Small sample corrections for Wald tests in Latent Variable Models
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Latent variable models (LVMs) are commonly used in psychology and increasingly used for analyzing brain imaging data. Such studies typically involve a small number of participants (n<100), where standard asymptotic results often fail to appropriately control the type 1 error. This paper presents two corrections improving the control of the type 1 error of Wald tests in LVMs estimated using maximum likelihood (ML). First, we derive a correction for the bias of the ML estimator of the variance parameters. This enables us to estimate corrected standard errors for model parameters and corrected Wald statistics. Second, we use a Student's t-distribution instead of a Gaussian distribution to account for the variability of the variance estimator. The degrees of freedom of the Student's t-distributions are estimated using a Satterthwaite approximation. A simulation study based on data from two published brain imaging studies demonstrates that combining these two corrections provides superior control of the type 1 error rate compared to the uncorrected Wald test, despite being conservative for some parameters. The proposed methods are implemented in the R package lavaSearch2 available at https://cran.r-project.org/web/packages/lavaSearch2.
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