More powerful parameter tests? No, rather biased parameter estimates. Some reflections on path analysis with weighted composites

Recently, a study compared the effect size and statistical power of covariance-based structural equation modeling (CB-SEM) and path analysis using various types of composite scores (Deng, L., & Yuan, K.-H., Behavior Research Methods, 55, 1460-1479, 2023). This comparison uses nine empirical datasets to estimate eleven models. Based on the meta-comparison, that study concludes that path analysis via weighted composites yields "path coefficients with less relative errors, as reflected by greater effect size and statistical power" (ibidem, p. 1475). In our paper, we object to this central conclusion. We demonstrate that the justification these authors provided for comparing CB-SEM and path analysis via weighted composites is not well grounded. Similarly, we explain that their employed study design, i.e., a meta-comparison, is very limited in its ability to compare the effect size and power delivered across these methods. Finally, we replicated Deng and Yuan's (ibidem) meta-comparison and show that CB-SEM using the normal-distribution-based maximum likelihood estimator does not necessarily deliver smaller effect sizes than path analysis via composites if a different scaling method is employed for CB-SEM.

Premature conclusions about the signal-to-noise ratio in structural equation modeling research: A commentary on Yuan and Fang (2023)

In a recent article published in this journal, Yuan and Fang (British Journal of Mathematical and Statistical Psychology, 2023) suggest comparing structural equation modeling (SEM), also known as covariance-based SEM (CB-SEM), estimated by normal-distribution-based maximum likelihood (NML), to regression analysis with (weighted) composites estimated by least squares (LS) in terms of their signal-to-noise ratio (SNR). They summarize their findings in the statement that "[c]ontrary to the common belief that CB-SEM is the preferred method for the analysis of observational data, this article shows that regression analysis via weighted composites yields parameter estimates with much smaller standard errors, and thus corresponds to greater values of the [SNR]." In our commentary, we show that Yuan and Fang have made several incorrect assumptions and claims. Consequently, we recommend that empirical researchers not base their methodological choice regarding CB-SEM and regression analysis with composites on the findings of Yuan and Fang as these findings are premature and require further research.

Confirmatory composite analysis in human development research

Research in human development often relies on composites, that is, composed variables such as indices. Their composite nature renders these variables inaccessible to conventional factor-centric psychometric validation techniques such as confirmatory factor analysis (CFA). In the context of human development research, there is currently no appropriate technique available for assessing composites with the same degree of rigor comparable to that known from CFA. As a remedy, this article presents confirmatory composite analysis (CCA), a statistical approach suitable to assess composites. CCA is a special type of structural equation modeling that consists of model specification, model identification, model estimation, and model assessment. This article explains CCA and its steps. In addition, it illustrates CCA’s use by means of an illustrative example.