REQU IREMEN TS

    Basic assumptions common to all regressiontype analyses include data

    multivariate normality and a sufficiently large sample size. SEM also as-

    sumes continuous data , a l though there are ways to model ordinal data by

    using tetrachoric o r polvchoric correlation s, and ways to m odel catego rical

    d ata as well (Mislevy, 19S6; M uthe n, 1984; Pa rry & M cA rdle, 1991). A

    num ber of boots trapping and M onte Carlo techniques have been used

    in an attempt to determine the ramifications of violations of these basic

    assumptions. There is not a clear consensus on the seriousness of relaxing

    these constraints, but parameter estimates appear to be fairly robust evenwhen fit statistics may be severely compromised by this relaxation (Loeh-

    lin, 1992).

    A. Multivariate Normality

    Multivariate normality of the variables in the model is necessary for a well

    behav ed analys is . M ultivariate n o rm ality is sim ply a generalization of th e

    b ivaria te norm al sit uation. W ith a m ultivariate norm al d istribu tio n , each

    variable is normally distributed when holding all other variables constant,each pair of variables is bivariate normal holding all other variables con-

    stant, et cetera, and the relation between any pair of variables is l inear. In

    or de r to tes t for m ultivaria te n orm ality , the th ird and fourth o rder m om ents

    of the variables must be examined fo r m ultivariate skewness and m ultivari-

    ate kurtosis. Mardia (1970) has devised measures to assess these that are

    available in the EQS (Bentler, 1992) and PRELIS (Joreskog & Sorbom.

    1993b) computer software packages for data preparation.

    It is im portant to assess the m ultivariate normality of the data, be cause

    in its absence model fit and standard errors may be biased or irregular

    (Jaccard & Wan, 1996: West, Finch, & Curran, 1995). However, there are

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    446 USABETH F. DILALLA

    can be located and el iminated from the data. However, i t is imperat ive

    that this be do ne carefully and with a great d eal o f thou ght by the researcher.

    If the outliers are truly errors, for instance, if someone were tested under

    improper conditions, then the outlier can be eliminated and the resulting

    sample is stil l the one that was originally expected. However, there are

    times w hen an o utlier occurs und er reaso nab le circumstanc es, such as when

    a person behaves very differently from expectation and from how others

    in the sam ple beh ave , but there are no noticea ble d ifferences in test adm inis-

    trat ion, and the person did not suffer from a known condit ion that would

    affect test perform an ce. In these cases, it is not a ccep table to elim inate this

    person fro m the to ta l sam ple because he o r she is a random ly ascertained

    member of the populat ion. In other words, i t is not acceptable to drop

    respondents simply because the researcher is not happy with the results

    that were obtained. If such atypical participants are dropped from the

    sample, then the resea rche r must be clear that resu l ts of the SEM may not

    general ize to extreme members of the populat ion.

    A second acceptable procedure for deal ing with nonnormali ty is to

    transform the variable that is causing the problem. Several transformation

    options exist, and it depends on the type of variable and the degree of

    skewness or kurtosis present as to which transformation is preferred. For

    instance, a linear transformation will not affect the distribution of the

    variable, whe reas a nonlinear t ransform ation m ay a l ter the variable 's d istr i-

    bu tio n and it s in te rac tio ns and curvil inear effec ts (W est et al., 1995). C en-

    sored v ariab les (variables that have ceiling ' or floo r' effects such that

    a large m ajority of the re spond ents receive the top o r bo ttom possible score,

    and only a small percent of the respondents score along the continuum of

    possib le v alu es) als o may bias p a ram ete r estim atio n (v an den O ord &

    Rowe, 1997).

    It is important after transforming a variable to reassess the skewness

    or kurtosis to determine whether this has improved. It also is important to

    be aw are th a t the in te rp re ta tio n of the varia b le follow in g a transform ation

    cannot be the same as prior to the t ransformation. Transformation causes

    a loss of metric so the variable cannot be easily compared across studies

    or to other, comparable variables (West et al. . 1995). Examples of typical

    and appropriate t ransformations are provided in Cohen and Cohen (1975)

    and West et al. (1995).

    A third approach to the violation of multivariate normality is to use a

    routine other than maximum likelihood (e.g. . weighted least squares) to

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    IS. STRUCTURAL EQUATION MODELING 447

    across the samples . This al lows an est imation of whether the normali ty

    violat ion is a prob lem for the part icular model. T he new v ers ion of LISRE L8 makes this method fairly simple.

