A Note on the Relationship Between the Number of Indicators and Their Reliability in Detecting Regression Coefficients in Latent Regression Analysis

Abstract

We consider the question of how variation in the number and reliability of indicators affects the power to reject the hypothesis that the regression coefficients are zero in latent linear regression analysis. We show that power remains constant as long as the coefficient of determination remains unchanged. Any increase in the number of indicators always results in an increase in the coefficient of determination and so in the power. We note that the coefficient of determination plays a similar role in determining the error variance of predicted factor scores.