Correcting Bias When Using Latent Regressors

Abstract

Many core concepts in political science are latent and therefore can only be measured with error. Measurement error in a predictor attenuates slope coefficient estimates in regression, often biasing them toward zero. We show that widely used strategies for correcting attenuation bias -- including instrumental variables and the method of composition -- are themselves biased when applied to latent regressors, often performing worse than simple regression ignoring the measurement error altogether. We derive a correlation-based correction using split-sample measurement strategies. Rather than assuming a particular estimation strategy for the latent trait, our approach is modular and can be easily deployed with a wide variety of latent variable measurement strategies, including additive score, factor, or machine learning models; it requires no joint estimation while yielding consistent slopes under standard assumptions. Simulations and applications show stronger relationships after our correction, sometimes by as much as 50%. Open-source software implements the procedure. Results underscore that latent predictors demand tailored error correction; otherwise, conventional practice can exacerbate bias

Political Analysis (2026)