    B. Sample Size

    The difficult part of choosing an appropriate sample size is that there is no

    clearcut rule to follow. D ifferent researchers , experim enting w ith different

    types of da ta and m odels , have found varying results in term s of the neces-

    sary sample size for obtaining accurate solutions to modelfitting analyses

    (Bentler & Chou, 1987; Guadagnoli & Velicer. 1988; Hu & Bentler. 1995;

    Loeh lin, 1992). O ne con sideration is the num ber of m anifest variables usedto measure the latent factors. The larger this is, and the larger the loadings

    are for the indicators , then the smaller the necessary sample can be. For

    instance, Guadagnoli and Velicer (1988) found that as long as the factors

    were sufficiently saturated with loadings of at least .80, the total number

    of variables was not important in determining the necessary sample s ize,

    and the sa m ple size could possibly go as low as 50. (W ith fac tor loadings

    less than .80, how ever, the sam ple size requ ireme nts we re m ore s tringent.)

    Another important consideration is the multivariate normali ty of the

    m easures . Sm aller sam ples may be adeq uate if all me asures are m ultivariate

    norm al. B en tler and C hou (1987) suggested that if all variables are normally

    dis tr ibuted , a 5 :1 ra t io of respondents to num ber of f ree param eters may

    be su ff ic ie nt. W ith ou t m u lt ivariate norm ality , a sa m ple size as la rg e as 5000

    may be n ecessary to ob tain accurate results (Hu & B en tler . 1995). Fo r most

    s tudies , An de rson and G erbing (1988) suggest that sam ple s izes of at least

    150 should be adequate.

    All of these sample s ize suggestions assume continuous data sampled

    randomly from a population. I t is possible that sample s izes need to be

    different when these assumptions are violated, but there are no definit ive

    answers as yet. Of course, the basic concern with a small sample is howwell the sample represents the population. Quirks specif ic to the sample

    may greatly affect the analysis, and that is more likely if a smaller sample

    hap pen s to m isreprese nt the popu lation. I f the sample is truly random ly

    ascertained and is an acc urate rep resentation of the large r pop ulation of

    interest , then some of the concerns about small sample s ize may become

    less problematic (Loehlin. 1992). An excellent discussion of the important

    issues of sample s ize and the accompanying concern about power can be

    found in Jaccard and Wan (1996).

    V PREPAR ING DA TA FOR ANALYS IS

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    448 USABETH F. DILALLA

    A. Input Data Matrix

    Most scholars recommend the use of a covariance matr ix for analysis be-

    cause the m ethods tha t are m ost comm only used to solve s tructural equat ion

    models (i .e. . maximum likelihood and generalized least squares) are based

    on theories that were der ived using covariance m atr ices ra th er than c orre la-

    tion m atrices (Lo ehlin, 1992). Also, when a corre lation m atrix is com puted,

    the var iables are s tandard ized based on that sample . W hen those s tandard -

    ized scores are used for the SEM, the sample s tandard deviat ion must be

    used to calculate the standardized variable, resulting in the loss of one

    degree of freedom (Loehlin, 1992). The effects of this are most serious

    with small samples. I t is imperative to use covariance matrices as input

    when a multiplegroup analysis is conducted because otherwise variance

    differences across groups cannot be considered. Instead, the groups are

    treated as though they did not differ in variance, which may be quite

    misleading. Thus, covariance matrices are necessary for comparison across

    groups and across t ime, but corre la t ion matr ices may be used when the

    analysis focuses exclusively on withingroup variations.

    B. Missing Data

    A second issue conc erns the handling of missing data. Th ere are three main

    options for dealing with this problem. First , variables can be deleted in a

    listwise fashion, thereby excluding all participants who are missing any of

    the variables that a re p ar t of the analyses. If variables are m issing random ly

    througho ut the sam ple , however , th is procedu re of ten redu ces the analysis

    sample to a size that is too small for reliable estimates to be produced.

    Furtherm ore, the sm aller sample may be less representat ive of the general

    p opu latio n th a t w as o rigin ally sam ple d, and th ere fo re is sues o f generaliz

    ability become a concern.Second, variables can be deleted in a pairwise fashion, thereby only

    omitting participants for those elements in the covariance matrix for which

    they are missing variables. When pairwise deletion is used, the elements

    in the resulting covariance matrix are based on different participants and

    different sample sizes. This can result in impossible relations among vari-

    ables and th erefo re in a m atrix that is not positive definite (Jac card & Wan.

    1996: Kap lan. 1995). Th e m atrix may then be u ninv ertable, or th e pa ram eter

    estimates m ay be theo retically impossible. Add itionally, th ere is a difficulty

    in determining what sample size to claim for the analyses. Because ofthese shortcomings I recommend against using pairwise deletion for SEM

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    15. STRUCTURAL EQUATION MODELING 449

    be accurate . E ven if the new valu es are reasonab le, there m ay be p ro b lem s

    with nonnormali ty and error var iance heteroscedast ici ty (Jaccard & Wan,1996). Problem s also m ay arise if the imp utation is bas ed on the va riables

    used in the model , because then the same variables are used for est imating

    an oth er var iable 's values an d for es timat ing the re la tions am ong the var i-

    ables. This type of redundancy increases the probabil i ty of a Type I error .

