Richard G. Lomax The Ohio State University lomax.24@osu.

edu

 The purpose of this paper is to introduce structural

equation modeling (SEM), utilizing poverty solutions theoretical model examples.

The following topics will be introduced: 1. Purpose and description of SEM; 2. Basics of SEM; 3. Steps in SEM process; 4. Observed and latent variable models; 5. Multi-sample SEM; 6. Multilevel SEM; and 7. Assumptions, and power, sample size, and effect size considerations.

1. Purpose and Description of SEM

The purpose of SEM is to provide a

quantitative test of one or more theoretical models (e.g., the influence of poverty on parental involvement).
In SEM the researcher hypothesizes certain

relationships among a set of theoretically important variables and then empirically tests those relationships.

 Here is a very simple theoretical model based on

some poverty research studies:

Poverty Parental Involvement Student Achievement

Bottom line question in SEM:

Do the sample data support the theoretical model?

2. Basics of SEM
A. Latent variables (or constructs or factors):

these are theoretically-based variables that are not directly observed or measured.
examples: Poverty; Parental Involvement;

Student Achievement.

 B. Observed variables (or indicators or

measures): these are measurable variables with actual scores from instruments that are used to define the latent variables in a particular way.

examples: Expenses for Food, Clothing, and

Shelter (measures of Poverty); Parent Attendance at Social and School Activities (measures of Parental Involvement); Math and Literacy Achievement subtests (measures of Student Achievement).

 C. Independent variables: variables that

are not influenced by any other variable in the model (Poverty in our example).
D. Dependent variables: variables that are

influenced by some other variable in the model (Parental Involvement and Student Achievement in our example).

3. Steps in SEM Process

A. Model Specification
This is where the researcher develops and hypothesizes a

theoretical model (or models) from available theory and research (from literally any type of research that examines relations among variables).
This is the hard part of SEM as it comes from the literature

review (i.e., not generated by your data).

This is done prior to any data analysis (and often done prior to

data collection so that the strongest measures can be selected).

 In model specification you decide which variables to include in the

model and how these variables are related to one another.

A model is properly specified when the true population model that

generated the sample data is consistent with the theoretical model actually tested.
Otherwise the model is misspecified. Every model is incomplete, or

misspecified, to some degree.

Misspecified models can be due to errors of omission and/or inclusion

of any variable and/or parameter.

Misspecified models can result in biased parameter estimates (this bias

is known as misspecification error); also the misspecified model may not fit the data according to global model fit indices.

B. Model Identification
Do we have sufficient information in the sample data to

uniquely estimate all of the parameters in the model?

In other words, can we obtain a unique value for every

parameter estimate? For a VERY simple example: X + Y = 11. you wish to estimate), (b) fixed (not free, but fixed to a specific value such as 0 or 1), or (c) constrained (fixed to be equal to some other free parameter).

Every potential parameter in a model is either (a) free (that

Since the results of a nonidentified model cannot be trusted,

you must be sure the model is identified before proceeding with the analysis.

C. Model Estimation
Some commonly used methods to estimate model

parameters include:
OLS (ordinary least squares);
GLS (generalized least squares); ML (maximum likelihood).

D. Model Testing
a) Use global fit indices to assess fit of the entire model:
unfortunately there is no single most powerful fit index (like

the F in ANOVA).
some commonly used SEM global fit indices include (a) chi-

square, (b) GFI (goodness-of-fit index), (c) RMSEA (root mean-square error of approximation), (d) SRMR (standardized root mean-square residual), and (e) CFI (comparative fit index).
it is recommended to report multiple global fit indices.

 b) To assess the fit of individual parameters, examine (1) t values (ratio of estimate to standard error);

(2) significance of t (whether estimates are significantly

different from zero);

(3) sign of the estimate (in hypothesized direction);
(4) whether the estimate makes sense (e.g., no negative

variances; no correlations beyond 1.0).

E. Model Modification
If the global fit of your initial model is not acceptable,

which is typical, then detective work is necessary to look for ways to modify the initial theoretical model to achieve a better fit.
a specification search.

Searching for a more properly specified model is known as

In any specification search, substantive knowledge

must be the #1 priority.

