Document Type

Article

Publication Date

10-1-2012

Published In

IZA Journal Of Labor Economics

Abstract

Cognitive ability measures are often taken as explanatory variables in regression analysis, e.g., as a factor affecting a market outcome such as an individual’s wage, or a decision such as an individual’s education acquisition. Cognitive ability is a latent construct; its true value is unobserved. Nonetheless, researchers often assume that a test score, constructed via standard psychometric practice from individuals’ responses to test items, can be safely used in regression analysis. We examine problems that can arise, and suggest that an alternative approach, a “mixed effects structural equations” (MESE) model, may be more appropriate in many circumstances.

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