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Definition of Structural Equation Modeling
 from Wikipedia

Structural equation modeling (SEM) is a statistical technique for building and testing statistical models, which are often causal models. It is a hybrid technique that encompasses aspects of confirmatory factor analysis, path analysis and regression, which can be seen as special cases of SEM.

SEM encourages confirmatory, rather than exploratory, modelling; thus, it is suited to theory testing, rather than theory development. It usually starts with a hypothesis, represents it as a model, operationalises the constructs of interest with a measurement instrument and tests the model. With an accepted theory or otherwise confirmed model, one can also use SEM inductively by specifying a model and using data to estimate the values of free parameters. Often the initial hypothesis requires adjustment in light of model evidence, but SEM is rarely used purely for exploration.

Among its strengths is the ability to model constructs as latent variables — variables which are not measured directly, but are estimated in the model from measured variables which are assumed to 'tap into' the latent variables. This allows the modeller to explicitly capture unreliability of measurement in the model, in theory allowing the structural relations between latent variables to be accurately estimated.

SEM is an extension of the general linear model that simultaneously estimates relationships between multiple independent, dependent and latent

Structural Equation Models are most often represented graphically. Here is a graphical example of a structural equation model:

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