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Latent variables refer to variables that cannot be directly observed. These variable are defined in terms of observable variables. In narrow sense, "latent variable" is seen/modeled as what generates the observed variables in an implied data generation process. Also called hidden or lurking variables.
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Generalized SEM description
I've become very interested in SEM recently, and while reviewing the literature on the subject I've run into the problem, that almost none of these descriptions are very general per se, they all handl …