Relationships of Measurement Error and Prediction Error in Observed‐Score Regression

The focus of this paper is assessing the impact of measurement errors on the prediction error of an observed‐score regression. Measures are presented and described for decomposing the linear regression's prediction error variance into parts attributable to the true score variance and the error variances of the dependent variable and the predictor variable(s). These measures are demonstrated for regression situations reflecting a range of true score correlations and reliabilities and using one and two predictors. Simulation results also are presented which show that the measures of prediction error variance and its parts are generally well estimated for the considered ranges of true score correlations and reliabilities and for homoscedastic and heteroscedastic data. The final discussion considers how the decomposition might be useful for addressing additional questions about regression functions’ prediction error variances.