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- Modification indices are useful diagnostic tool after structural in case of more estimates. Modification indices are often misapplied, lets take a look at what modification indices do. Our example for the video is Mesquita and Lazzarini from 2008 Academy of Management Journal. They estimated a sequence of models and their CFA model, the data well, but what they call theoretical model, which they use for testing the hypothesis failed the Chi-square test. Then they proceeded doing diagnostics. The report that they applied LM tests to see if some paths that were not in the model should be there. And this paper is a nice paper because the correlation matrix in the article contains all the variables, so we can simply replicate the analysis ourselves. So this is their modification indices. Based on this modification indices, the authors conclude that it was necessary to add a path, a covariance path, between variables called horizontal and vertical. And then they continued doing the same
