European Association of Methodology

Department of methodology and evaluation research

Jena University

There are many good reasons for creating parcels in structural equation modeling (SEM). In this paper, I present clear evidence that how one creates these parcels can have important implications for the interpretation of the substantive analysis. To the extent that the individual items do not form a clearly unidimensional domain, it is definitely best to create parcels that are each representative of all the subdomains within the set of items. I present algebra-based arguments to support my conclusions, and a brief empirical example that shows how substantively relevant biases can be introduced if parcels are formed using the "unidimensional" approach. The results are discussed in terms of assumptions underlying SEM.