Cross-classified random-effects models (CCREMs) are used for modeling nonhierarchical multilevel data. Misspecifying CCREMs as hierarchical linear models (i.e., treating the cross-classified data as strictly hierarchical by ignoring one of the crossed factors) causes biases in the variance component estimates, which in turn, results in biased…

The paper discusses the consequences for maximum likelihood factor analysis which may follow if the observed variables are ordinal with only a few scale steps. Results indicate that classification may lead to a substantial lack of fit of the model--an erroneous indication that more factors are needed. (Author/CTM)