Manifest and Latent Markov Chain Models for Categorical Panel Data

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Abstract
The starting point of this paper is a 3 × 3 × 3 table of repeated behavior ratings of children, which has been previously analyzed by Plewis (1981) using manifest discrete time and continuous time Markov chain models. Potential reasons for the ubiquitous misfit of the manifest discrete time Markov chain model are outlined. It is proposed, instead, to make use of more recent developments in latent discrete time Markov chain modeling that simultaneously address the main problems of heterogeneity, measurement error, stationarity, and order effects.