The effect of latent and error non-normality on corrections to the test statistic in structural equation modeling

In structural equation modeling, several corrections to the likelihood-ratio model test statistic have been developed to counter the effects of non-normal data. Previous robustness studies investigating the performance of these corrections typically induced non-normality in the indicator variables. However, non-normality in the indicators can originate from non-normal errors or non-normal latent factors. We conducted a Monte Carlo simulation to analyze the effect of non-normality in factors and errors on six different test statistics based on maximum likelihood estimation by evaluating the effect on empirical rejection rates and derived indices (RMSEA and CFI) for different degrees of non-normality and sample sizes. We considered the uncorrected likelihood-ratio model test statistic and the Satorra–Bentler scaled test statistic with Bartlett correction, as well as the mean and variance adjusted test statistic, a scale-shifted approach, a third moment-adjusted test statistic, and an approach drawing inferences from the relevant asymptotic chi-square mixture distribution. The results indicate that the values of the uncorrected test statistic—compared to values under normality—are associated with a severely inflated type I error rate when latent variables are non-normal, but virtually no differences occur when errors are non-normal. Although no general pattern regarding the source of non-normality for all analyzed measures of fit can be derived, the Satorra–Bentler scaled test statistic with Bartlett correction performed satisfactorily across conditions.

Small Sample Adjustment for Hypotheses Testing on Cointegrating Vectors

Johansen’s (2000. “A Bartlett Correction Factor for Tests of on the Cointegrating Relations.” Econometric Theory 16: 740–78) Bartlett correction factor for the LR test of linear restrictions on cointegrated vectors is derived under the i.i.d. Gaussian assumption for the innovation terms. However, the distribution of most data relating to financial variables is fat-tailed and often skewed; there is therefore a need to examine small sample inference procedures that require weaker assumptions for the innovation term. This paper suggests that using the non-parametric bootstrap to approximate a Bartlett-type correction provides a statistic that does not require specification of the innovation distribution and can be used by applied econometricians to perform a small sample inference procedure that is less computationally demanding than it’s analytical counterpart. The procedure involves calculating a number of bootstrap values of the LR test statistic and estimating the expected value of the test statistic by the average value of the bootstrapped LR statistic. Simulation results suggest that the inference procedure has good finite sample property and is less dependent on the parameter space of the data generating process.

Likelihood ratio and score burden tests for detecting disease-associated rare variants

This paper presents two simple rare variant (RV) burden tests based on the likelihood ratio test (LRT) and score statistics. LRT is one of the commonly used tests in practical data analysis, and we show here that there is no reason to ignore it in testing RV associations. With the Bartlett correction, we have numerically shown that the LRT-based test can have a reliable distribution. Our simulation study indicates that if the non-null variants are as common as the null variants, then the LRT and score statistics have comparable performance to the C-alpha test, and if the former is rarer than the null variants, then they outperform the C-alpha test.