    R ovine (1994) describes several m etho ds of data est imation tha t may avoid

    som e of these problem s. T hese m ethod s are too complex to descr ibe here

    and may prove challenging for beginning users, but they may prove useful

    if missing data are a problem.

    D espite its drawbacks, the safest me thod for deal ing with m issing data

    in SEM is to use listwise deletion. However, as long as the data are missing

    completely at random, the sample size remains large, and no more than

    10% o f the da ta are missing, there is not a large pract ical difference b etw een

    the m ethods of deal ing with m issing data. I f an impu tat ion m ethod is chosen ,

    i t is important to have a strong rat ionale for the type of imputat ion used

    an d no t to confound the im pu tat ion with the modeling itself . M ore resea rch

    is necessary on the various ways to handle missing data before vve can

    recommend one method over another unequivocal ly .

    C. Construction of Input Matrix

    O nce the appropr ia te type of inpu t m atrix has been chosen and the problem

    of missing data handled, the sam ple m atrix must be const ructed . I f L ISR E L

    (Jores kog & Sorbom, 1993a) is the program of choice, a package cal led

    PRELIS (Joreskog & Sorbom, 1993b) can compute the input matr ix in a

    form that is ready to be read by LISREL. This is deceptively simple; al l

    th at the user needs to do is pro vide a raw data f ile and specify the m issing

    values and type of matr ix to compute. As with al l canned stat ist ical pack-

    ages, the user must be diligent in specifying the desired options. It is very

    simple to request the w rong type o f matr ix (e.g. , a correlat ion m atr ix rath er

    than a covariance m atrix) or to misspecify the types of var iables th at have

    b een m easured (e .g ., identi fy in g a con ti n uo u s variable as o rd inal). P R E L IS

    will compute the requested matrix, even if it is not necessarily sensible,

    LISREL wil l analyze that matr ix, and the naive user may think that the

    m odel has been tested ad equ ately. PR E L IS is an excellent tool for pre parin g

    da ta for input to LISR EL as long as the us er correct ly identifies the variables

    and the desired type of input matr ix.

    D. Estimation Procedures

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    450 L1SABETH F. DILALLA

    choice of est imation pro ced ure depend s on the samp le and the m odel

    bein g estim ate d.

    The MLE procedure i s the defaul t opt ion in LISREL and EQS. Thism ethod is based on the a ssum ption of m ult ivar iate n orm ali ty, and i t requires

    a relat ively large samp le size to perform adeq uately. W hen these two as-

    sumptions are not met. it may be wise to consider a different estimation

    m ethod. A second m etho d is gene ral ized least squares, which also assumes

    mult ivar iate normali ty and zero kurtosis. A number of other methods have

    been develo ped, m any o f w hic h are available th roug h th e sta n d ard SEM

    pro gram s. In p ra ctic e , th ere m ay be li tt le d if ference in ou tcom e betw een

    the various m ethod s (C hou & B entler . 1995). but when the re is do ub t about

    the appropriateness of a method, I recommend that the invest igator use

    several methods and compare the results.

    VI . MULT IPLE GROUPS

    One huge advantage of SEM analyses over other types of analyses is the

    abil i ty to compare two or more independent groups simultaneously on the

    same model to determine whether the groups differ signif icantly on one or

    more parameters. There are a number of instances when i t is useful to

    model more than one group s imul taneously . A researcher may want tocompare exper imental groups to determine whether a t rea tment had an

    effect , or gender groups to determine whether the relat ions among a set

    of var iables are comparable for boys and gir ls, or small versus large busi-

    nesses to determine whether shareholder earnings affect worker productiv-

    ity comparably. The basic methodology is to hold al l or a subset of the

    param eters co n stan t acro ss g roups and assess m odel fits fo r all groups

    simultaneously. Then these equal parameters can be freed and the models

    comp ared to determine w heth er holding the param eters equal across groups

    pro vid es a sig nif icantly w orse fit. If it does, th en the p a ram ete rs dif fe r

    significantly across groups; if not, then the parameters do not differ signifi-

    cantly across groups and can be set equal across groups without loss of

    model fit.

