Confirmatory Factor Analysis

Confirmatory Factor Analysis (CFA) is the next step after exploratory factor analysis to determine
the factor structure of your dataset. In the EFA we explore the factor structure (how the variables
relate and group based on inter-variable correlations); in the CFA we confirm the factor structure
we extracted in the EFA.

 LESSON: Confirmatory Factor Analysis

 VIDEO TUTORIAL: CFA part 1
 VIDEO TUTORIAL: CFA part 2

Do you know of some citations that could be used to support the topics and procedures
discussed in this section? Please email them to me with the name of the section, procedure, or
subsection that they support. Thanks!

Contents
[hide]

 1 Model Fit
o 1.1 Metrics
o 1.2 Modification indices
o 1.3 Standardized Residual Covariances
 2 Validity and Reliability
 3 Common Method Bias (CMB)
o 3.1 Harman’s single factor test
o 3.2 Common Latent Factor
o 3.3 Marker Variable
o 3.4 Zero and Equal Constraints
 4 Measurement Model Invariance
o 4.1 Configural
o 4.2 Metric
o 4.3 Contingency Plans
 5 2nd Order Factors
 6 Common CFA Problems

Model Fit

 VIDEO TUTORIAL: Handling Model Fit

Model fit refers to how well our proposed model (in this case, the model of the factor structure)
accounts for the correlations between variables in the dataset. If we are accounting for all the
major correlations inherent in the dataset (with regards to the variables in our model), then we
will have good fit; if not, then there is a significant "discrepancy" between the correlations
proposed and the correlations observed, and thus we have poor model fit. Our proposed model
does not "fit" the observed or "estimated" model (i.e., the correlations in the dataset). Refer to the
CFA video tutorial for specifics on how to go about performing a model fit analysis during the
CFA.
Metrics
There are specific measures that can be calculated to determine goodness of fit. The metrics that
ought to be reported are listed below, along with their acceptable thresholds. Goodness of fit is
inversely related to sample size and the number of variables in the model. Thus, the thresholds
below are simply a guideline. For more contextualized thresholds, see Table 12-4 in Hair et al.
2010 on page 654. The thresholds listed in the table below are from Hu and Bentler (1999).

Modification indices
Modification indices offer suggested remedies to discrepancies between the proposed and
estimated model. In a CFA, there is not much we can do by way of adding regression lines to fix
model fit, as all regression lines between latent and observed variables are already in place.
Therefore, in a CFA, we look to the modification indices for the covariances. Generally, we
should not covary error terms with observed or latent variables, or with other error terms that are
not part of the same factor. Thus, the most appropriate modification available to us is to covary
error terms that are part of the same factor. The figure below illustrates this guideline - however,
there are exceptions. In general, you want to address the largest modification indices before
addressing more minor ones. For more information on when it is okay to covary error terms
(because there are other appropriate reasons), refer to David Kenny's thoughts on the
matter: David's website
Standardized Residual Covariances
Standardized Residual Covariances (SRCs) are much like modification indices; they point out
where the discrepancies are between the proposed and estimated models. However, they also
indicate whether or not those discrepancies are significant. A significant standardized residual
covariance is one with an absolute value greater than 2.58. Significant residual covariances
significantly decrease your model fit. Fixing model fit per the residuals matrix is similar to fixing
model fit per the modification indices. The same rules apply. For a more specific run-down of
how to calculate and locate residuals, refer to the CFA video tutorial. It should be noted however,
that in practice, I never address SRCs unless I cannot achieve adequate fit via modification
indices, because addressing the SRCs requires the removal of items.

Validity and Reliability

 VIDEO TUTORIAL: Testing Validity and Reliability in a CFA

It is absolutely necessary to establish convergent and discriminant validity, as well as reliability,
when doing a CFA. If your factors do not demonstrate adequate validity and reliability, moving on
to test a causal model will be useless - garbage in, garbage out! There are a few measures that
are useful for establishing validity and reliability: Composite Reliability (CR), Average Variance
Extracted (AVE), Maximum Shared Variance (MSV), and Average Shared Variance (ASV). The
video tutorial will show you how to calculate these values. The thresholds for these values are as
follows:
Reliability
 CR > 0.7
Convergent Validity

 AVE > 0.5

Discriminant Validity

 MSV < AVE

 Square root of AVE greater than inter-construct correlations
If you have convergent validity issues, then your variables do not correlate well with each other
within their parent factor; i.e, the latent factor is not well explained by its observed variables. If
you have discriminant validity issues, then your variables correlate more highly with variables
outside their parent factor than with the variables within their parent factor; i.e., the latent factor is
better explained by some other variables (from a different factor), than by its own observed
variables.
If you need to cite these suggested thresholds, please use the following:

 Hair, J., Black, W., Babin, B., and Anderson, R. (2010). Multivariate data analysis (7th ed.):
Prentice-Hall, Inc. Upper Saddle River, NJ, USA.
AVE is a strict measure of convergent validity. Malhotra and Dash (2011) note that "AVE is a
more conservative measure than CR. On the basis of CR alone, the researcher may conclude
that the convergent validity of the construct is adequate, even though more than 50% of the
variance is due to error.” (Malhotra and Dash, 2011, p.702).

 Malhotra N. K., Dash S. (2011). Marketing Research an Applied Orientation. London:

Pearson Publishing.
Here is an updated video that uses the most recent Stats Tools Package, which includes a more
accurate measure of AVE and CR.

 VIDEO TUTORIAL: SEM Series (2016) 5. Confirmatory Factor Analysis Part 2

Common Method Bias (CMB)

 VIDEO TUTORIAL: Zero-constraint approach to CMB

 REF: Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y., and Podsakoff, N.P. "Common method
biases in behavioral research: a critical review of the literature and recommended
remedies," Journal of Applied Psychology (88:5) 2003, p 879.
Common method bias refers to a bias in your dataset due to something external to the
measures. Something external to the question may have influenced the response given. For
example, collecting data using a single (common) method, such as an online survey, may
introduce systematic response bias that will either inflate or deflate responses. A study that has
significant common method bias is one in which a majority of the variance can be explained by a
single factor. To test for a common method bias you can do a few different tests. Each will be
described below. For a step by step guide, refer to the video tutorials.
Harman’s single factor test
 It should be noted that the Harman's single factor test is no longer widely accepted and is
considered an outdated and inferior approach.
A Harman's single factor test tests to see if the majority of the variance can be explained by a
single factor. To do this, constrain the number of factors extracted in your EFA to be just one
(rather than extracting via eigenvalues). Then examine the unrotated solution. If CMB is an issue,
a single factor will account for the majority of the variance in the model (as in the figure below).

Common Latent Factor

This method uses a common latent factor (CLF) to capture the common variance among all
observed variables in the model. To do this, simply add a latent factor to your AMOS CFA model
(as in the figure below), and then connect it to all observed items in the model. Then compare
the standardised regression weights from this model to the standardized regression weights of a
model without the CLF. If there are large differences (like greater than 0.200) then you will want
to retain the CLF as you either impute composites from factor scores, or as you move in to the
structural model. The CLF video tutorial demonstrates how to do this.

