Parameter estimation of structural equation models with misclassification: The MC-SIMEX approach

Abstract The random errors in the measurement process, called measurement error or misclassification, are inevitable and cause bias and inconsistent parameter estimates. Misclassification Simulation Extrapolation (MC-SIMEX) is a simulation based measurement error estimation method to obtain reduced parameter bias under misclassification. The main purpose of this study is an adaptation of MC-SIMEX method on Structural Equation Modeling (SEM). The effects of misclassification on the parameter estimates of a binary explanatory variables in SEM and the performance of MC-SIMEX method investigated with both Monte Carlo and an empirical study. According to the main results, finding the best extrapolant function is just as important as estimating the misclassification matrix although MC-SIMEX corrected a part of the bias.