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# st: Implementation of Latent Variable Model with SEM Builder

 From Samantha Molbach To statalist@hsphsun2.harvard.edu Subject st: Implementation of Latent Variable Model with SEM Builder Date Sat, 14 Apr 2012 07:55:49 +0200

```Dear Statalisters,

I need some help in implementing a Structural Equation Model in Stata
12. I want to create a health index according to Bound (1999): "The
dynamic effects of health on the labor force transitions of older
workers".

I have the following variables available: Self-assessed health on a
five-point scale (SAH), Age, Education, different objective measures
of health such as blood pressure (Blood), chronic diseases (chronic)
and physical limitations (limit).

The theoretical model is the following:
H = X*ß1 + Z*ß2 + u
with  H=true health; X= socioeconomic variables; Z=objective health
measures; u=error term

I do not observe the true health, but only the self-assessed health
which includes a reporting error e, thus:
SAH = H + e
SAH = X*ß1 + Z*ß2 + v (with v=u+e)

I estimate the last equation via SEM the following way:
sem (age -> sah) (education -> sah) (blood -> sah) (chronic -> sah)
(limit -> sah)

Then, I'm stuck - how do I get back to the first equation and model
the health indicator H? Also, can I estimate an ordered Probit model
in SEM?
I tried to use "SEM-Predictions", but I have the feeling that I need
to define a latent variable first in the SEM model. I'm totally new
with latent variable models - could it be that both the health index
and SAH are latent variables with the latter one being endogenous?

I hope that my problem is understandable. Any help will be very
appreciated, also some literature advice - thank you very much in