Marker Variable
This method is simply an extended, and more accurate way to do the common latent factor
method. For this method, just add another latent factor to the model (as in the figure below), but
make sure it is something that you would not expect to correlate with the other latent factors in
the model (i.e., the observed variables for this new factor should have low, or no, correlation with
the observed variables from the other factors). Then add the common latent factor. This method
teases out truer common variance than the basic common latent factor method because it is
finding the common variance between unrelated latent factors. Thus, any common variance is
likely due to a common method bias, rather than natural correlations. This method is
demonstrated in the common method bias video tutorial.
Zero and Equal Constraints
The most current and best approach is outlined below.

1. Do an EFA, and make sure to include “marker” or specific bias (SB) constructs.
1. Specific bias constructs are just like any other multi-item constructs but measure
specific sources of bias that may account for shared variance not due to a
causal relationship between key variables in the study. A common one is Social
Desirability Bias.
2. Do the CFA with SB constructs covaried to other constructs (this looks like a normal
CFA).
1. Assess and adjust to achieve adequate goodness of fit
2. Assess and adjust to achieve adequate validity and reliability
3. Then conduct the CFA with the SB constructs shown to influence ALL indicators of other
constructs in the study. Do not correlate the SB constructs with the other constructs of
study. If there is more than one SB construct, they follow the same approach and can
correlate with each other.
1. Retest validity, but be willing to accept lower thresholds
2. If change in AVE is extreme (e.g., >.300) then there is too much shared variance
attributable to a response variable. This means that variable is compromised
and any subsequent analysis with it may be biased.
3. If the majority of factors have extreme changes to their AVE, you might consider
rethinking your data collection instrument and how to reduce specific response
biases.
 4. If the validities are still sufficient, then conduct the zero-constrained test. This test
determines whether the response bias is any different from zero.
1. To do this, constrain all paths from the SB constructs to all indicators (but do not
constrain their own) to zero. Then conduct a chi-square difference test between
the constrained and unconstrained models.
2. If the null hypothesis cannot be rejected (i.e., the constrained and unconstrained
models are the same or "invariant"), you have demonstrated that you were
unable to detect any specific response bias affecting your model. You can move
on to causal modeling, but make sure to retain the SB construct(s) to include as
control in the causal model.
3. If you changed your model while testing for specific bias, you should retest
validities and model fit with this final (unconstrained) measurement model, as it
may have changed.
5. If the zero-constrained chi-square difference test resulted in a significant result (i.e.,
reject null, i.e., response bias is not zero), then you should run an equal-constrained test.
This test determines whether the response bias is evenly distributed across factors.
1. To do this, constrain all paths from the SB construct to all indicators (not including
their own) to be equal. There are multiple ways to do this. One easy way is
simply to name them all the same thing (e.g., "aaa").
2. If the chi-square difference test between the constrained (to be equal) and
unconstrained models indicates invariance (i.e., fail to reject null - that they are
equal), then the bias is equally distributed. Make note of this in your report. e.g.,
"A test of equal specific bias demonstrated evenly distributed bias."
3. Move on to causal modeling with the SB constructs retained (keep them).
4. If the chi-square test is significant (i.e., unevenly distributed bias), which is more
common, you should still retain the SB construct for subsequent causal
analyses. Make note of this in your report. e.g., "A test of equal specific bias
demonstrated unevenly distributed bias."

Measurement Model Invariance

 VIDEO TUTORIAL: Measurement Model Invariance

Before creating composite variables for a path analysis, configural and metric invariance should
be tested during the CFA to validate that the factor structure and loadings are sufficiently
equivalent across groups, otherwise your composite variables will not be very useful (because
they are not actually measuring the same underlying latent construct for both groups).
Configural
Configural invariance tests whether the factor structure represented in your CFA achieves
adequate fit when both groups are tested together and freely (i.e., without any cross-group path
constraints). To do this, simply build your measurement model as usual, create two groups in
AMOS (e.g., male and female), and then split the data along gender. Next, attend to model fit as
usual (here’s a reminder: Model Fit). If the resultant model achieves good fit, then you have
configural invariance. If you don’t pass the configural invariance test, then you may need to look
at the modification indices to improve your model fit or to see how to restructure your CFA.
Metric
If we pass the test of configural invariance, then we need to test for metric invariance. To test for
metric invariance, simply perform a chi-square difference test on the two groups just as you
would for a structural model. The evaluation is the same as in the structural model invariance
test: if you have a significant p-value for the chi-square difference test, then you have evidence of
differences between groups, otherwise, they are invariant and you may proceed to make your
composites from this measurement model (but make sure you use the whole dataset when you
create composites, instead of using the split dataset).
An even simpler and less time-consuming approach to metric invariance is to conduct a
multigroup moderation test using critical ratios for differences in AMOS. Below is a video to
explain how to do this. The video is about a lot of things in the CFA, but the link below will start
you at the time point for testing metric invariance with critical ratios.

 VIDEO TUTORIAL: Metric Invariance

Contingency Plans
If you do not achieve invariant models, here are some appropriate approaches in the order I
would attempt them.

 1. Modification indices: Fit the model for each group using the unconstrained measurement
model. You can toggle between groups when looking at modification indices. So, for
example, for males, there might be a high MI for the covariance between e1 and e2, but for
females this might not be the case. Go ahead and add those covariances appropriately for
both groups. When adding them to the model, it does it for both groups, even if you only
needed to do it for one of them. If fitting the model this way does not solve your invariance
issues, then you will need to look at differences in regression weights.
 2. Regression weights: You need to figure out which item or items are causing the trouble
(i.e., which ones do not measure the same across groups). The cause of the lack of
invariance is most likely due to one of two things: the strength of the loading for one or more
items differs significantly across groups, or, an item or two load better on a factor other than
their own for one or more groups. To address the first issue, just look at the standardized
regression weights for each group to see if there are any major differences (just eyeball it). If
you find a regression weight that is exceptionally different (for example, item2 on Factor 3
has a loading of 0.34 for males and 0.88 for females), then you may need to remove that
item if possible. Retest and see if invariance issues are solved. If not, try addressing the
second issue (explained next).
 3. Standardized Residual Covariances: To address the second issue, you need to analyze
the standardized residual covariances (check the residual moments box in the output tab). I
talk about this a little bit in my video called “Model fit during a Confirmatory Factor Analysis
(CFA) in AMOS” around the 8:35 mark. This matrix can also be toggled between groups.
 Here is a small example for CSRs and BCRs. We observe that for the BCR group rd3 and q5
have high standardized residual covariances with sw1. So, we could remove sw1 and see if
that fixes things, but SW only has three items right now, so another option is to remove rd3
or q5 and see if that fixes things, and if not, then return to this matrix after rerunning things,
and see if there are any other issues. Remove items sparingly, and only one at a time, trying
your best to leave at least three items with each factor, although two items will also
sometimes work if necessary (two just becomes unstable). If you still have issues, then your
groups are exceptionally different… This may be due to small sample size for one of the
groups. If such is the case, then you may have to list that as a limitation and just move on.

