Indications and Limitations of Structural Equation Modeling in Complex Surveys: Implications for an Application in the Medical Expenditure Panel Survey (MEPS)

This paper examines some indications and limitations of structural equation modeling (SEM) in complex survey analysis using an example from the Medical Expenditure Panel Survey (MEPS). The primary objectives of this paper are: 1) to provide an overview of basic statistical issues related to SEM, 2) to discuss findings in the literature related to SEM and complex survey design, and 3) to discuss a substantive application of SEM to MEPS. MEPS data are used to develop a preliminary model of the relationship between parental reports of affective behaviors and psychotropic medication utilization for children aged 5-17. Findings are presented from a comparison of SEM analysis, which uses latent variables to model affective behaviors, to a regression analysis which uses indices which are created from observed variables to represent affective behavior. The paper concludes with a discussion of the findings from the two analytical approaches and discussion of next steps in model development.

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