Question

What is the importance of Theory in Structural Equation Modeling?

Answer 1

Structural equation modeling is a multivariate statistical analysis technique that is used to analyze structural relationships. This technique is the combination of factor analysis and multiple regression analysis, and it is used to analyze the structural relationship between measured variables and latent constructs.

Theory:

A theory is a set of interrelated concepts, definitions, and propositions that explains or predicts events or situations by specifying relations among variables.

This can be thought of as a set of relationships providing consistency and comprehensive explanations of the actual phenomena.

In every situation, we use theory to see patterns and tendencies, to discern potential trajectories (insofar as that’s possible) and to decide on appropriate responses and strategies.

Following perspective used or considered

1. Multivariate normal distribution: The maximum likelihood method is used and assumed for multivariate normal distribution. Small changes in multivariate normality can lead to a large difference in the chi-square test.
2. Linearity: A linear relationship is assumed between endogenous and exogenous variables.
3. Outlier: Data should be free of outliers. Outliers affect the model significance.
4. Sequence: There should be a cause and effect relationship between endogenous and exogenous variables, and a cause has to occur before the event.
5. Non-spurious relationship: Observed covariance must be true.