2nd Order Factors

 VIDEO TUTORIAL: Handling 2nd Order Factors

Handling 2nd order factors in AMOS is not difficult, but it is tricky. And, if you don't get it right, it
won't run. The pictures below offer a simple example of how you would model a 2nd order factor
in a measurement model and in a structural model. The YouTube video tutorial above
demonstrates how to handle 2nd order factors, and explains how to report them.
Common CFA Problems
1. CFA that reaches iteration limit.

 Here is a video: * VIDEO TUTORIAL: Iteration limit reached in AMOS

2. CFA that shows CMB = 0 (sometimes happens when paths from CLF are constrained to be
equal)

 The best approach to CMB is just to not constrain them to be equal. Instead, it is best to do a
chi-square difference test between the unconstrained model (with CLF and marker if
available) and the same model but with all paths from the CLF constrained to zero. This tells
us whether the common variance is different from zero.
3. CFA with negative error variances
 This shouldn’t happen if all data screening and EFA worked out well, but it still happens… In
such cases, it is permitted to constrain the error variance to a small positive number (e.g.,
0.001)
4. CFA with negative error covariances (sometimes shows up as “not positive definite”)

 In such cases, there is usually a measurement issue deeper down (like skewness or
kurtosis, or too much missing data, or a variable that is nominal). If it cannot be fixed by
addressing these deeper down issues, then you might be able to correct it by moving the
latent variable path constraint (usually 1) to another path. Usually this issue accompanies the
negative error variance, so we can usually fix it by fixing the negative error variance first.
5. CFA with Heywood cases

 This often happens when we have only two items for a latent variable, and one of them is
very dominant. First try moving the latent variable path constraint to a different path. If this
doesn’t work then, move the path constraint up to the latent variable variance constraint AND
constrain the paths to be equal (by naming them both the same thing, like “aaa”).

 VIDEO TUTORIAL: AMOS Heywood Case

6. CFA with discriminant validity issues

 This shouldn’t happen if the EFA solution was satisfactory. However, it still happens
sometimes when two latent factors are strongly correlated. This strong correlation is a sign of
overlapping traits. For example, confidence and self-efficacy. These two traits are too similar.
Either one could be dropped, or you could create a 2nd order factor out of them:

 VIDEO TUTORIAL: Handling 2nd Order Factors

7. CFA with “missing constraint” error

 Sometimes the CFA will say you need to impose 1 additional constraint (sometimes it says
more than this). This is usually caused by drawing the model incorrectly. Check to see if all
latent variables have a single path constrained to 1 (or the latent variable variance
constrained to 1).

Data screening
 LESSON: Data Screening
 VIDEO TUTORIAL: Data Screening
Data screening (sometimes referred to as "data screaming") is the process of ensuring your data
is clean and ready to go before you conduct further statistical analyses. Data must be screened
in order to ensure the data is useable, reliable, and valid for testing causal theory. In this section I
will focus on six specific issues that need to be addressed when cleaning (not cooking) your
data.
 Do you know of some citations that could be used to support the topics and procedures
discussed in this section? Please email them to me with the name of the section, procedure, or
subsection that they support. Thanks!

Contents
[hide]

 1 Missing Data
 2 Outliers
o 2.1 Univariate
o 2.2 Multivariate
 3 Normality
 4 Linearity
 5 Homoscedasticity
 6 Multicollinearity

Missing Data
If you are missing much of your data, this can cause several problems. The most apparent
problem is that there simply won't be enough data points to run your analyses. The EFA, CFA,
and path models require a certain number of data points in order to compute estimates. This
number increases with the complexity of your model. If you are missing several values in your
data, the analysis just won't run.
Additionally, missing data might represent bias issues. Some people may not have answered
particular questions in your survey because of some common issue. For example, if you asked
about gender, and females are less likely to report their gender than males, then you will have
male-biased data. Perhaps only 50% of the females reported their gender, but 95% of the males
reported gender. If you use gender in your causal models, then you will be heavily biased toward
males, because you will not end up using the unreported responses.
To find out how many missing values each variable has, in SPSS go to Analyze, then Descriptive
Statistics, then Frequencies. Enter the variables in the variables list. Then click OK. The table in
the output will show the number of missing values for each variable.
The threshold for missing data is flexible, but generally, if you are missing more than 10% of the
responses on a particular variable, or from a particular respondent, that variable or respondent
may be problematic. There are several ways to deal with problematic variables.

 Just don't use that variable.

 If it makes sense, impute the missing values. This should only be done for continuous or
interval data (like age or Likert-scale responses), not for categorical data (like gender).
 If your dataset is large enough, just don't use the responses that had missing values for that
variable. This may create a bias, however, if the number of missing responses is greater
than 10%.
To impute values in SPSS, go to Transform, Replace Missing Values; then select the variables
that need imputing, and hit OK. See the screenshots below. In this screenshot, I use the Mean
replacement method. But there are other options, including Median replacement. Typically with
Likert-type data, you want to use median replacement, because means are less meaningful in
these scenarios. For more information on when to use which type of imputation, refer to: Lynch
(2003)

Handling problematic respondents is somewhat more difficult. If a respondent did not answer a
large portion of the questions, their other responses may be useless when it comes to testing
causal models. For example, if they answered questions about diet, but not about weight loss, for
this individual we cannot test a causal model that argues that diet has a positive effect on weight
loss. We simply do not have the data for that person. My recommendation is to first determine
which variables will actually be used in your model (often we collect data on more variables than
we actually end up using in our model), then determine if the respondent is problematic. If so,
then remove that respondent from the analysis.

Outliers
Outliers can influence your results, pulling the mean away from the median. Two types of outliers
exist: outliers for individual variables, and outliers for the model.
Univariate

 VIDEO TUTORIAL: Detecting Univariate Outliers

To detect outliers on each variable, just produce a boxplot in SPSS (as demonstrated in the
video). Outliers will appear at the extremes, and will be labeled, as in the figure below. If you
have a really high sample size, then you may want to remove the outliers. If you are working with
a smaller dataset, you may want to be less liberal about deleting records. However, this is a
trade-off, because outliers will influence small datasets more than large ones. Lastly, outliers do
not really exist in Likert-scales. Answering at the extreme (1 or 5) is not really representative
outlier behavior.
Another type of outlier is an unengaged respondent. Sometimes respondents will enter '3, 3, 3,
3,...' for every single survey item. This participant was clearly not engaged, and their responses
will throw off your results. Other patterns indicative of unengaged respondents are '1, 2, 3, 4, 5,
1, 2, ...' or '1, 1, 1, 1, 5, 5, 5, 5, 1, 1, ...'. There are multiple ways to identify and eliminate these
unengaged respondents:

 Include attention traps that request the respondent to "answer somewhat agree for this item
if you are paying attention". I usually include two of these in opposite directions (i.e., one
says somewhat agree and one says somewhat disagree) at about a third and two-thirds of
the way through my surveys. I am always astounded at how many I catch this way...
 See if the participant answered reverse-coded questions in the same direction as normal
questions. For example, if they responded strongly agree to both of these items, then they
were not paying attention: "I am very hungry", "I don't have much appetite right now".
Multivariate

 VIDEO TUTORIAL: Detecting Multivariate Influential Outliers

Multivariate outliers refer to records that do not fit the standard sets of correlations exhibited by
the other records in the dataset, with regards to your causal model. So, if all but one person in
the dataset reports that diet has a positive effect on weight loss, but this one guy reports that he
gains weight when he diets, then his record would be considered a multivariate outlier. To detect
these influential multivariate outliers, you need to calculate the Mahalanobis d-squared. This is a
simple matter in AMOS. See the video tutorial for the particulars. As a warning however, I
almost never address multivariate outliers, as it is very difficult to justify removing them just
because they don't match your theory. Additionally, you will nearly always find multivariate
outliers, even if you remove them, more will show up. It is a slippery slope.
A more conservative approach that I would recommend is to examine the influential cases
indicated by the Cook's distance. Here is a video explaining what this is and how to do it. This
video also discusses multicollinearity.

