Abstract: Item parceling is a technique using in structural equation modeling (SEM). Parceling can improve the quality of indicators and model fit. Bias that due to parceling was often neglectable and can be corrected. Parceling greatly enhances model parsimony, but it greatly reduces falsifiability of the tested model. It could be summarized that the prerequisites of parceling are unidimension and homogeneity, and the applicability of parceling is the analysis of structural models, rather than measurement models. Parcel-building algorithms and the number of parcels were discussed and recommended. A procedure for item parceling was proposed when the scale was unidimensional. If the scale was multidimensional, internal-consistency approach was recommended such that the items of the same dimension are parceled to one or three indicators for structural equation modeling.

Key words: latent variable, structural equation model, item parceling