    Certain regulat ions must be observed when conducting mult iplegroup

    SEM. First , it is im po rtant to inp ut covariance m atr ices ra ther than correla-

    tion matr ices, as descr ibed ear l ier , because variances may not be compara-

    ble acro ss gro ups. Second, th e laten t variable s m ust be on a com m on scale

    across groups, which means that the same manifest var iable(s) must be

    used to set the scale for the latent variable(s) in all groups. These two

    pra ctices allow com p ariso ns across groups as well as a te s t fo r w h e th er th ei l i f i i ( J k & S b

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    IS. STRUCTURAL EQUATION MODELING 451

    V II. AS SESS ING M O DEL F iT

    Once the m odel has been specified properly and the data have been e ntered

    correctly, the fit of the data to the hypothesized model must be evaluated.

    A number of tes ts are used to evaluate how well the model descr ibes

    the observed re la t ions among the measured var iables: d ifferent modeling

    p ro g ram s prov ide d iffe ren t o u tp u t. T h ere is no consensus as to w hic h one

    is "b e st becau se each test statistic has advantages and disadvantages. A lso,

    there is no consensus regarding the effect of factors such as sample size

    and normality violations on different fit indices (e.g.. Hu & Bentler, 1995;

    M arsh. Ballad & M cD onald, 1988).

    It is im perative to exa m ine several fit indices when e valuating a m odeland never rely solely on a single index (Hoyle, 1995b). Table 15.1 summa-

    rizes some of the tes ts and the s i tuations under which m ost researchers

    agree that they are most and least useful. The following descriptions and

    recom m enda tions are by no m eans def ini tive or exhaust ive , but they incor-

    p o ra te the m ost recent suggestions in th e li terature. H oyle (ch ap te r 16, th is

    volume) and Tracey (chapter 22, this volume) also provide discussions of

    fit indices.

    A. Absolute Fit Indices

    Th ese indices compare observ ed versus expected variances and covariances ,

    thereby measuring absolute model fit (Jaccard & Wan, 1996). The earliest

    m eas ure and o ne th at is stil l freq ue ntly rep orted is the chisquare fit index.

    This index was designed to test whether the model fit is perfect in the

    p o p u la tio n (Jaccard & W an. 1996). It com pares th e observed covariance

    m atr ix with the expected covariance m atr ix given the re la tions am ong the

    variables specified by the model. The chisquare will be zero when there

    is no difference between the two matrices (i.e., there is perfect fit), and

    the chisquare index will increase as the difference between the matrices

    increases. A significant chisquare value signifies that the model predicts

    relations that are significantly different from the relations observed in the

    sample , and that the model should be re jected.

    A problem with the chisquare statistic is that SEM requires the use

    of large sam ples, and u nd er tho se co nditions the chisquare test is pow erful

    and rejects virtually all models. Also, the chisquare statistic may not be

    distributed as a chisquare when sample size is small or when the data

    are nonnormal, and under these conditions the significance test is not

    ap pro pria te (Jaccard & W an, 1996). However, the chisquare test is usefulh i d d l Th f I d h hi i i b

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    15. STRUCTURAL EQUAT ION MODELING 453

    bu t which ad ju sts fo r th e degre es o f freedom in th e m odel. A th ir d index

    is the centrali ty index (Cl: McDonald, 1989). Scores on all three indices

    can range from 0 to 1.0. with values closer to 1.0 being preferable. Manyresearchers have suggested that values greater than .90 on these indices

    can be inte rp rete d as signifying acceptable mo del fit , bu t there is no em piri-

    cal support for this . Although Gerbing and Anderson (1993) found the Cl

    to be particularly robust with Monte Carlo simulations, i t is not provided

    by L IS R E L and is used less frequently in general, m akin g it less use fu l fo r

    comparing results across studies. The final two absolute fi t indices are

    the standard ized roo t m ean square residual (R M R), which is the average

    discrepancy b etw een the o bserved and the ex pected co rrelat ions across all

    p a ram ete r estim ate s, and th e root m ean square e rro r o f approxim ation

    (RM SE A; S teiger & L ind, 1980). which adjusts for parsim on y in the m odel.A p erfect fit will yield an RM R o r RM SE A of zero; sco res less than .08

    are co nsid ered to be ad equ ate, and scores o f less tha n .05 are considered

    to be goo d (Jacc ard & W an, 1996). The R M R is a function of the metric

    used in m easuring the variables and is most interp retable with standardized

    variables. The R M SE A is useful because it adds a pen al ty for including

    too many parameters in the model .

    B. Com para tive Fit indices

    Th ese indices com par e the absolute fit of the m odel to an alternative model.

    The co m parat ive fit index (CFI; Be nt ler , 1990). the D E L TA 2 or incremental

    fit index (IFI; Bo llen. 1989a), the no rm ed fit index (NF I; Bentler & Bon ett ,

    1980). and the n on no rm ed fit index (NN FI: Be ntler & B on ett , 1980), which

    is a general ized version of the Tucker and Lewis index (TLI; Tucker &

    Lewis, 1973). are the most widely used comparative fit indices (see Table

    15.1). Each compares the fi t of a target model to a baseline model.