 VIDEO TUTORIAL: Multivariate Assumptions

Normality

 VIDEO TUTORIAL: Detecting Normality Issues

Normality refers to the distribution of the data for a particular variable. We usually assume that
the data is normally distributed, even though it usually is not! Normality is assessed in many
different ways: shape, skewness, and kurtosis (flat/peaked).

 Shape: To discover the shape of the distribution in SPSS, build a histogram (as shown in the
video tutorial) and plot the normal curve. If the histogram does not match the normal curve,
then you likely have normality issues. You can also look at the boxplot to determine
normality.
 Skewness: Skewness means that the responses did not fall into a normal distribution, but
were heavily weighted toward one end of the scale. Income is an example of a commonly
right skewed variable; most people make between 20 and 70 thousand dollars in the USA,
but there is smaller group that makes between 70 and 100, and an even smaller group that
makes between 100 and 150, and a much smaller group that makes between 150 and 250,
etc. all the way up to Bill Gates and Mark Zuckerberg. Addressing skewness may require
transformations of your data (if continuous), or removing influential outliers. There are two
rules on Skewness:
 (1)If your skewness value is greater than 1 then you are positive (right) skewed, if it is less
than -1 you are negative (left) skewed, if it is in between, then you are fine. Some published
thresholds are a bit more liberal and allow for up to +/-2.2, instead of +/-1.
 (2)If the absolute value of the skewness is less than three times the standard error, then you
are fine; otherwise you are skewed.
Using these rules, we can see from the table below, that all three variables are fine using the first
rule, but using the second rule, they are all negative (left) skewed.
Skewness looks like this:

 Kurtosis:
Kurtosis refers to the outliers of the distribution of data. Data that have outliers have large
kurtosis. Data without outliers have low kurtosis. The kurtosis (excess kurtosis) of the normal
distribution is 0. The rule for evaluating whether or not your kurtosis is problematic is the same as
rule two above:

 If the absolute value of the kurtosis is less than three times the standard error, then the
kurtosis is not significantly different from that of the normal distribution; otherwise you have
kurtosis issues. Although a looser rule is an overall kurtosis score of 2.200 or less (rather
than 1.00) (Sposito et al., 1983).
Kurtosis looks like this:

 Bimodal:
One other issue you may run into with the distribution of your data is a bimodal distribution. This
means that the data has multiple (two) peaks, rather than peaking at the mean. This may indicate
there are moderating variables effecting this data. A bimodal distribution looks like this:
 Transformations:
 VIDEO TUTORIAL: Transformations
When you have extremely non-normal data, it will influence your regressions in SPSS and
AMOS. In such cases, if you have non-Likert-scale variables (so, variables like age, income,
revenue, etc.), you can transform them prior to including them in your model. Gary Templeton
has published an excellent article on this and created a YouTube video showing how to conduct
the transformation. He also references his article in the video.

Linearity
Linearity refers to the consistent slope of change that represents the relationship between an IV
and a DV. If the relationship between the IV and the DV is radically inconsistent, then it will throw
off your SEM analyses. There are dozens of ways to test for linearity. Perhaps the most elegant
(easy and clear-cut, yet rigorous), is the deviation from linearity test available in the ANOVA test
in SPSS. In SPSS go to Analyze, Compare Means, Means. Put the composite IVs and DVs in
the lists, then click on options, and select "Test for Linearity". Then in the ANOVA table in the
output window, if the Sig value for Deviation from Linearity is less than 0.05, the relationship
between IV and DV is not linear, and thus is problematic (see the screenshots below). Issues of
linearity can sometimes be fixed by removing outliers (if the significance is borderline), or through
transforming the data. In the screenshot below, we can see that the first relationship is linear (Sig
= .268), but the second relationship is nonlinear (Sig = .003).

 If this test turns up odd results, then simply perform an OLS linear regression between each
IV->DV pair. If the sig value is less than 0.05, then the relationship can be considered
"sufficiently" linear. While this approach is somewhat less rigorous, it has the benefit of
working every time! You can also do a curve-linear regression ("curve estimation") to see if
the relationship is more linear than non-linear.
Homoscedasticity

 VIDEO TUTORIAL: Plotting Homoscedasticity

 Encyclopedia of Research Design, Volume 1 (2010), Sage Publications, pg. 581

Homoscedasticity is a nasty word that means that the variable's residual (error) exhibits
consistent variance across different levels of the variable. There are good reasons for desiring
this. For more information, see Hair et al. 2010 chapter 2. :) A simple way to determine if a
relationship is homoscedastic is to do a simple scatter plot with the variable on the y-axis and the
variable's residual on the x-axis. To see a step by step guide on how to do this, watch the video
tutorial. If the plot comes up with a consistent pattern - as in the figure below, then we are good -
we have homoscedasticity! If there is not a consistent pattern, then the relationship is considered
heteroskedastic. This can be fixed by transforming the data or by splitting the data by subgroups
(such as two groups for gender). You can read more about transformations in Hair et al. 2010 ch.
4.
Schools of thought on homoscedasticity are still out. Some suggest that evidence of
heteroskedasticity is not a problem (and is actually desirable and expected in moderated
models), and so we shouldn't worry about testing for homoscedasticity. I never conduct this test
unless specifically requested to by a reviewer.

Multicollinearity

 VIDEO TUTORIAL: Detecting Mulitcollinearity

Multicollinearity is not desirable. It means that the variance our independent variables explain in
our dependent variable are are overlapping with each other and thus not each explaining unique
variance in the dependent variable. The way to check this is to calculate a Variable Inflation
Factor (VIF) for each independent variable after running a multivariate regression. The rules of
thumb for the VIF are as follows:

 VIF < 3: not a problem

 VIF > 3; potential problem
 VIF > 5; very likely problem
 VIF > 10; definitely problem
The tolerance value in SPSS is directly related to the VIF, and values less than 0.10 are strong
indications of multicollinearity issues. For particulars on how to calculate the VIF in SPSS, watch
the step by step video tutorial. The easiest method for fixing multicollinearity issues is to drop one
 of problematic variables. This won't hurt your R-square much because that variable doesn't add
much unique explanation of variance anyway.