In other words, do not add additional parameters to

simply achieve better model fit if they do not make substantive sense.

4. Observed and Latent Variable Models

A. Regression Models an observed variable model with a

single equation or dependent variable; thus only simple theoretical models are possible; measurement error is not taken into account.

Shelter Expenses

School Activities

 B. Path Models an observed variable model with multiple

equations or dependent variables; thus more complex theoretical models are possible; measurement error is not taken into account.

Shelter Expenses

School Activities

Literacy Achieve

 C. Confirmatory Factor Analysis Models a latent variable model with

multiple observed variables measuring each factor; latent variables are not related to one another other than perhaps by a correlation (or covariance).
e1 e2 e3
Food

Clothing Shelter

Poverty

e4 e5

Social School

Parental Involve

e6 e7

Math

Achieve
Literacy

 D. Structural Equation Analysis Models a latent variable model which

combines a confirmatory factor analysis model and a path model; latent variables can influence one another.
e1 e2 e3
Food

Clothing Shelter

Poverty

e4 e5

Social School

Parental Involve

e6 e7

Math

Achieve
Literacy

5. Multi-sample SEM
To this point we have only been concerned with models involving a single sample. We can also examine any type of SEM model using multiple samples, sub-samples, populations, or treatment groups (e.g., is the same poverty model appropriate for different national samples, or for different levels of poverty?).

 First there is multiple sample SEM (MS-SEM) where

we consider the invariance (equality) of parameters across samples.

Applications of MS-SEM might involve (a) validating a

particular model across different samples, (b) taking random subsamples from the original sample, or (c) comparing multiple groups (e.g., treatment groups, levels of poverty, levels of education).

 Second there is structured means SEM (SM-SEM) where

you are interested in group mean differences. Here you are also looking at mean structures, whereas all previous models were only looking at covariance structures.
For example, suppose we wish to compare samples of

children who have attended preschool versus those who have not. Here we can consider mean differences on latent variables (e.g., Student Achievement), or in a measurement equation (e.g., a particular measure of Student Achievement, such as Math Achievement), or in a structural equation (e.g., the prediction of Student Achievement).

6. Multilevel SEM
To this point we have only considered models where

data have been gathered and analyzed at a single level (e.g., family level).
There is also multilevel SEM (ML-SEM) where data are

hierarchical in nature. For example, families are nested within neighborhoods, within cities, within states, etc.
For our example model, we might have data at both the

family and the neighborhood levels, which is a twolevel model.

 In ML-SEM we are interested in the relations among

the variables, perhaps both within and between levels.

ML-SEM allows us to (a) properly take into account

the nested nature of the design in terms of parameter estimation, (b) test the same or a different theoretical model at each level, (c) use repeated measures data on the same subjects with latent growth curve models, (d) use of covariates as in ANCOVA, (e) test nonlinear models, or (f) test models with categorical outcomes.

7. Assumptions, and power, sample size, and effect size considerations

There are two important assumptions in SEM: normality

and linearity.
Thus the population data should be normally distributed

and the observed variables should be linearly related.

We have to assess normality and linearity, and subsequently

deal with any nonnormality and nonlinearity; these violations can affect SEM results.

 With all inferential statistics, it is important to have sufficient

power (i.e., our ability to correctly reject the null hypothesis). Power is largely a function of effect size, selected alpha level, and sample size. perspective, most researchers focus on determining what a large enough sample needs to be in order to have sufficient power in a study (i.e., a priori power).

Since sample size is the most important aspect from a design

A priori power is typically determined using either statistical

software (e.g., G*Power), statistical tables, or rules of thumb (e.g., need at least 100 to 150 for a basic SEM model). the variables in your model. In SEM, effect size is typically assessed via the noncentrality parameter or by delta.

Effect size deals with the magnitude of the relations among

Poverty Solutions SEM Examples

Shumow & Lomax (2002). In Parenting: Science and Practice

Palomar et al. (2005). In Social Indicators Research

Additional Information
For additional information on SEM, one source is: Schumacker, R.E. & Lomax, R.G. (2010). A beginners

guide to structural equation modeling (3rd ed.). New York: Routledge.

Email address: lomax.24@osu.edu