    The CFI compares the tested model to a nul l model having no paths

    that l ink the v ariables, therefore making the variables indepe nden t of each

    other. The CFI appears to be quite stable, especially with small samples.It can range from 0 to 1.0: scores less than .90 are co nsid ered to be unaccep t-

    able. The IFI also tends to be quite consistent even with small samples.

    The IFI typically ranges from 0 to 1.0. although values can exceed 1.0,

    which makes this more difficult to interpret than the CFI. Again, higher

    values indicate better model fi t . There is some debate about the sensitivity

    of the TLI and the NNFI to sample size; Marsh et al . (1988) suggest that

    they are relatively indep end ent of sample size, whe reas Hu and B ent ler

    (1995) suggest that their values may not stay within the easily interpreted

    0 to 1 ran ge if the sa m ple size is small. Th e NF I clearly is m ore sensitive

    to sample size, does not perform as consistently with smaller samples, andt d t b d ti t d (i l b t bl ll f

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    454 USABETH F. DILALLA

    C. Sum mary

    Many indices have been proposed for evaluating the fit of a model (seeByrne. 1995; Hu & Bentler. 1995; Jaccard & Wan, 1996). and many cutoff

    values have been suggested for interpreting these indices (e.g.. Schu

    macker & Lomax, 1996). However, there is much discussion among SEM

    users as to wh ether these cutoffs are app ropriate. No unam biguous inter pre -

    tation exists whereby model fit can be described as "definitely good" or

    definitely bad." Instead, fit indices are interpreted fairly subjectively, al-

    though the cutoff values suggested in Table 15.1 will be of some help. The

    best w ay to de te rm in e w h eth er a m odel is acceptable is to use several of

    the indices listed in Table 15.1 and to look for agreement across indices.

    Confidence can be placed in the m odel if m ost or all indices are a cceptable,

    b u t the m odel should be considered a p o o r fit to the da ta if severa l o f th e

    indices are unacceptable. A good general practice is to report the chi

    square and A G FI statistics, but to rely more on the com parative fit indices

    for interpreting the model fit .

    V III. C H E C K I NG T H E O UT P U T F O R P R O B LE M S

    I hav e insufficient space in this ch ap ter to do mo re than highlight aspectsof the SEM output that may cause readers some confusion or lead to

    erroneous interpretations if not examined carefully. Therefore, in this sec-

    tion I will focus on doublechecking output, using standardized scores,

    interpreting parameter estimates, using model modification indices, and

    comparing nested models . An example of LISREL output is provided in

    Tables 15.2 and 15.4 through 15.6 to help clarify the points made below.

    This model hypothesizes that day care experience and child temperament

    are c auses of childhoo d ag gression (D iLalla, 1998; see Figure 15.2). SES and

    sex are the two exogen ous variables, and all oth er variables are regressed onthem. Aggression is measured by parent report and by lab ratings during

    a pe er play enco unter. Aggression of the pee r also is rated in the lab. Thus,

    child lab aggression is correlated with parentrated aggression and peer

    aggression, and is regressed on day care experience, child temperament.

    SES, and sex.

    A. Ensuring Accurate fnput

    It is obvious that errors in input will lead to inaccurate output. Th erefo re,p rio r to in terp reting th e analy sis results , it is im perative that the user

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    15. STRUCTURAL EQUATION MODELING 455

    FS G U R E I 5 .2 Model depicting the relations betwe en day care experience, child tem pe ra-

    ment. and child sociabil i ty (from DiLalla. 1998). and a nested version of the full model, with

    the day care experience parameter f ixed to zero.

    p rio r to exam inin g the ou tp u t for m odeling results . A n exam ple o f L IS R E L

    "P ara m eter Specification output is provided in Table 15.2. All num bered

    p a ram ete rs are supposed to be free and all zero p aram ete rs sh o u ld be

    fixed. N ote , for instance, that B eta (4,1) is free (p ara m ete r 3) beca use lab

    aggress ion is regresse d on day care ex perien ce. Psi (4,1) is fixed (set at zero)

    b ecause lab aggre ssio n and day care experience are no t free to co rre la te .