Exploratory Factor Analysis

Exploratory Factor Analysis (EFA) is a statistical approach for determining the correlation among
the variables in a dataset. This type of analysis provides a factor structure (a grouping of
variables based on strong correlations). In general, an EFA prepares the variables to be used for
cleaner structural equation modeling. An EFA should always be conducted for new datasets. The
beauty of an EFA over a CFA (confirmatory) is that no a priori theory about which items belong to
which constructs is applied. This means the EFA will be able to spot problematic variables much
more easily than the CFA. A critical assumption of the EFA is that it is only appropriate for
sets of non-nominal items which theoretically belong to reflective
latent factors. Categorical/nominal variables (e.g., marital status, gender) should not be
included. Formative measures should not be included. Very rarely should objective (rather than
perceptual) variables be included, as objective variables rarely belong to reflective latent factors.
For those wondering why I default to Maximum Likelihood and Promax, here is a good
explanation: https://jonathantemplin.com/files/sem/sem13psyc948/sem13psyc948_lecture10.pdf

 VIDEO TUTORIAL: How to do an EFA

 LESSON: Exploratory Factor Analysis

Do you know of some citations that could be used to support the topics and procedures
discussed in this section? Please email them to me with the name of the section, procedure, or
subsection that they support. Thanks!

Contents
[hide]

 1 Rotation types
o 1.1 Orthogonal
o 1.2 Oblique
 2 Factoring methods
o 2.1 Principal Component Analysis (PCA)
o 2.2 Principal Axis Factoring (PAF)
o 2.3 Maximum Likelihood (ML)
 3 Appropriateness of data (adequacy)
o 3.1 KMO Statistics
o 3.2 Bartlett’s Test of Sphericity
 4 Communalities
 5 Factor Structure
 6 Convergent validity
 7 Discriminant validity
 8 Face validity
 9 Reliability
 10 Formative vs. Reflective
 11 Common EFA Problems
 12 Some Thoughts on Messy EFAs

Rotation types
Rotation causes factor loadings to be more clearly differentiated, which is often necessary to
facilitate interpretation. Several types of rotation are available for your use.
Orthogonal
Varimax (most common)

 minimizes number of variables with extreme loadings (high or low) on a factor

 makes it possible to identify a variable with a factor
Quartimax

 minimizes the number of factors needed to explain each variable

 tends to generate a general factor on which most variables load with medium to high values
 not very helpful for research
Equimax

 combination of Varimax and Quartimax

Oblique
The variables are assessed for the unique relationship between each factor and the variables
(removing relationships that are shared by multiple factors).
Direct oblimin (DO)

 factors are allowed to be correlated

 diminished interpretability
Promax (Use this one if you're not sure)

 computationally faster than DO

 used for large datasets

Factoring methods
There are three main methods for factor extraction.
Principal Component Analysis (PCA)
Use for a softer solution
 Considers all of the available variance (common + unique) (places 1’s on diagonal of
correlation matrix).
 Seeks a linear combination of variables such that maximum variance is extracted—repeats
this step.
 Use when there is concern with prediction, parsimony and you know the specific and error
variance are small.
 Results in orthogonal (uncorrelated factors).
Principal Axis Factoring (PAF)

 Considers only common variance (places communality estimates on diagonal of correlation

matrix).
 Seeks least number of factors that can account for the common variance (correlation) of a
set of variables.
 PAF is only analyzing common factor variability; removing the uniqueness or unexplained
variability from the model.
 PAF is preferred because it accounts for co-variation, whereas PCA accounts for total
variance.
Maximum Likelihood (ML)
Use this method if you are unsure

 Maximizes differences between factors. Provides Model Fit estimate.

 This is the approach used in AMOS, so if you are going to use AMOS for CFA and structural
modeling, you should use this one during the EFA.

Appropriateness of data (adequacy)

KMO Statistics

 Marvelous: .90s
 Meritorious: .80s
 Middling: .70s
 Mediocre: .60s
 Miserable: .50s
 Unacceptable: <.50
Bartlett’s Test of Sphericity
Tests hypothesis that correlation matrix is an identity matrix.

 Diagonals are ones

 Off-diagonals are zeros
A significant result (Sig. < 0.05) indicates matrix is not an identity matrix; i.e., the variables do
relate to one another enough to run a meaningful EFA.

Communalities
A communality is the extent to which an item correlates with all other items. Higher
communalities are better. If communalities for a particular variable are low (between 0.0-0.4),
then that variable may struggle to load significantly on any factor. In the table below, you should
identify low values in the "Extraction" column. Low values indicate candidates for removal after
you examine the pattern matrix.

Factor Structure
Factor structure refers to the intercorrelations among the variables being tested in the EFA.
Using the pattern matrix below as an illustration, we can see that variables group into factors -
more precisely, they "load" onto factors. The example below illustrates a very clean factor
structure in which convergent and discriminant validity are evident by the high loadings within
factors, and no major cross-loadings between factors (i.e., a primary loading should be at least
0.200 larger than secondary loading).
Convergent validity
Convergent validity means that the variables within a single factor are highly correlated. This is
evident by the factor loadings. Sufficient/significant loadings depend on the sample size of your
dataset. The table below outlines the thresholds for sufficient/significant factor loadings.
Generally, the smaller the sample size, the higher the required loading. We can see that in the
pattern matrix above, we would need a sample size of 60-70 at a minimum to achieve significant
loadings for variables loyalty1 and loyalty7. Regardless of sample size, it is best to have loadings
greater than 0.500 and averaging out to greater than 0.700 for each factor.
Discriminant validity
Discriminant validity refers to the extent to which factors are distinct and uncorrelated. The rule is
that variables should relate more strongly to their own factor than to another factor. Two primary
methods exist for determining discriminant validity during an EFA. The first method is to examine
the pattern matrix. Variables should load significantly only on one factor. If "cross-loadings" do
exist (variable loads on multiple factors), then the cross-loadings should differ by more than 0.2.
The second method is to examine the factor correlation matrix, as shown below. Correlations
between factors should not exceed 0.7. A correlation greater than 0.7 indicates a majority of
shared variance (0.7 * 0.7 = 49% shared variance). As we can see from the factor correlation
matrix below, factor 2 is too highly correlated with factors 1, 3, and 4.

What if you have discriminant validity problems - for example, the items from two theoretically
different factors end up loading on the same extracted factor (instead of on separate factors). I
have found the best way to resolve this type of issue is to do a separate EFA with just the items
from the offending factors. Work out this smaller EFA (by removing items one at a time that have
the worst cross-loadings), then reinsert the remaining items into the full EFA. This will usually
resolve the issue. If it doesn't, then consider whether these two factors are actually just two
dimensions or manifestations of some higher order factor. If this is the case, then you might
consider doing the EFA for this higher order factor separate from all the items belonging to first
order factors. Then during the CFA, make sure to model the higher order factor properly by
making a 2nd order latent variable.

Face validity
Face validity is very simple. Do the factors make sense? For example, are variables that are
similar in nature loading together on the same factor? If there are exceptions, are they
explainable? Factors that demonstrate sufficient face validity should be easy to label. For
example, in the pattern matrix above, we could easily label factor 1 "Trust in the Agent"
(assuming the variable names are representative of the measure used to collect data for this
variable). If all the "Trust" variables in the pattern matrix above loaded onto a single factor, we
may have to abstract a bit and call this factor "Trust" rather than "Trust in Agent" and "Trust in
Company".

