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Simulation study reveals the effects of categorization error in multiple indicator models, indicating that ordinal variables with four or more categories maintain parameter accuracy.
David Richard Johnson, James C. Creech, Ordinal Measures in Multiple Indicator Models: A Simulation Study of Categorization Error, American Sociological Review, Vol. 48, No. 3 (Jun., 1983), pp. 398-407
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Johnson et al. (1983) studied this question.
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