    Also, doub le check the input matrix before exam ining the m odel results.This requires that the user be familiar with the data set and understand

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    456 IISABETH F. DILALLA

    T A B L E 15.2 LI S R E L Outpu t: Par am eter Specifications for Model in

    Figure 15.2

    Beta matrix

    Day care

    experience

    Tempera-

    ment

    Parentrated

    aggression

    Child lab Pe er lab

    aggression aggression

    Day care experience 0 0 0 0 0

    Temperament 1 0 0 0 0

    Paren trated aggression 2 0 0 0 0

    Ch ild lab aggression 3 4 0 0 0

    Pe er lab aggression 0 0 0 0 0

    Gamma matrix

    Socio-

    economic Sex of

    status child

    Day care experience 5 6

    Temperament 7 8

    Pa rentra ted aggression 9 10

    Child lab aggression 11 12

    Peer lab aggression 0 13

    Psi matrix

    Day care Tempera- Parentrated Child lab Peer lab

    experience ment aggression aggression aggression

    Day care experience 14

    Temperament 0 15

    Par entra ted aggression 0 16 17

    Child lab aggression 0 0 18 19

    Peer lab aggression 0 0 0 20 21

    B. Check for Warnings and Errors

    A fter ensuring the accuracy of the mo del and data , check the o utp ut for

    any warnings or errors. Fatal errors are easy to detect because they cause

    the program to crash and make i t c lear that something is wrong, but there

    are a number of other types of error messages that , i f ignored, can lead to

    false confidence in the o utpu t. Table 15.3 lists some of the erro rs that

    begin nin g users tend to ig nore o r m is understa nd th e m ost frequen tly .

    One of the most common mistakes made when specifying a model is

    inverting the direction of causality. It is necessary to com pletely un de rstan d

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    S STRUCTURAL EQUATION MODELING 457

    fac tor to the mani fes t var iables used to approximate i t . Thus , in LISREL

    nota t ion, the lambda mat r ices a re not symmetr ic and must be spec i f ied

    careful ly so that the rows and columns are not reversed. Similarly, in EQS,equat ions are specified using regression semantics: the predicted variable

    (the arrow head ) is regressed on (eq ua ls) the pre dictor ( the tai l of the arrow ).

    A re la ted e rror tha t may he more indica t ive of a misunders tanding of

    the en t i re process of SEM is the m isinterp retat io n o f causal ity. SE M an aly-

    ses are based ori the correlat ion or covariance between the variables, and

    i t is axiomatic that causali ty can no t b e inferred from correlat ions. A test

    of the m odels with the direct ion o f cau sal i ty reverse d would yield the same

    fi t index because the f i t of the model depends only on how well the model

    recaptures the original covariance matrix. If two variables are correlated,

    i t does not m at te r wh ether the f irst var iable is regressed on the secon d, or

    vice versa: the resulting fit will be the same. As noted earlier, this under-

    scores the importance of firmly grou nd ing the m odel on theory and pr ior re-

    search.

    Final ly, poorly defined latent variables wil l cause the program to be

    underident i f ied, to fai l to converge, or to yield a very poor f i t value. The

    latent factor cannot be measured adequately unless the variables used to

    m easure i t are fair lv highly inte rco rrela ted . W hen the la tent variables are

    i A B LE 15.3 Selected LI SR EL Warning s or Errors

    Warning /e r ro r

    message" Interpretat ion What to do

    Solution written on

    Dump f i l e

    Solut ion was unable to converge: parameter

    estimates are saved in a f i le called

    "D um p ; li t indices and pa ram eter est i-

    mates are provided because they may

    help locate the problem. These es t imatesshould n o t b e i n t e r p r e t e d t h ey a re not

    meaningful.

    Dump va lues can

    be used as sta rt

    values for the

    next run.

    Inadmissibili ty error Solution is nonadrnissible. This happens if a

    Lam bda matr ix has a row of zeroes ,

    meaning a latent variable is not defined

    by any m anif est v ari ab le s (e .g ., oft en

    used in behavior genetic analyses).

    Turn of f the ad miss i-

    bi li ty te st if a ro w

    of zeroes is in-

    tended.

    Sigma not positive

    definite

    The covar iance matr ix based on the model

    (not the data) is not invertible: this may

    resul t if one or m ore pa ram eters have

    been sta rte d a t ze ro .

    Change some of the

    start values and

    rerun the

    p ro gra m .

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    458 LISABETH F. DILALLA

    poorly defin ed, th e lo adin gs of each of th e m anif est varia ble s on the la te n tfactor will be small, and the latent factor will not be well defined. Poorly

    defined factors are of little use in predicting another factor and the result

    will be a poo r m od el fit. very small and n onsignificant par am ete r estim ates,

    and a model that accounts for virtually no variance in the data. Thus, one

    model check is to ensure that the variables used to measure a factor are

    sufficiently intercorrelated that the factor will be defined.

    ! X . INTERPRET ING RESULTS

    Only after the user is confident that there are no input errors should the

    outp ut be exam ined to add ress the substantive issues guiding the research.

    Joreskog and Sorbom (1993a) describe a logical sequence to follow in

    examining the analysis output.

