Simple, Efficient and Distribution-free Approach to Interaction Effects in Complex Structural Equation Models

Structural equation models with mean structure and non-linear constraints are the most frequent choice for estimating interaction effects when measurement errors are present. This article proposes eliminating the mean structure and all the constraints but one, which leads to a more easily handled model that is more robust to non-normality and more general as it can accommodate endogenous interactions and thus indirect effects. Our approach is compared to other approaches found in the literature with a Monte Carlo simulation and is found to be equally efficient under normality and less biased under non-normality. An empirical illustration is included.