Reliability
Reliability refers to the consistency of the item-level errors within a single factor. Reliability
means just what it sounds like: a "reliable" set of variables will consistently load on the same
factor. The way to test reliability in an EFA is to compute Cronbach's alpha for each factor.
Cronbach's alpha should be above 0.7; although, ceteris paribus, the value will generally
increase for factors with more variables, and decrease for factors with fewer variables. Each
factor should aim to have at least 3 variables, although 2 variables is sometimes permissible.

Formative vs. Reflective

 LESSON: Variables and Factor Analysis, including Specification

Specifying formative versus reflective constructs is a critical preliminary step prior to further
statistical analysis. Formative constructs should not be expected to properly factor in SPSS, and
cannot be modeled appropriately in AMOS. If you need to work with formative factors, either use
a Partial Least Squares approach (see PLS section), or create a score (new variable) for each
set of formative indicators. This score could be an average or a sum, or some sort of weighted
scoring. Here is how you know whether you're working with formative or reflective constructs:
Formative

 Direction of causality is from measure to construct

 No reason to expect the measures are correlated
 Indicators are not interchangeable
Reflective

 Direction of causality is from construct to measure

 Measures expected to be correlated
 Indicators are interchangeable
An example of formative versus reflective constructs is given in the figure below.
Common EFA Problems
1. EFA that results in too many or too few factors (contrary to expected number of factors).

 This happens all the time when you extract based on eigenvalues. I encourage students to
use eigenvalues first, but then also to try constraining to the exact number of expected
factors. Concerns arise when the eigenvalues extract fewer than expected, so constraining
ends up extracting factors with very low eigenvalues (and therefore not very useful factors).
2. EFA with low communalities for some items.

 This is a sign of low correlation and is usually corroborated by a low pattern matrix loading. I
tell students not to remove an item just because of a low communality, but to watch it
carefully throughout the rest of the EFA.
3. EFA with a 2nd order construct involved, as well as several first order constructs.

 Often when there is a 2nd order factor in an EFA, the subdimensions of that factor will all
load together, instead of in separate factors. In such cases, I recommend doing a separate
EFA for the items of that 2nd order factor. Then, if that EFA results in removing some items
to achieve discriminant validity, you can try putting the EFA back together with the remaining
items (although it still might not work). Then, during the CFA, be sure to properly model the
2nd order factor with an additional latent variable connected to its sub-factors.
4. EFA with Heywood cases

 Sometimes loadings are greater than 1.00. I don’t address these until I’ve addressed all
other problems. Once I have a good EFA solution, then if the Heywood case is still there
(usually it resolves itself), then I try a different rotation method (Varimax will fix it every time).

Some Thoughts on Messy EFAs

Let us say that you are doing an EFA and your pattern matrix ends up a mess. Let’s say that the
items from one or two constructs do not load as expected no matter how you manipulate the
EFA. What can you do about it? There is no right answer (this is statistics after all), but you do
have a few options:
1. You can remove those constructs from the model and move forward without them.

 This option is not recommended as it is usually the last course of action to take. You should
always do everything in your power to retain constructs that are key to your theory.
2. You can run the EFA using a more exploratory approach without regard to expected loadings.
For example, if you expected item foo3 to load with items foo1 and foo2, but instead it loaded
with items moo1-3, then you should just let it. Then rename your factors according to what
loaded on them.

 This option is acceptable, but will lead you to produce a model that is probably somewhat
different from the one you had expected to end up with.
3. You can say to yourself, “Why am I doing an EFA? These are established scales and I already
know which items belong to which constructs (theoretically). I do not need to explore the
relationships between the items because I already know the relationships. So shouldn’t I be
doing a CFA instead – to confirm these expectations?” And then you would simply jump to the
CFA first to refine your measurement model (but then you return to your EFA after your CFA).

 Surveys are usually built with a priori constructs and theory in mind – or surveys are built
from existing scales that have been validated in previous literature. Thus, we are less
inclined to “explore” and more inclined to “confirm” when doing factor analysis. The point of a
factor analysis is to show that you have distinct constructs (discriminant validity) that each
measures a single thing (convergent validity), and that are reliable (reliability). This can all be
achieved in the CFA. However, you should then go back to the EFA and "confirm" the
CFA in the EFA by setting up the EFA as your CFA turned out.
Why do I bring this up? Mainly because your EFAs are nearly always going to run messy, and
because you can endlessly mess around with an EFA and if you believe everything your EFA is
telling you, you will end up throwing away items and constructs unnecessarily and thus you will
end up letting statistics drive your theory, instead of letting theory drive your theory. EFAs are
exploratory and they can be treated as such. We want to retain as much as possible and still be
producing valid results. I don’t know if this is emphasized enough in our quant courses. I also
bring this up because I ran an EFA recently and got something I could not salvage without
hacking a couple constructs. However, after running the CFA with the full model (ignoring the
EFA), I was able to retain all constructs by only removing a few items (and not the ones I
expected based on the EFA!). I now have excellent reliability, convergent validity, and only a
minor issue with discriminant validity that I’m willing to justify for the greater good of the model. I
can now go back and reconcile my CFA with an EFA.
For a very rocky but successful demonstration of handling a troublesome EFA, watch my SEM
Boot Camp 2014 Day 3 Afternoon Video towards the end. The link below will start you at the right
time position. In this video, I take one of the seminar participant's data, which I had never seen
before, and with which he had been unable to arrive at a clean EFA, and I struggle through it until
we arrive at something valid and usable.

Structural Equation Modeling

 “Structural equation modeling (SEM) grows out of and serves purposes similar to multiple
regression, but in a more powerful way which takes into account the modeling of interactions,
nonlinearities, correlated independents, measurement error, correlated error terms, multiple
latent independents each measured by multiple indicators, and one or more latent dependents
also each with multiple indicators. SEM may be used as a more powerful alternative to multiple
regression, path analysis, factor analysis, time series analysis, and analysis of covariance. That
is, these procedures may be seen as special cases of SEM, or, to put it another way, SEM is an
extension of the general linear model (GLM) of which multiple regression is a
part.“ http://www.pire.org/
SEM is an umbrella concept for analyses such as mediation and moderation. This wiki page
provides general instruction and guidance regarding how to write hypotheses for different types
of SEMs, what to do with control variables, mediation, interaction, multi-group analyses, and
model fit for structural models. Videos and slides presentations are provided in the subsections.

Do you know of some citations that could be used to support the topics and procedures
discussed in this section? Please email them to me with the name of the section, procedure, or
subsection that they support. Thanks!

