Effects of Ignoring Correlated Measurement Error in Structural Equation Models

• Main Author: REDDY, Srinivas K.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 1992
• Subjects: Management Sciences and Quantitative Methods
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/2976
• Institution: Singapore Management University

The implications of ignoring correlated error on parameter estimates in some simple structural equation models are examined. Ignoring correlated measurement error not only affected the acceptability of a model based on goodness-of-fit measures, but also affected the parameter estimation. Ignoring within-construct correlated error does not affect the estimates of the structural parameter but overestimates the associated measurement parameters. It is shown analytically and empirically that ignoring positive between-construct correlated error overestimates the structural parameter linking the two constructs. The effects become more pronounced with decreasing reliability in measurement.