    A. Examine Parameter Estimates

    First , exam ine the p aram eter estim ates to ensure that they are in the right

    direction and of reasonable size. In many programs (e.g. . LISREL). the

    estimates can be presented in standardized (see Table 15.4) or unstandard-

    ized form. M ost users will f ind the standardized o utp ut to be m ore inte rpr et-

    able. For example, the partial regression of day care experience ( .17) and

    lab aggression ( .16) on SES can be seen in the G am m a m atrix o f Table

    15.4. As hypothesized, SES positively predicts day care quality and nega-

    tively predicts child aggression.

    Also, the user should examine the standard errors of the parameters

    to ensure that they are not so large that the estimate is not reasonably

    determ ined. A dditionally, the squared m ultiple c orrelations and the coeffi-

    cients of determ ination indicate how well the laten t variables are m easured

    by the observed varia ble s. These values should range from zero to one.

    with larger values indicating better fitting models.

    B. Examine Fit Indices

    Second, exam ine the m easures of overall fit (see Tab le 15.5). R em em ber

    to consider several indices, bearing in mind that interpretation of these

    indices is subjective and that you are look ing for consistency across indices.

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    15. STRUCTURAL EQUATION MODELING 459

    T A B L E 15.4 LIS R EL O utput: Standardized Solution for Model in

    Figure 15.2

    Beta matrix

    Dav care T em pera- P are ntra te d Child lab P eer lab

    experience ment aggression aggression aggression

    Day care experience __;

    Temperam ent 0.03

    Parentrated aggression 0.19

    Child lab aggression 0.17 0.11

    Peer lab aggression

    Gamma matrix

    Socio-

    economic Sex of

    status child

    Day care experience 0.17 0.11

    Tem peram ent 0 .33 0.12

    Paren trated aggression 0.21 0.01

    Child lab aggression 0 .16 0 .52

    Peer lab aggression 0.17

    Psi matrix

    Day care Tem pera- Parentrated Child lab Peer lab

    experience ment aggression aggression aggression

    Day care experience 0.96

    Temperam ent 0.87

    Parentrated aggression 0.31 0.93

    Child lab aggression 0.28 0.70

    Peer lab aggression 0.14 0.97

    TA BLE 15.5 LISR EL Output: Partial List of

    Goodness-of-Fit Statistics for Model in Figure 15.2

    Chisquare with 4 degrees of freedom = 7.40 (p = 0.12)

    Root mean square error of approximat ion (RM SE A ) = 0 .11

    Root mean square residual (RMR) = 0.057

    Goodnessoffi t index (GFI) = 0.97

    Adjusted goodnessoffi t index (AGFI) = 0.81

    N orm ed fit in dex (N F I) = 0.91N onnorm ed fit in dex (N N F I) = 0 70

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    460 LISABETH F. DILALLA

    hand, the CFI (.94) and the 1FI (.96) are in the acceptable range. There is

    not clear consensus among the f i t indices, and therefore the most prudent

    interpretat ion is that the model requires fur ther ref inement.

    C. Examine Individual Aspects of the Model

    The next step is to examine the standardized residuals and modif icat ion

    indices to determine what aspect or aspects of the model do not f i t the

    data well . This step is important because the main function of SEM is to

    test a theoret ical model and determine areas that require close scrut iny

    in future theory development and empir ical research. Small standardized

    residuals indicate that the observed and the expected correlat ions are very

    simi lar and the m odel has done an adeq uate job o f account ing for the data

    (H u & B en tler. 1995). Mod ification indices assess the value of freeing

    p aram ete rs th a t are cu rre n tly fixed or constra in ed (fo r in sta nce, pa ram ete rs

    that are forced to be equal to o ther param eters) . For example , the cor re la-

    tion path between parentrated aggression and peer aggression is f ixed at

    zero in Table 15.2. Modification indices (Table 15.6) show that the largest

    change in chisquare would result f rom freeing this path (element 5,3 in

    the Psi matrix). The path can be freed if this makes sense theoretically,

    b u t it is essen tia l to re alize th at such m odif ications resu lt in p o st hoc analy-ses. They are useful in that they generate hypotheses for future research

    (Hoyle, 1995b), but unti l crossvalidated on an independent sample there

    is no way to be certain that they are not capitalizing on chance associations

    in this par t icular data set (see Tinsley and Brown, chapter 1, this volume,

    for a discussion of crossvalidat ion procedures) . In the example presented

    ear l ier , i t makes no sense theoret ical ly to correlate a parent 's rat ing of

    their own ch ild 's aggression with labo ratory rat ings of the aggression of an

    unfamiliar peer in the lab. Therefore, this path should not be freed in the

    model , even though i t would improve the model 's f i t .

