What is Structural Equation Modeling?

Structural equation modeling, or SEM, is a very general, chiefly linear, chiefly cross-sectional statistical modeling technique. Factor analysis, path analysis and regression all represent special cases of SEM.

SEM is a largely confirmatory, rather than exploratory, technique. That is, a researcher are more likely to use SEM to determine whether a certain model is valid., rather than using SEM to "find" a suitable model--although SEM analyses often involve a certain exploratory element.

In SEM, interest usually focuses on latent constructs--abstract psychological variables like "intelligence" or "attitude toward the brand"--rather than on the manifest variables used to measure these constructs. Measurement is recognized as difficult and error-prone. By explicitly modeling measurement error, SEM users seek to derive unbiased estimates for the relations between latent constructs. To this end, SEM allows multiple measures to be associated with a single latent construct.

A structural equation model implies a structure of the covariance matrix of the measures (hence an alternative name for this field, "analysis of covariance structures"). Once the model's parameters have been estimated, the resulting model-implied covariance matrix can then be compared to an empirical or data-based covariance matrix. If the two matrices are consistent with one another, then the structural equation model can be considered a plausible explanation for relations between the measures.

Compared to regression and factor analysis, SEM is a relatively young field, having its roots in papers that appeared only in the late 1960s. As such, the methodology is still developing, and even fundamental concepts are subject to challenge and revision. This rapid change is a source of excitement for some researchers and a source of frustration for others.

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