Effects of employing ridge regression in structural equation models |
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| Authors: | Shaun McQuitty |
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| Institution: | Business Administration Programme , University of Northern British Columbia , 3333 University Way, Prince George, British Columbia, V2N 4Z9, Canada E-mail: mcquitty@unbc.edu |
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| Abstract: | LISREL 8 invokes a ridge option when maximum likelihood or generalized least squares are used to estimate a structural equation model with a nonpositive definite covariance or correlation matrix. The implications of the ridge option for model fit statistics, parameter estimates, and standard errors are explored through the use of 2 examples. The results indicate that maximum likelihood estimates are quite stable with the ridge option, though fit statistics and standard errors vary considerably and therefore cannot be trusted. As a result of these findings, the application of the ridge method to structural equation models is not recommended. |
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