Contents
[hide]

 1 Hypotheses
o 1.1 Direct effects
o 1.2 Mediated effects
o 1.3 Interaction effects
o 1.4 Multi-group effects
o 1.5 Mediated Moderation
o 1.6 Handling controls
o 1.7 Logical Support for Hypotheses
o 1.8 Statistical Support for Hypotheses through global and local tests
 2 Controls
 3 Mediation
o 3.1 Concept
 4 Interaction
o 4.1 Concept
o 4.2 Types
 5 Model fit again
 6 Multi-group
 7 From Measurement Model to Structural Model
 8 Creating Factor Scores from Latent Factors
 9 Need more degrees of freedom
Hypotheses
Hypotheses are a keystone to causal theory. However, wording hypotheses is clearly a struggle
for many researchers (just select at random any article from a good academic journal, and count
the wording issues!). In this section I offer examples of how you might word different types of
hypotheses. These examples are not exhaustive, but they are safe.
Direct effects
"Diet has a positive effect on weight loss"
"An increase in hours spent watching television will negatively effect weight loss"
Mediated effects
For mediated effects, be sure to indicate the direction of the mediation (positive or negative), the
degree of the mediation (partial, full, or simply indirect), and the direction of the mediated
relationship (positive or negative).
"Exercise positively and partially mediates the positive relationship between diet and weight loss"
"Television time positively and fully mediates the positive relationship between diet and weight
loss"
"Diet affects weight loss positively and indirectly through exercise"
Interaction effects
"Exercise positively moderates the positive relationship between diet and weight loss"
"Exercise amplifies the positive relationship between diet and weight loss"
"TV time negatively moderates (dampens) the positive relationship between diet and weight loss"
Multi-group effects
"Body Mass Index (BMI) moderates the relationship between exercise and weight loss, such that
for those with a low BMI, the effect is negative (i.e., you gain weight - muscle mass), and for
those with a high BMI, the effect is positive (i.e., exercising leads to weight loss)"
"Age moderates the relationship between exercise and weight loss, such that for age < 40, the
positive effect is stronger than for age > 40"
"Diet moderates the relationship between exercise and weight loss, such that for western diets
the effect is positive and weak, for eastern (asia) diets, the effect is positive and strong"
Mediated Moderation
An example of a mediated moderation hypothesis would be something like:
“Ethical concerns strengthen the negative indirect effect (through burnout) between customer
rejection and job satisfaction.”
In this case, the IV is customer rejection, the DV is job satisfaction, burnout is the mediator, and
the moderator is ethical concerns. The moderation is conducted through an interaction. However,
if you have a categorical moderator, it would be something more like this (using gender as the
moderator):
“The negative indirect effect between customer rejection and job satisfaction (through burnout) is
stronger for men than for women.”
Handling controls
When including controls in hypotheses (yes, you should include them), simply add at the end of
any hypothesis, "when controlling for...[list control variables here]" For example:
"Exercise positively moderates the positive relationship between diet and weight loss when
controlling for TV time and diet"
"Diet has a positive effect on weight loss when controlling for TV time and diet"
Another approach is to state somewhere above your hypotheses (while you're setting up your
theory) that all your hypotheses take into account the effects of the following controls: A, B, and
C. And then make sure to explain why.
Logical Support for Hypotheses
Getting the wording right is only part of the battle, and is mostly useless if you cannot support
your reasoning for WHY you think the relationships proposed in the hypotheses should exist.
Simply saying X has a positive effect on Y is not sufficient to make a causal statement. You must
then go an explain the various reasons behind your hypothesized relationship. Take Diet and
Weight loss for example. The hypothesis is, "Diet has a positive effect on weight loss". The
supporting logic would then be something like:

 Weight is gained as we consume calories. Diet reduces the number of calories consumed.
Therefore, the more we diet, the more weight we should lose (or the less weight we should
gain).
Statistical Support for Hypotheses through global and local tests
In order for a hypothesis to be supported, many criteria must be met. These criteria can be
classified as global or local tests. In order for a hypothesis to be supported, the local test must be
met, but in order for a local test to have meaning, all global tests must be met. Global tests of
model fit are the first necessity. If a hypothesized relationship has a significant p-value, but the
model has poor fit, we cannot have confidence in that p-value. Next is the global test of variance
explained or R-squared. We might observe significant p-values and good model fit, but if R-
square is only 0.025, then the relationships we are testing are not very meaningful because they
do not explain sufficient variance in the dependent variable. The figure below illustrates the
precedence of global and local tests. Lastly, and almost needless to explain, if a regression
weight is significant, but is in the wrong direction, our hypothesis is not supported. Instead, there
is counter-evidence. For example, if we theorized that exercise would increase weight loss, but
instead, exercise decreased weight loss, then we would have counter-evidence.

Controls

 LESSON: Controls
Controls are potentially confounding variables that we need to account for, but that don’t drive
our theory. For example, in Dietz and Gortmaker 1985, their theory was that TV time had a
negative effect on school performance. But there are many things that could affect school
performance, possibly even more than the amount of time spent in front of the TV. So, in order to
account for these other potentially confounding variables, the authors control for them. They are
basically saying, that regardless of IQ, time spent reading for pleasure, hours spent doing
homework, or the amount of time parents spend reading to their child, an increase in TV time still
significantly decreases school performance. These relationships are shown in the figure below.

As a cautionary note, you should nearly always include some controls; however, these control
variables still count against your sample size calculations. So, the more controls you have, the
higher your sample size needs to be. Also you get a higher R square but with increasingly
smaller gains for each added control. Sometimes you may even find that adding a control
“drowns out” all the effects of the IV’s, in such a case you may need to run your tests without that
control variable (but then you can only say that your IVs, though significant, only account for a
small amount of the variance in the DV). With that in mind, you can’t and shouldn't control for
everything, and as always, your decision to include or exclude controls should be based on
theory.
Handling controls in AMOS is easy, but messy (see the figure below). You simply treat them like
the other exogenous variables (the ones that don’t have arrows going into them), and have them
regress on whichever endogenous variables they may logically affect. In this case, I have
valShort, a potentially confounding variable, as a control, with regards to valLong. And I have
LoyRepeat as a control on LoyLong. I’ve also covaried the Controls with each other and with the
other exogenous variables. When using controls in a moderated mediation analysis, go ahead
and put the controls in at the very beginning. Covarying control variables with the other
exogenous variables can be done based on theory, rather than as default. However, there are
different schools of thought on this. The downside of covarying with all exogenous variables is
that you gain no degrees of freedom. If you are in need of degrees of freedom, then try removing
the non-significant covariances with controls.
When reporting the model, you do need to include the controls in all your tests and output, but
you should consolidate them at the bottom where they can be out of the way. Also, just so you
don’t get any crazy ideas, you would not test for any mediation between a control and a
dependent variable. However, you may report how the control effects a dependent variable
differently based on a moderating variable. For example, valshort may have a stronger effect on
valLong for males than for females. This is something that should be reported, but not
necessarily focused on, as it is not likely a key part of your theory. Lastly, even if effects from
controls are not significant, you do not need trim them from your model (although, there are also
other schools of thought on this issue).

