I was wondering if you can help me. I want to run a pathway model using composite variables. Each composite variable is made up of 3 or 4 observed items. To create the composite variable to draw my model in AMOS do I simply compute the variable in SPSS by adding up the observed items relevant to each composite variable. Or do I use the data imputation option in AMOS to create my composite variable? Is there a preferred method
Don't use a composite variable in a structural equations model. Instead, add a latent variable that the manifest variables (i.e., the items) all measure. The composite variable isn't what the items measure, it is just (presumably) a better measure of the latent variable in question. If you were to add a composite variable, it would decrease the ability of your model to extract the information in your data, as it forces the loadings to be 1, whereas the latent variable will allow the loadings to be estimated from the data.