    D. Testing Nested Models

    T here are two w ays to create n ested m odels for determ ining the best f it ting

    model for the data. One is to hypothesize a priori a full model and certain,

    more restr icted models that are based in theory. For instance, i t may be

    reasonable to form a model that descr ibes the relat ions among day care

    experience, chi ld temperament, and child aggression ( i .e . , the ful l model

    depicted in Figure 15.2) , and then on theoret ical grounds to postulate anested m odel that includes only the path f rom tem peram ent to sociabil ity

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    IS. STRUCTURAL EQUATION MODELING 4 61

    T A B L E 15.6 L IS R E L Ou tput: Modification Indices for Model in

    Figure 15.2

    Modification indices for beta

    Day care

    experience

    Tempera Parentrated

    ment aggression

    Child lab

    aggression

    Peer lab

    aggression

    Day care experience __ __ 0.04 0.04

    Temperament 0.19 0.19Paren trated aggression 5.35 5.35Child lab aggression _

    P eer lab aggression 0.15 0.00 4.24 4.90

    Modification indices

    for gamma

    Socio-

    economic Sex of

    status child

    Day care experience __

    Temperament Parentrated aggression

    Child lab aggression

    Peer lab aggression 1.29

    Modification indices for Psi

    Day care T em pe ra P ar en t ra te d C hild lab Pee r lab

    exp erience m en t ag gre ssio n aggression aggression

    Day care experience

    Temperament Paren trated aggression Child lab aggression Peer lab aggression 0.04 0.19 5.35

    Maximum modification index is 5.35 for element (5.3) of Psi.

    full model. This nested model is equivalent to a p o st ho c test that requires

    crossvalidation.

    Regardless of how they are created, nested models can be statistically

    compared to determine whether dropping the paths f rom the ful l model

    resulted in a statistically significant decrease in model fit. The chisquare

    statistic is useful for com paring nested m odels. The difference b etw een chi

    squa res (i .e. , chisquare (Full) minus chisquare (N ested )) is distributed as

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    462 L1SABETH F. DILAILA

    that the more restr ict ive model with the greater degrees of freedom can

    be accepted as the b e tte r (m ore parsim onious) m odel.

    X . CONCL US ION

    SEM is a flexible analytic tool that can combine regression, correlation,

    and factor analyses simu ltaneou sly to add ress im portant issues in the social

    sciences, biological sciences, and humanities. Readers desiring a more de-

    tailed introduction to the topic will find useful treatments in Byrne (1994).

    H ayd uk (1987), H oyle (1995a). and Jacca rd and W an (1996). Re lated issues

    are addressed in the journal devoted to SEM enti t led Structural Equation

    M odeling: A M ult idiscip lin ary Journ al, and advice about specific issues is

    available from SE M N ET , the lively discussion forum that is available on

    an email list server ([email protected] ).

    There is stil l much to be learned about SEM, including appropriate

    uses of various fit indices and the interpretation of odd or impossible

    pa ram ete r estim ates, b u t its valu e has been d em o n stra ted in n um erous

    studies. Furthe rm ore, nove l m ethods for addressing unique m odeling issues

    continue to emerge. Fo r instance, recent developm ents include the creat ion

    of phantom variables that enab le one p aram eter est im ate to be equal to a

    multiple of another or that allow a group of participants who are missing

    a variable to be included as a separate group rather than to be omit ted

    from analysis (e.g., Loehlin, 1992; Rovine, 1994). As these innovations

    continue, the application of SEM to complex research questions will in-

    crease.

    R EFER ENCES

    A nde rson. J . C. . & G erbing, D. W. (198S). Structural equation modeling in practice: A review

    and recommended twos tep approach. Psychological Bulletin, 103, 411423.

    Baron. R. M.. & Kenny. D. A. (1986). The moderatormediator variable dist inct ion in social

    psych ological research : C oncep tu a l, s tr ate g ic , and sta ti st ic al consid erati on . Jou rn a l o f

    Personality and Social Psychology, 51, 11731182.

    B en tler. P. M. (1980). M ultivaria te analysis with latent variables: Causal mo deling. A n n u a l

    Review o f Psycholo gy, 31, 419456.

    Bentler. P. M. (1990). Comparative fit indices in structural models. Psychological Bulletin ,

    107, 238246.B en tler, P. M. (1992). E Q S str uctu ral equations program m anual. Los Angeles : B M D P S ta ti s ti-

    mailto:[email protected]:[email protected]
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    15. STRUCTURAL EQUATION MODELING 463

    Bollen. K. A. (1989b). Structural equations with latent variables. NY: Wiley.

    Byrne. B. M. (1994). Structural equat ion m odel ing wi th E Q S and E Q S/W indow s: Bas ic con-

    cepts. applications, an d prog ram ming . Thousand Oaks . CA Sage Publ icat ions .

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