Published online by Cambridge University Press: 05 February 2026
Chapter 2 focuses on background information that is essential to understanding SEMs. This includes providing the general structural equation model that appears throughout the book along with definitions of the notation and the assumptions of the model. The chapter introduces path diagram symbols and their relation to the equation form of the model. It also describes differences between endogenous and exogenous variables and observed and latent variables for both continuous and categorical variables. In addition, the chapter introduces the problems of missing data, outliers and influential cases, and multiple significance testing, issues that are common in all types of models. Finally, basic rules of expected values, variances, and covariances are part of the chapter.
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