Mediation

 Lesson: Testing Mediation using Bootstrapping

 Video Lecture: A Simpler Guide to Mediation
 VIDEO TUTORIAL: Mediation in AMOS
 Hair et al.: pp. 751-755
Concept
Mediation models are used to describe chains of causation. Mediation is often used to provide a
more accurate explanation for the causal effect the antecedent has on the dependent variable.
The mediator is usually that variable that is the missing link in a chain of causation. For example,
Intelligence leads to increased performance - but not in all cases, as not all intelligent people are
high performers. Thus, some other variable is needed to explain the reason for the inconsistent
relationship between IV and DV. This other variable is called a mediator. In this example, work
effectiveness, may be a good mediator. We would say that work effectiveness mediates the
relationship between intelligence and performance. Thus, the direct relationship between
intelligence and performance is better explained through the mediator of work effectiveness. The
logic is, intelligent workers tend to perform better because they work more efficiently. Thus,
when intelligence leads to working smarter, then we observe greater performance.
We used to theorize three main types of mediation based on the Barron and Kenny approach;
namely: 1) partial, 2) full, and 3) indirect. However, recent literature suggests that mediation is
less nuanced than this -- that simply, if a significant indirect effect exists, then mediation is
present.
Here is another useful site for mediation: https://msu.edu/~falkcarl/mediation.html

Interaction

 VIDEO TUTORIAL: Testing Interaction Effects

 LESSON: Interaction Effects
Concept
In factorial designs, interaction effects are the joint effects of two predictor variables in addition to
the individual main effects. This is another form of moderation (along with multi-grouping) – i.e.,
the X to Y relationship changes form (gets stronger, weaker, changes signs) depending on the
value of another explanatory variable (the moderator). So, for example

 you lose 1 pound of weight for every hour you exercise

 you lose 1 pound of weight for every 500 calories you cut back from your regular diet
 but when you exercise while dieting, the you lose 2 pounds for every 500 calories you cut
back from your regular diet, in addition to the 1 pound you lose for exercising for one hour;
thus in total, you lose three pounds
So, the multiplicative effect of exercising while dieting is greater than the additive effects of doing
one or the other. Here is another simple example:

 Chocolate is yummy
 Cheese is yummy
 but combining chocolate and cheese is yucky!
The following figure is an example of a simple interaction model.
Types
Interactions enable more precise explanation of causal effects by providing a method for
explaining not only how X affects Y, but also under what circumstances the effect of X changes
depending on the moderating variable of Z. Interpreting interactions is somewhat tricky.
Interactions should be plotted (as demonstrated in the tutorial video). Once plotted, the
interpretation can be made using the following four examples (in the figures below) as a guide.
My most recent Stats Tools Package provides these interpretations automatically.

Model fit again

You already did model fit in your CFA, but you need to do it again in your structural model in
order to demonstrate sufficient exploration of alternative models. Every time the model changes
and a hypothesis is tested, model fit must be assessed. If multiple hypotheses are tested on the
same model, model fit will not change, so it only needs to be addressed once for that set of
hypotheses. The method for assessing model fit in a causal model is the same as for a
measurement model: look at modification indices, residuals, and standard fit measures like CFI,
RMSEA etc. The one thing that should be noted here in particular, however, is logic that should
determine how you apply the modification indices to error terms.

 If the correlated variables are not logically causally correlated, but merely statistically
correlated, then you may covary the error terms in order to account for the systematic
statistical correlations without implying a causal relationship.
 e.g., burnout from customers is highly correlated with burnout from management
 We expect these to have similar values (residuals) because they are logically similar and
have similar wording in our survey, but they do not necessarily have any causal ties.
 If the correlated variables are logically causally correlated, then simply add a regression
line.
 e.g., burnout from customers is highly correlated with satisfaction with customers
 We expect burnC to predict satC, so not accounting for it is negligent.
Lastly, remember, you don't need to create the BEST fit, just good fit. If a BEST fit model (i.e.,
one in which all modification indices are addressed) isn't logical, or does not fit with your theory,
you may need to simply settle for a model that has worse (yet sufficient) fit, and then explain why
you did not choose the better fitting model. For more information on when it is okay to covary
error terms (because there are other appropriate reasons), refer to David Kenny's thoughts on
the matter: David's website

Multi-group

 VIDEO TUTORIAL: Testing Multi-group Moderation using Chi-square difference

test
 VIDEO TUTORIAL: Testing Multi-group differences using AMOS's multigroup
function
 LESSON: Mediation versus Moderation
Multi-group comparisons are a special form of moderation in which a dataset is split along values
of a grouping variable (such as gender), and then a given model is tested with each set of data.
Using the gender example, the model is tested for males and females separately. The use of
multi-group comparisons is to determine if relationships hypothesized in a model will differ based
on the value of the moderator (e.g., gender). Take the diet and weight loss hypothesis for
example. A multi-group analysis would answer the question: does dieting effect weight loss
differently for males than for females? In the videos above, you will learn how to set up a
multigroup analysis in AMOS, and test it using chi-square differences, and AMOS's built in
multigroup function. For those who have seen my video on the critical ratios approach, be
warned that currently, the chi-square approach is the most widely accepted because the critical
ratios approach doesn't take into account family-wise error which affects a model when testing
multiple hypotheses simultaneously. For now, I recommend using the chi-square approach. The
AMOS built in multigroup function uses the chi-square approach as well.

From Measurement Model to Structural Model

 VIDEO TUTORIAL: From CFA to SEM in AMOS
Many of the examples in the videos so far have taught concepts using a set of composite
variables (instead of latent factors with observed items). Many will want to utilize the full power of
SEM by building true structural models (with latent factors). This is not a difficult thing. Simply
remove the covariance arrows from your measurement model (after CFA), then draw single-
headed arrows from IVs to DVs. Make sure you put error terms on the DVs, then run it. It's that
easy. Refer to the video for a demonstration.

Creating Factor Scores from Latent Factors

 VIDEO TUTORIAL: Imputing Factor Scores in AMOS

If you would like to create factor scores (as used in many of the videos) from latent factors, it is
an easy thing to do. However, you must remember two very important caveats:

 You are not allowed to have any missing values in the data used. These will need to be
imputed beforehand in SPSS or Excel (I have two tools for this in my Stats Tools Package -
one for imputing, and one for simply removing the entire row that has missing data).
 Latent factor names must not have any spaces or hard returns in them. They must be single
continuous strings ("FactorOne" or "Factor_One" instead of "Factor One").
After those two caveats are addressed, then you can simply go to the Analyze menu, and
select Data Imputation. Select Regression Imputation, and then click on the Impute button. This
will create a new SPSS dataset with the same name as the current dataset except it will be
followed by an "_C". This can be found in the same folder as your current dataset.

Need more degrees of freedom

Did you run your model and observe that DF=0 or CFI=1.000. Sounds like you need more
degrees of freedom. There are a few ways to do this:

1. If there are opportunities to use latent variables instead of computed variables, use
latents.
2. If you have control variables, do not link them to every other variable.
3. Do not include all paths by default. Just include the ones that make good theoretical
sense.
4. If a path is not significant, omit it. If you do this, make sure to argue that the reason for
doing this was to increase degrees of freedom (and also because the path was not
significant).
Increasing the degrees of freedom allows AMOS to calculate model fit measures. If you have
zero degrees of freedom, model fit is irrelevant because you are "perfectly" accounting for all
possible relationships in the model.