The Comparison of Latent Variable Propensity Score Models to Traditional Propensity Score Models under Conditions of Covariate Unreliability.

Propensity score (PS) methods are implemented by researchers to balance the differences between participants in control and treatment groups that exist in observational studies using a set of baseline covariates. Propensity scores are most commonly calculated using baseline covariates in a logistic regression model to predict the binary grouping variable (control versus treatment). Low reliability associated with the covariates can adversely impact the calculation of treatment effects in propensity score models. The incorporation of latent variables when calculating propensity scores has been suggested to offset the negative impact of covariate unreliability. Simulation studies were conducted to compare the performance of latent variable methods with traditional propensity score methods when estimating the treatment effect under conditions of covariate unreliability. The results indicated that using factor scores or composite variables to compute propensity scores resulted in biased estimates and inflated Type I error rates as compared to using latent factors to compute propensity scores in certain conditions. This was largely dependent upon the number of infallible covariates also included in the PS model and the outcome analysis model analyzed. Implications of the findings are discussed.