A general 3-step maximum likelihood approach to estimate the effects of multiple latent categorical variables on a distal outcome

Yajing Zhu, Fiona Steele and Irini Moustaki

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The 3-step approach has been recently advocated over the simultaneous 1-step approach to model a distal outcome predicted by a latent categorical variable. We generalize the 3-step approach to situations where the distal outcome is predicted by multiple and possibly associated latent categorical variables. Although the simultaneous 1-step approach has been criticized, simulation studies have found that the performance of the two approaches is similar in most situations (Bakk & Vermunt, 2016). This is consistent with our findings for a 2-LV extension when all model assumptions are satisfied. Results also indicate that under various degrees of violation of the normality and conditional independence assumption for the distal outcome and indicators, both approaches are subject to bias but the 3-step approach is less sensitive. The differences in estimates using the two approaches are illustrated in an analysis of the effects of various childhood socioeconomic circumstances on body mass index at age 50.

Keywords: latent class analysis; multiple latent variables; robustness; 3-step approach (search for similar items in EconPapers)
JEL-codes: C1 (search for similar items in EconPapers)
Date: 2017-06-06
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (4)

Published in Structural Equation Modeling, 6, June, 2017, 24(5), pp. 643-656. ISSN: 1070-5511

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